Contracting in Greece
Greece is located in Southeast Europe and is known as a crossroads between Europe, Asia, the Middle East and Africa. Ancient Greece is attributed as the cradle of Western Civilization as it is credited with the birth of various aspects of modern day life such as democracy, philosophy, literature, political science, maths and drama.
Greece is a founding member of the United Nations, has been a member of the European Union since 1981 and has been a member of NATO since 1952 so has a long history as an integral part of Europe. It is also on the council of Europe, is a member of the International Monetary Fund and the World Trade Organisation. Greece adopted the Euro in 2001 replacing its local currency the drachma.
Greece’s economy is the largest in the Balkans, with the service sector and industry being the main contributor. It ranks high for a developed information and communications infrastructure which may be why a number of multinational corporations such as Ericsson, Siemens and Motorola have their regional research and development headquarters there. Greece is one of the most visited countries in Europe and ranks quite high when compared to worldwide destinations and so tourism is also a major contributor. Greece has one of the largest merchant shipping fleets in the world and is a significant exporter of agricultural produce to Europe.
Greece has one of the longest coastlines in the world and consists of approximately 1,400 islands and has numerous ancient historical sites so is a popular place to live for those who like to be by the sea and enjoy culture. Inland you can find beautiful mountain scenery. It is known for its carefree lifestyle and what with having so many islands and being the crossroads between so many continents offers a great many travelling opportunities.
Due to some major projects in Telecommunications, Oil & Gas and IT Greece has been increasing in popularity with international contractors. However, there is a considerable amount of red tape when considering working and moving to Greece which is why Chesterfield’s payroll solutions can be of great comfort to anyone looking to kick back and enjoy the country and the relaxed way of life that Greece has to offer.
The requirements to live and work in Greece differ significantly depending on where you are from.
If you are from a member country of the European Union or the European Economic Area then you do not need a permit to work or live in Greece. However if you intend to stay for more than ninety days you must register at the local Aliens bureau, which are usually found at police stations and they will issue you a certificate of registration. If you reside in Greece for longer than ninety days without registering you will be subject to a fine. This does not cost you anything, the certificate of registration is issued same day and is unlimited.
In order to apply for this you must bring the following documentation;
- Passport or identity card with two copies
- 3 x passport photos
- Proof of medical insurance with two copies
- Certificate from employer if applicable, or proof that you have sufficient finances to support yourself with two copies
- Address verification for your residence in Greece i.e. rental agreement with two copies (if you are staying with someone you must bring a statement from them and documentation to support that this is their residence)
They are quite rigorous with the paperwork and procedure, so do have everything in order before you go and expect this to take some time.
If you stay continuously in Greece for five years or marry a Greek national then you can apply for a Permanent Residence Certificate.
If you are not an EU citizen then it is likely that you will need a Visa to enter Greece, this must be obtained at the Greek Consulate General or Embassy before entering Greece. Certain nationality’s like Americans, Canadians and Australians can visit Greece without a visa providing that their stay does not exceed ninety days in a one hundred and eighty day period. If you are intending to stay for more than ninety days then you will need to apply for the appropriate long stay visa and you will need to apply for a Residence Permit at least two months prior to the expiration of your entrance visa. Certain types of Residence Permits include permission to work and so a separate work permit is not required.
There is a lot of paperwork required for the application for your Residence permit. This paperwork must be in Greek and therefore official foreign documents must be translated by a lawyer, the Greek Foreign Ministry’s Department of Translation or a certified translator. In order to get a work permit in Greece you need to be sponsored by an employer for a specific position, this position has to be one that could not be filled by a Greek or EU applicant. It should be noted that applying for a permit based on this offer can take some time.
Greece, not unlike certain other countries is trying to encourage foreign citizens in a certain wealth bracket to reside in Greece. They have done that by offering non-EU foreign citizens residency permits providing that they purchase property in Greece of a minimum value of 250,000EUR. This is granted for five years, but is renewable providing that the property remains in their possession. There are also residence permits available for individuals who offer certain investment prospects.
Earlier this year Greece amended its tax laws. One of the outcomes of this is that it has reduced its existing eight tax brackets to only three.
- There is no tax free bracket
- Income up to 25,000EUR – 22%
- Income up to 42,000EUR – 32%
- Income exceeding 42,000EUR – 42%
There is a tax credit of 2,100EUR to employee’s with an annual income up to 21,000EUR. This tax credit is also given to employees on an annual income of between 21,000 with the maximum credit of 2,100EUR and 41,500 where it is reduced by 100EUR for every additional 1,000EUR of income over 21,000EUR. There is no tax credit for employees earning an income exceeding 41,500EUR.
There are very few deductions allowed, but some of these include medical and hospital expenses, alimony and donations. Non-Greek tax residents are not eligible for any credits or deductions except for EU citizens who earn more than 90% of their worldwide income in Greece. There is an obligation in Greece to collect living expenses receipts and submit these with your tax return. If you submit your tax return online you should still retain your receipts in case of audit. Failure to produce these receipts will result in a 22% penalty on the outstanding value of receipts not produced. Receipts issued in any EU country will be accepted.
