There are several ways of doing business in Greece, the most common being through the setup of a Greek limited liability company, called Private Company (IKE)!
In order to set up a Greek Private Company, there is a list of bureaucratic and legal steps that a foreign entrepreneur must complete.
If you want to incorporate and register a Private Company (IKE) in Greece, you can find the basic steps on the following article, along with a detailed summary of those procedures, and the estimated time and cost for each step.
Establish a Private Company in Greece with ease and without hassle!
General Information about IKE
There are several ways of establishing a business in Greece even though the most famous one is the Greek limited liability company, called Private Company (IKE)!
We are here to help you choose wisely the entity that suits your business needs. Concentrate on your business growth and allow us to take good care of your company incorporation and much more!
Types of Business Entities in Greece | Basic information & Incorporation Procedures
Private Company in one glance
A simpler and more flexible corporate form, namely the Private Company (IKE), has been introduced by Law 4072/2012 (A’86). IKE is a private capital company which has capital and the liability of its members for the company debts, except for those with guarantee contribution, is limited. A private capital company is established by one or more natural persons (founders). Participation to a private capital company requires the acquisition of one or more company shares. The company shares cannot be represented by shares. The company may issue a document for the company shares, which does not have the features of a security.
- A form of limited partnership and the capital consists of share parts.
- Minimum capital requirements is € 1.00.
- There is an administrator instead of the board of directors.
- IKE is governed by its articles and memorandum of association and its accounts must be published.
- Statutory audit requirements as per EU directives.
- A single partner can control this form of incorporation.
- Double entry accounting and reporting system.
- Management’s and Partners’ Liabilities: The legal representatives (administrators) are liable with their personal property for the company’s tax and insurance obligations. In addition they are liable against third parties when the liability is proved that are made by them (administrators).
- It is very similar to EPE with the difference that is not obliged to the formalities governing the EPE, it is a more flexible to administer form of company and the setup costs are lower than EPE.
- Needed time for incorporation: 5 working days after the needed documentation is selected.
Law 4072 of 2012 (the “Law”) introduced in Greece a new type of company, the Private Company (“PC”) (“Idiotiki Kefalaiouchiki Etaireia” or “IKE” in Greek) in order to meet the growing need for a modern and flexible middle- sized company.
After seven years since the new law about the Private Companies, the Private Company is entitled as a huge success in terms of limiting the complexities of setting up a limited capital company in Greece. Since then, thousands Private Companies has been incorporated.
GENERAL INFORMATION AND STRUCTURE
The Private Company is a company with legal personality. It is qualified as a commercial company, even if its object is not to carry commercial activities.
A Private Company may be incorporated by several persons (called “members” or “partners”) or by a single person and in such case it shall be called single-membered. The members may be natural or legal persons.
The capital of the PC is determined by the members without any restriction from the Law, as there is no minimum share capital requirement.
A PC may be incorporated by means of a private document (Statutes/Articles of Association), unless a notarial deed is specifically required by the Law.
The company is registered at the General Commercial Register (“GEMI”) of the Companies House, following the “One Stop Shop” procedure of incorporation.
There is no maximum limitation; it could be either limitless or registered for a specific period.
The seat of the company is in the municipality determined in its Articles, and the effective management may be abroad. Furthermore, the PC may transfer its seat to any other member state of the European Economic Area.
Finally, within a month from its incorporation, the PC must create a website, featuring certain information prescribed by law.
IKE – Private Company Incorporation Package
Business founders need to submit a certified copy or copies of their IDs or their passport. They also need to request to send notice to the Insurance Organization (EFKA) with regard to the company’s establishment.
- Payment for all the provided fees required for the company establishment (General Commercial Registry, Social Insurance Registry, Chamber’s Subscription Fee, etc).
- Drawing up the required documentation and declarations.
- Issuance of the TIN number for the company and the founders.
- Check the name and the distinctive trade name.
- Drafting of the statute of the company (Articles of Association).
- Establishment of the company through the General Commercial Register.
- Submitting all the necessary documentation and declarations in order to register the company in the General Commercial Register.
- Submitting all the necessary documentation in order to register the legal representative in the Social Insurance Registry (if needed).
