Taxation of portfolio income in Greece
The Greek tax system offers an attractive framework for passive income, featured by exemptions and flat tax rates, rather than progressive tax brackets commonly found in other European countries. This fact allows financial planning and positions Greece as a competitive destination for global portfolio holders.
In this article, we outline the tax treatment for some of the most common financial products, including shares, bonds, and mutual funds, providing information on how dividends, interest, and capital gains are taxed accordingly. Specifically:
1. Shares
Taxation of income from shares depends on the type of stock and the investor’s holding rate in a company. For listed stocks, dividends are generally subject to a 5% tax rate, while capital gains are exempt from taxation. However, when the investor holds more than 0.5% of a company’s share capital, capital gains are taxed at a rate of 15%.
For non-listed shares, both dividends and capital gains are taxed at 5% and 15%, respectively.
2. Bonds and bank deposits
Greek government bonds and treasury bills offer a significant incentive for tax residents of Greece, since interest and coupons exempt from income tax. Foreign government bonds and treasury bills are subject to a 15% tax rate on both interest and capital gains.
Corporate bonds issued within the European Union are subject to a 15% tax rate on interest, while capital gains are tax-free. On the other hand, bonds issued by companies registered in third countries are taxed at 15% on both interest and capital gains.
Deposits and repos are taxed at 15% on interest income, while structured notes and certificates, which are specialized financial instruments, are taxed at 15% on both interest and capital gains.
3. Mutual Funds and ETFs
Mutual funds and exchange-traded funds (ETFs) have a distinct tax treatment depending on whether they fall under the UCITS directive or not. Mutual funds and ETFs domiciled in the EU and adhering to the UCITS directive enjoy a tax-exempt status for both dividends and capital gains, making them attractive for investors seeking tax efficiency.
Other mutual funds and ETFs domiciled in 3rd countries, however, are subject to a 5% tax on dividends and 15% on capital gains.
To be noted, Greece has an extensive network of Double Tax Treaties with 57 countries and has signed BEPS Multilateral Convention. In addition, there are specific provisions in the Income Tax code providing for credits for taxes withheld or paid to other tax authorities.
Coupled with a stable financial environment over the last years and a growing reputation as a business-friendly destination, Greece is increasingly attractive to both institutional and individual investors seeking tax-efficient and sophisticated investment opportunities. People who relocate to Greece and obtain tax residency status, can undoubtedly continue to hold or create trading portfolios taking advantage of the favorable tax framework.