You are considered a permanent resident of Greece if you are domiciled there for at least one hundred and eighty three days within the tax year. In this instance you will be subject to taxation on your worldwide income. If you can submit documents proving that you are resident abroad then you will only be subject to taxation on income earned in Greece.
When working in Greece you must pay social security. EU citizens are entitled to the same social security benefits as a Greek national. Members of your family who are living with you in Greece will also be entitled to the same benefits as family members of a Greek worker. There are also bilateral agreements in place with various non EU countries.
The employers contribution in Greece usually amounts to 28.06% whilst the employee contribution is 16%.
There are various insurance institutions in Greece who handle social security and as there is no single legislative framework governing these conditions and documentation do vary throughout. You must register with an appropriate insurance institute when working in Greece, you will then be able to present your employer with a certificate of registration. You will then have your social security number and be able to obtain a health booklet. Benefits are normally subject to amount of days worked, but these can include periods in another EU Member State.
In order to claim sickness benefit you must present;
- Your personal social security account statement
- Your health booklet
- A statement from your employer detailing the time you have been off work
- A certificate from your doctor that you are unable to work
When referring to the laws applicable to foreign nationals working in Greece there are several regulations to be taken into account;
- The Constitution
- International Treaties
- European directives and regulations
- The Civil Code
- Specific employment laws
- Collective agreements
- Internal company regulations
You are able to choose the law of a different jurisdiction to govern your employment relationship as long as this abides by all mandatory rules, but it should be noted that as there are so many rules in Greek employment legislation this can become very difficult. A written employment contract is generally not necessary in Greece. Although for temporary employees this must be in place.
There are several aspects of the employment that need to be set out by the employer and advised to the employee before work commences. These have Greek legislation that sets out mandatory rules;
- Employers full identity
- Work Location
- Employees position and responsibilities
- Duration of the employment
- Severance and notice obligations –This again depends on how long the employee has worked for the company. If it has been between one and two years then it is one months notice, if this is between two and five years then it is two months notice. The employer has the option to give notice to the employee or terminate immediately, if they terminate immediately then legal severance is due
- Salary and payment terms – by law the annual monthly minimum wage is 683.76EUR
- Bonuses and benefit
- Working hours – by law employees must not work more than a 40 hour week or ten hours a day. Hours over this time must be paid at overtime rates.
- Annual leave – this depends on how many days you work and how long you have worked for the company, but the lowest is usually 20 days. In addition there are four annual paid public holidays Christmas day, the second day of Easter, 15 August, 25 March. The 1 May and the 28 October are optional paid public holidays.
Time off for injury or illness is based on the amount of time you have worked for the company. If it is less than four years this is one month.
Normally there are restricted covenants upon termination concerning what is known as competitive activities. This is when you leave your employment and engage in any of the following;
- Establishing a company that engages in identical activities
- Co-operating with a competitor
- Defaming the previous employers products or services
- Soliciting the employers clients
EU citizens are covered by the EU legislation and can open an account in any other EU-member country providing they can produce the appropriate documentation. The documentation required in Greece is as follows;
- Passport or identity card
- Proof of address
- Statement declaring that the account will not be used for trade
- Copy of tax statement (only if an overdraft is required)
Many banks in Greece will require a minimum opening balance.
Greek banks open Monday to Thursday from 8.00-14.30. They usually close early on a Friday. In some of the larger cities it is possible to find branches that operate weekend hours.
If you require a credit card you will need to produce;
- Passport or Greek identification card
- Tax number (AFM)
- Letter of recommendation from your former bank
It should be noted that in the case of foreigners credit limits on cards are relatively low, but can usually be increased over time providing the account is being used responsibly.
When considering which bank to open your account with it is recommended to look at the service and interest rates first as these can be higher than banks in other countries and can vary quite significantly from bank to bank. Large Greek banks with presents overseas include Alpha Bank, Eurobank Erasias, National Bank of Greece and Piraeus Bank although you will find some familiar names in Greece such as HSBC and Barclays. If you have problems with your bank you can visit the Banking Ombudsman website which is there to deal with complaints.
We have a number of different Umbrella companies to choose from depending on your own personal circumstances. The umbrella company essentially acts as an employer. There are various advantages to this. The umbrella company provides payroll services by billing the agency on behalf of the contractor and then distributing the salary back to the contractor.
Chesterfield are also able to incorporate companies in a number of jurisdictions in order to suit your needs. This is more expensive to set up and maintain than our umbrella or self-employed schemes, but can have its advantages. Once the contract provider or agency has been invoiced for the work and this has been paid into the company bank account the contractor has a choice as to whether they would like to collect their money as dividends or as salary. If they were to choose dividends then in Greece dividends are taxed at 25% withholding tax, which is due to be reduced to 10% come January 2014, and so depending on your tax bracket can offer an attractive alternative.
Chesterfield and contracting in Greece
Chesterfield has years of experience with contractors working in other countries and a variety of schemes and solutions in order to make life easier. You will be given a dedicated member of staff who is responsible for all your administration and contact, allowing them to be more in tune with all your needs and assist you in every way possible.