- Issuance of the certificate stating the absence of tax and insurance debt, if required.
Atlas Consulting Fees depends on:
- The participation of the foreign entity
- The complexity of the business activity
Pros and Cons
A Private Company is subject to the same corporate tax, and in general the same taxation treatment as a SA and also as the Ltd, type of companies.
The main significant differences between PC and the two types of companies (SA and LTD) is the shorter time period required for the incorporation.
The main significant difference between PC and SA is the absence of the minimum required capital for the Private Company.
In the contrary the absence of minimum required capital for PC implies more reduced solvency and credit rating than SA.
The name of the private capital company (IKE) is formed either by the name of one or more partners either by the object of its activity or by other verbal indications. The corporate name can be entirely or partially expressed in Latin letters. The company name must contain written out in full the words “Ιδιωτική Κεφαλαιουχική Εταιρία” or the acronym “IKE”.
For its international transactions the above words are expressed as “Private Company” or/and the acronym “P.C.”.
The name of single-member private company must include the words “Μονοπρόσωπη Ιδιωτική Κεφαλαιουχική Εταιρεία” or “Μονοπρόσωπη Ι.Κ.Ε.” For its international transactions the above words become “Single Member Private Company” or/and “Single Member P.C.
The statutory seat of a private capital company is located in the Municipality of the Greek territory referred to in its statutes. A private capital company can establish branches, agencies or other forms of secondary establishment in other areas of Greece or abroad.
A registered address can be used as the statutory in cases that it is not compulsory to rent regular premises for the company’s operations.
The private capital company has legal personality and it is a commercial company even if its business purpose is other than trading. The private capital company cannot perform a business activity for which another corporate form is exclusively defined by law.
The establishment of a private capital company is done by its registration at the GE.MI. service of the competent Chamber of Commerce. The disclosure of the P.C. is held either on the website of the company or at the GE.MI. service.
The law states explicitly that the P.C. has a legal personality which acquires from its establishment and a business status which acquires from the type of company and does not depend on its purpose, namely the exercise of commercial activity. The company is established and acquires a legal personality at the moment of its registration at the General Commercial Registry Services.
The relevant law provides for the possibility of the P.C. to be set up as a single firm or a single firm following its establishment by merging all shares to one person. Concerning the corporate obligations, only the legal entity of the company is liable. The partners do not even have a limited liability. Only exception of a partner to have a limited liability for the debts of the company is if he undertakes a guarantee contribution.
The liability is up to the amount of the company’s capital. The P.C. is the only one liable by its assets, for its corporate obligations, excluding the liability undertaken primarily by the partner, with guarantee contributions. The extent of the aforementioned liability against the company’s creditors, if required, is up to the value of the partner’s contribution.
The PC is managed and represented by one or more Managers/Administrator, which must be all natural persons.
If there is no namely indication of the Manager/Administrator of the private company then, the management and representation of the PC is carried out collectively by the members or by the single member of the company.
There can be one or more Managers. If the Managers are more than one, then they act collectively (unless otherwise determined by the Articles).
The managers represent the company in front of all public authorities and they perform in its name any actions concerning its management, the administration of its assets and generally the pursuit of its objects.
The managers are liable to any of the obligations of the private company in case of breach of the Law, the Articles and the decisions of the members, as well as for failures in the management of the company and they have the obligation of loyalty towards the company.
Ρrivate Companies are taxed the same as to the Greek Limited Liability Companies, and as such:
– Corporate Income Tax rate: 24 %
– Withholding Tax on Dividends: 5%
The 1/20 of the net profits is withheld by the company for the formation of a reserve, which may either be capitalised or set- off against losses. This happens before any distribution of any profits.
Τhe manager(s) of the PC and the sole member (in case the PC is single -membered private company) must be registered at the Social insurance Organisation (EFKA/OAEE). The minimum fee for this is 220,00 euros monthly. In case that that is the first registration in EFKA as a Director then there is a discount and the fees are 136,50 euros.
Τhe persons that are participating in the PC, and are already insured in a public insurance organisation of another EU country may obtain a relevant exemption from the payment of the insurance fees in Greece (A1).
The members may participate in the company either by capital contributions, non – capital contributions or guarantee contributions.
