In order to attract foreign investors, Greece has signed treaties of anti-avoidance of double taxation with numerous states, such as Albania, Armenia, Austria, Azerbaijan, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Hungary, Iceland, India, Ireland, Israel, Italy, Korea, Kuwait, Latvia, Lithuania, Luxembourg, Malta, Mexico, Moldova, Morocco, Netherlands, Norway, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Serbia, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Tunisia, Turkey, United Kingdom, Ukraine, United States of America and Uzbekistan. Many drafts are still waiting to be signed by the Greek Minister of Finance.
In order to apply the provisions of the treaties, the investors must follow the regulation of the procedure adopted in 1985 by the Greek Minister of Finance, the Tax-Refund system.
The investor must submit a proving certificate stating that the applicant is already a tax payer in the country of origin, a declaration from the payer stating that he’s the beneficial owner of the income and other documents that might be considered relevant by the Greek tax authorities.
The regulations of a double tax treaty have priority ahead the local tax laws and other Greek laws.
The corporate tax of 20% can be refunded if paid or can be not charged at the source, depending on the provisions signed between the countries. Usually, the second method is used and the profits are taxed only in the country of origin.
The withholding taxes on dividends, interest and royalties are also affected by the provisions if various double tax treaties. Usually the royalties and dividends paid to a non-resident are taxed with 25%, while the interests paid to a non-resident are taxed with 40%.
The provisions of the treaties are minimizing these taxes and in certain cases the dividends, interests and royalties are even exempt from taxation.
The above provisions may encourage the tax evasion so special treaties regarding the tax information exchange are signed every year between Greece and other countries. Besides these treaties, special provisions are stipulated at the end of each treaty regarding this matter. This way, the participant countries knows exactly which entities are paying taxes and which don’t.