In an effort to attract investment, enhance the national economy and combat unemployment, the Greek state provides a range of tax and other incentives to enterprises.
Through their activities in various sectors, enterprises can create benefits for the wider economy, society or the environment. The enterprises in question are incentivized and rewarded by the Greek government through super tax deductions, tax exemptions or state grants, thereby increasing the net income resulting from the following activities:
Research & Development and Innovation
Companies engaged in the fields of pharmaceuticals and chemicals, information and communication technology, logistics, industrial products, energy, etc. invest heavily in innovation and the creation of intellectual property through R&D in Greece.
The Income Tax Code (art. 22A) stipulates that scientific and technological research expenses are tax deductible at a rate of 200%, whereas depreciation of fixed equipment is effected at the high rate of 40%. The expenses must be incurred within Greece, and in case of tax losses, these are carried forward for tax purposes for up to five years. The taxpayer has the option to assign the relevant audit to a certified auditor in order to speed up the process of certification of the expenditures by the General Secretariat for Research and Technology.
The same law includes a patent box provision (art. 71A) which exempts from taxation the profits arising from the sale of products or services which are protected by an internationally recognized patent. The exemption applies for three consecutive years. The profits which are exempted from tax form a special reserve, which should be taxed upon its capitalization or distribution. For the subjection of a company to the above regime, approval by the Minister of Economy and Development is required.
Finally, pharmaceutical companies may offset (namely reduce) the amount of the clawback with expenditures related to R&D and investment plans for the development of products, services or production lines. The relevant audit is mandatorily carried out by a certified auditor and the audit report is submitted to the General Secretariat for Research and Technology.
These incentives concern mainly enterprises operating in the sectors of tourism, industry, processing, energy, and technology which invest in new assets and/or in the creation of new jobs in Greece.
The Investment Incentives Law 4399/ 2016 provides for a range of state benefits to a variety of industries and businesses, depending on the nature, size and code activity of the investment plan. The expenses may concern capital assets or operational costs (payroll). The benefits consist of tax exemptions, subsidies for financial leasing, payroll and other costs, ranging from 10% to 55% of the eligible expenses, depending on the size of the taxpayer and the geographical region of the investment. The state aid for the investment may reach €5 million.
Furthermore, Law 4608/ 2019 aims to attract strategic high value investments in Greece, i.e. investments related to financial activities of globally tradeable products or services with strategic significance to the national or local economy. The law provides site/location incentives, tax incentives, fast-track licensing, and incentives for research expenses. The tax benefits entail tax exemptions, accelerated tax depreciations and subsidies, ranging from 5% to 100% of the eligible expenses based on the nature of the investment.
Business Services Centers
Law 89/ 1967 sets the licensing framework for foreign companies’ branches/offices (as well as Greek companies) to operate as Business Services Centers, providing specific services defined by law. The law offers inter alia a state grant for specific types of expenses (payroll, R&D, etc.), provided that said offices/companies develop a new activity and create new job positions. The benefit ranges from 25% to 50% of the eligible expenses depending on their nature.
Incentives for the protection of the environment
Tax incentives are granted to enterprises investing in new fixed assets in order to save energy and water and protect the environment.
The Income Tax Code (art. 24.10a L. 4172/ 2013) provides for a 100% increased tax depreciation of assets related to energy efficiency or water conservation. Said increased depreciation may not exceed the rate of 10%. The realization of the relevant works is confirmed by a technical report signed by an engineer, environmental scientist, etc. From the issuance of the said report, the expenses are qualified as eligible for the increased depreciation. Losses that may arise due to the increased depreciation are normally carried forward for up to five years.
Furthermore, an ESPA program is in place for the subsidy of investments in waste management. This plan aims to strengthen existing and new small- and medium-sized enterprises operating in the sector of recycling, processing and reclamation of waste. The total state aid amounts to €40 million, of which 65% is allocated to existing and 35% to new enterprises. The subsidized budget of each investment plan ranges from €400,000 to €3 million.
The actual benefit for the enterprise ranges from 20% to 55% of the eligible expenses and depends on the size of the enterprise, the geographical region and the category of the expense.
Generous investment incentives are provided to film facilities, studio infrastructure and audiovisual production in Greece.
Specifically, Law 4487/2017 sets the investment incentives framework for the production of audiovisual works in Greece, by providing a state grant (cash rebate) for an amount of up to 40% of the total eligible expenses of the production. The incentive concerns the reimbursement of a monetary amount covering eligible expenses incurred in Greece for the purposes of production of audiovisual works in Greece, e.g. feature films, television series, documentaries, animation, as well as digital games.
Furthermore, tax relief in the form of super deduction of the relevant audiovisual production’s expenses is provided by the ITC. Specifically, 30% of eligible expenses incurred in Greece for each audiovisual work is deducted from the taxable income of a legal entity or person that is subject to taxation in Greece and invests in audiovisual works.
Tax incentive for new jobs
A super deduction in the employer’s social security contributions is offered for creating new full-time job positions. These contributions are deducted from the gross income of entrepreneurs and companies, increased by 50% and up to the minimum salary (currently amounting to €650) multiplied by 14 for each job. If following said deduction, losses arise, these are brought forward for up to five years.