There is no minimum requirement in relation to the share capital of the PC, but we advise that the initial capital must cover at least the operation costs until the company generates income.
The contributions of the members in order to participate in the company can be of 3 kinds:
– Capital contributions, in cash.
– Non – capital contributions, being assets which are not subject to evaluation (ie you can provide services), and the value of which is defined in the Articles.
– Guarantee contributions; it’s the obligation that one member of the company can take in order to cover a future liability against third persons, up to an amount determined in the Articles.
Frequently Asked Questions about Private Companies - IKE
Companies resident in Greece are subject to corporate income tax on their worldwide income from all sources. Non-resident companies that have a permanent establishment in Greece are subject to corporate income tax on income derived through the permanent establishment. Companies are deemed to be resident if they are incorporated in Greece (the registered office is in Greece) or have their place of effective management in Greece. The fiscal year usually runs from 1 January to 31 December.
However, all companies maintaining a double- entry accounting system can choose to have the fiscal year ending on 30 June. Also, if a Greek company is a subsidiary of a foreign parent company with the parent company holding a minimum of 50% of the share capital, the Greek company can choose to align the fiscal year with that of the foreign parent company.
The tax rate applicable to undistributed profits is 28% for all forms of companies including Public Limited Companies (SA), Limited Liability companies (EPE) and branches of foreign companies.
Distributed profits are subject to an additional income tax of 10%. Dividends paid to parent companies based in European countries are exempted from such dividend tax if certain conditions are met.
The calculation of tax on the taxable profits of branch offices of international companies is the same as the tax applicable to Greek companies in general. The tax is calculated at 29% of net taxable income. There is no branch remittance tax in Greece.
VAT is imposed on the sale of goods and supply of services at a standard rate of 24% which applies to the majority of goods and services. For specific categories of goods and services a reduced rate of 13% and an extra reduced rate of 6% applies. The above rates are reduced by 30% for sales to a few specific remote Aegean islands but this reduction is expected to be abolished in the near future.
Current Corporate Tax rates in Greece are:
Type of Business Tax Rate
Societe Anonyme SA, EPE, IKE, branches 29%
Other corporations OE, EE 29%
The Dividend Tax is 15% on the dividends’ amount.
Yes, a Private Company must pay every year a Lump Sum Tax (Telos Epitidevmatos) of 1000 euros.
For the first year only, the company will pay a percentage of the lump sum tax depending on the date you establish the company.
The tax is calculated on the net profit of the company. The corporate tax rate on the net profit are 29%. Every year you have to pre calculate and pay a tax advance of 50% for the first 3 years and then 100% for the years onwards.
The equation for the calculation of the tax is the following:
Regular tax 29% on the net profits
(+) 50% (for first years) advance payment of the next year’s tax.
(- ) the advance payment of previous year tax.
The tax payment starts on the end of July once the Corporate Tax Returns is submitted; then the company can either pay all the tax at once or in 6 monthly instalments from July and the months after.
There is no tax withholding if a double treaty provides so and also if tax relief is available under the EU Parent – Subsidiary Directive (90/435/EEC – EU holding company has more than 10% participation in the Greek subsidiary for at least two consecutive years). Dividends received by Greek parent companies from subsidiaries established in other EU member states (has more than 10% participation in the EU subsidiary
for at least two consecutive years) are exempt from tax at the shareholder level to the extent that they are registered under a tax free reserve account. If these dividends are subsequently distributed or capitalized a 15% tax is applicable.
Greece follows internationally recognised Transfer Pricing (TP) rules where cross-border trading and financial transactions between affiliated entities have to be conducted on an arm’s length basis. The price and terms should be the same as if the transactions had been between completely independent parties.
The arms length principle applies to all transactions made between a Greek company/branch and its foreign affiliates. It is wise to be ready at all times to satisfy the tax authorities on pricing policies involving both ways of trading. For management fees and royalties above the rates accepted by the tax authorities special approval by the Ministry of Finance is required. Companies with inter group transactions, over and above the limits of the transactions as specified by the ministry of finance, are required to file a return for all intergroup transactions and also the method used to account for these transactions. They are also obliged to have a documentary file proving the method used.
