Israel – Greece Tax Treaty

Bilateral agreements

1. Convention to prevent Double Taxation – Israel & The Hellenic Republic

Greece-Israel Tax Treaty

A double taxation treaty is a bilateral agreement under which two states claiming for a taxation privilege in relation to an income and/or assets in relation to a taxpayer, an individual or a corporation, designed to reconcile the taxation rights of both countries.

Such tax privileges might be claimed by each of the states, whether if a taxpayer is claimed to be a tax resident of a certain state or in a case that an income of a taxpayer was derived by exploiting such state’s resources, or was physically generated within such state’s borders.

The bilateral tax treaty between Israel and Greece was signed in 1995 and became effective on 1/1/1999. In addition, the treaties include principles for the exchange of information on tax issues between the two countries.

Residency for Tax Purposes

Residency of an individual in Greece: In general, individuals are considered residents for tax purposes if they stay in Greece for more than 183 consecutive days in a one-year period. Also, to determine the residency of an individual, it is required to assess its permanent place of living; Main economic interests, and any other aspect that might be considered as a tie to Greece.  

Information about residency in Israel can be found here.

Residency of a company in Greece

A company will be considered a resident of Greece if it has been incorporated or established according to Greek legislation: if it’s place of business or affective place of management is undertaken or located in Greece.

To learn about how a company is considered a resident of Israel read here.

Greece Tax Regime

Income Tax: 9-44%

The highest tax rate in Greece, as of today, is 44% for individuals who earn over 40,000 EUR.

Corporate and Branch Tax: 22%

VAT: Standard rate: 24%. Reduced rate: 13%/6%/0% (exemptions apply for each reduced rate).

Capital Gains Tax: 15%.

Withholding tax

Therefore, according to the treaty, the rate of withholding tax for dividends in Greece are domestic, Interest 10%, Royalties  10%.

Inheritance and Estate Tax in Greece

As other European countries, Greece has a multi-level inheritance tax system in which all beneficiaries pay different taxes depending on their relationship to the deceased. As a general rule, the closer the relationship the lower the tax rate, for example: Children, grandchildren, spouses and parents of the deceased (tier one) are entitled for 150,000 EUR tax – free, while other beneficiaries are entitled to only 30,000 euros. Moreover, the maximum tax rate for individuals in tier one is 10%, while the maximum tax rate for other beneficiaries is up to 40% depending on their tier.

Israel does not impose inheritance or estate taxes.

Currency differences between Israel and Greece

The currency in Greece is called Euros. The Euro currency symbol is EUR. The Israeli currency called New Israel Shekel (NIS) or Israeli Shekel (ILS).

Transfer pricing in Greece

Filing Documentation regarding Transfer of Funds is essential and needed to be filed within 1 year from the last day of the month during which the fiscal year ends.

Transfer pricing in Israel

The legislation within Israel in respect of transfer pricing is disclosed within Section 85A of the Israel Tax Ordinance (New Version), 1961 and the Income Tax Regulations (Determining Market Conditions) – 2006 (The Regulations).

Click here for more information on Israel transfer pricing.

MLI

Multilateral agreement between Israel, Greece, and Cyprus

In July 2015, an agreement was signed between the governments of Israel and Greece, designed to regulate legal aspects and logistics involved in the cooperation between the countries. In February 2016, a similar agreement was signed with the Government of Cyprus. In 2017, both Israel and Greece signed the Multilateral Convention for the Implementation of Measures Related to Tax Treaties to Prevent Base Erosion and Profit Shifting (the MLI), but while Israel ratified the Convention so that it would be effective on 01/01/1999, Greece has not yet ratified it. After the Greek government ratifies the treaty, the MLI will prevail over what is stated in the bilateral treaty, so that only the MLI will apply in the relevant sections.

Relocation to Greece

The population in Greece over the last few decades has seen intricate movement; The population has been declining due to several different reasons, including emigration, financial crisis, low fertility rates and a growing older population. Recently, many Israelis have been investing in real estate in Greece; The Jewish communities in Greece are amongst the oldest in Europe and to this day continue to remain and flourish.

Real Estate market in Greece

The real estate market is one of the main driving forces of Greece’s economy. Both EU and non-EU residents can purchase property and reside in Greece, but non-EU residents may have to prove their intent of property purchase. Currently, the market continues to rise for its geographical and geopolitical position. In order to buy property in Greece, an individual will need to apply for a unique tax registry number (AFM) to be able to complete a property sale.

Business Activities between Greece and Israel

Our firm specializes in providing legal advice and assistance to our clients in Greece. Professional relationships with accountants and lawyers in Greece help aid our clients in matters of: Setting up businesses, opening bank accounts, and connecting Greek and Israeli companies.

Specific information on real estate investments and income derived in Denmark can be found on our Overseas Real Estate Investment page.

Transfer of funds

Funds transfer from Israel to Greece

According to section 170(a) of the income tax ordinance, most transfers of funds from Israel to Greece will require prior approval of the tax authority. Nimrod Yaron & Co. makes it easy for our clients to obtain tax exemptions from withholding tax and upon transfer of funds to Greece.

Funds transfer from Greece to Israel

Our firm helps to transfer money from Greece to Israel in the easiest and cheapest way. For further information press here.

Types of business entities in Israel

Private Company in Israel

• 1-50 shareholders
• Can’t sell stocks or debentures to the public

Public company in Israel

• Minimum of 7 shareholders
• Must publish an annual report
• Can sell stocks or debentures to the public

Foreign Company in Israel

• A company from overseas with a branch in Israel;
• Partnership
• Self- Employed
• Non-Profit Organizations

Types of business entities in Greece

General Partnership in Greece (“OE”);

• A type of business agreement made by at least two individuals where all assets or profits are shared amongst each other.

Limited Partnership in Greece (“EE”);

• Where one (or more) business partner is liable only up to the amount of money that a partner invested in the company in Greece.

Limited Liability Company in Greece (“EPE”)

• This form of business entity is the most used in the Hellenic Republic
• The shareholder and or director are not required to be a resident of Greece for company setup
• The minimum capital requirement is 4,500.00 €
• Registered capital is made up of contributions paid by shareholders
• Those specific shareholders are responsible for the unpaid parts of the contributions to the Commercial Register

The “Society Anonyme” Company in Greece (“AE”);

• The Greece AE requires at least 1 shareholder and 3 directors who can either be individuals or legal entities to be incorporated
• The directors and shareholders can be of any nationality, and don’t have to be Greece resident
• Legal personality; responsible for its debts with its assets
• Liability of a shareholder is limited to the capital contributed by him
• The minimum capital requirement in Greece is 60,000.00 €

The New Private Limited Company in Greece (“IKE”), introduced in Greek law in 2012;

• Type of privately held business entity
• Owner liability is limited to their shares
• Shares are prohibited from being publicly traded
• Limited to having 50 shareholders

Social Security Tax in Greece

As of June 1, 2020, for the primary social security fund (EFKA), social security contributions are withheld at 15.33% at the level of the employee and contributed at 24.33% at the level of the employer.

For information about Israel’s social security & tax liability click here

Incentive Laws in Greece

The main investment incentives provided by law in Greece are tax exemption, state funding, subsides for financial credit, subsidies towards the costs of jobs created, and corporate risk financing.

For information about Israel’s incentive laws click here.  

Greece Tax Authority

The tax authority in Greece is the Independent Authority for Public Revenue (IAPR) of the Hellenic Republic.

List of countries with whom Greece has a double tax treaty