Dividend Taxation and the benefits while applying the E.U. Parent-Subsidiary Directive (90/435)
Dividend Taxation for Individuals and Legal Entities & E.U. Parent-Subsidiary Directive (90/435)
The recent tax legislation provides for more favourable taxation of corporate profits.
The corporate tax rate will be decreased from 23% to 20% for financial periods starting as of 1 January 2011.
A withholding tax of 25% is applicable to distributed profits (dividends) from Greek SA & LTD companies to residents and non-residents individuals or companies. The same withholding tax applies, as well, to dividends distributed from a permanent establishment situated in Greece to another company which has its statutory seat or another permanent establishment in a foreign country.
The withholding tax rates for dividends distributed within 2011 are subject to a 21% withholding tax and with regards to dividends distributed from the 1.1.2012 and next years, they are subject to a 25% withholding tax.
Dividends received by resident individuals are subject to taxation at the recipient’s individual income tax rate (that is, individuals with low income could be entitled to a refund, whereas individuals with high income levels already subject to income tax at a rate of 45% would not have any further tax obligation or refund opportunity).
In any case where dividends are distributed from Greek companies to non-residents companies or individuals and there is a Double Tax Convention in force, under the respective D.T.C. lower tax rates might be applicable.
E.U. Parent-Subsidiary Directive (90/435)
As mentioned above, for dividends distributed within 2011, the rate is 21%. If the E.U. Parent-Subsidiary Directive (Law 2578/1998, implements the E.U. Parent-Subsidiary Directive (90/435) into Greek law) conditions are met, no withholding tax will apply. While the 25% withholding tax will apply on profit distributions between domestic companies, if the ultimate dividend recipient is an E.U. parent company (that qualifies under the P-S Directive), the dividends will be tax exempt.
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