If an individual is resident in Greece then they are subject to Greek tax laws. An individual is resident in Greece if they reside in Greece or has a habitual abode in the country. An abode will be regarded as ‘habitual’ if the taxpayer stays in Greece more than 183 days within a calendar year.
We would advise any new entrant to Greece or person who spends time working in Greece to take professional advice to determine whether they are Greece tax resident.
Current Personal Income Tax rates in Greece are:
Band of income (Euro) Tax rate (%)
(NB: rates are for the tax year 2017)
Employers and employees also have to pay Greek social security, which is called National Insurance rates are currently about 25% for the employer and 16% for the employee on their gross salary.
It is the employers’ legal responsibility to pay over employee’s tax and social security deductions to the Greek tax authorities.
For other EU nationals exceptions may be given for a limited period of time provided they can prove they are registered at home.
Yes, it is compulsory that the Director of a Private Company must be insured. He can either be an employee of the company or can be a person that offers his services without employment strings; however he must pay at least 167,5 euros per month to the National Insurance Organisation.
Since the Business registration of the new company, a wide range of tax – accounting obligations runs in certain time periods. We provide several packages of Tax – Accounting Compliance depending on the needs of each company.
Accounting – Bookkeeping
Recording of other transactions in accordance with Greek statutory regulations, on the basis of documentation & information provided by the Company.
Preparation of the monthly trial balance.
Preparation of the general ledgers printouts.
Monthly cash, credit cards and bank reconciliation.
Insurance Policies amortization.
Preparing depreciation/amortization tables both for accounting as well as for tax purposes.
Preparing obligatory reports for the Central Statistical Office, National Bank and other.
• Be readily available to answer questions from the staff and Accounting Unit as needed.
• Other accounting/bookkeeping duties as needed.
Year-end closing of the Company’s accounting books
Preparation of the closing journal entries, recording of any year-end provisions & accruals, reconciliation of year-end accounts to general ledger & supporting data.
Preparation & sign off (as accountants) of the financial statements & related notes.
Tax Filings for withholding taxes; Value Added Tax Filing (due monthly) Corporation Tax Filing (due annually); Accounts Filing (due Annually).
Ongoing tax compliance services
Preparation, sign off & submission of the Company’s annual income tax return.
Preparation, sign off & submission of monthly & annual VAT, Intrastat & EC Sales Listing returns.
Preparation, sign off & submission of the Company’s annual suppliers/client listings.
Preparation, sign off & submission of the free lancers & third parties’ fees withholding tax returns monthly & annually.
Preparation & filing with the tax authorities of the monthly various withholding tax returns.
Preparation & filing with the tax authorities of the quarterly statement of contracts.
Annual Financial Statements – Publications To General Commercial Registry Specialised Reporting for shareholders, for investors, for banks etc.
Monthly calculation of the gross and net salaries payable to the employees, on the basis of figures provided by the Company;
– Calculation of the amounts due for personal income tax, social and health security contributions;
– Preparation and submission of all the required data to the Social Security authorities & filing of notifications to the competent authorities regarding the contributions payable as required;
– File keeping of all documentation, related to the provision of payroll services;
– Administration of ERGANI reporting (hiring, termination of employment, amendment working hours, overtime, amendment of salary, annual leave);
– Preparation of employees’ monthly and annually pay slips in official format;
– Computation of employees’ indemnity upon dismissal;
– Monitoring of vacation days entitlement of the employees as well as the remaining untaken days per year, according to the figures provided by the company. It has to be noted though that this service is not and does not replace the update of the book leave of the company which remains under your responsibility;
– Preparation of the payroll monthly withholding tax returns.
Preparation of monthly, quarterly, and annual reports:
• Preparation of schedules requested by the auditors as well as any other audit process support requested.
• Preparation of year-end balance sheet, revenue and expenditure and funds flow reports for auditor.
• Provide audit process support; research and resolve issues as they arise.
• Meet with auditor as needed.
• Assistance in budget preparation and analysis.
Here are the services that we offer!
We can provide you with the necessary information in order to choose the right entity for your business needs. There are pros and cons to every occasion.
We are here to help you choose wisely the entity that suits to your business needs. Concentrate on your business growth and allow us to take good care of your company incorporation and much more!
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