Starting A Business In Greece? Here’s What You Need To Know

Greece is known for its rich cultural heritage and thriving tourism industry. These characteristics, along with its strategic location, make it an attractive destination for starting a business.

There are many reasons why starting a business in Greece is appealing, but it’s important to consider some key factors. Prospective business owners need to understand the current economic climate, navigate the legal and regulatory framework, manage applicable taxes, and comply with labour laws.

Careful planning and informed decision-making are essential for entrepreneurs looking to tap into Greece’s potential.

 

Economic Overview

 

Greece’s economy has shown resilience, bouncing back from the pandemic with impressive growth in 2021 and 2022. However, this momentum has slowed, with growth moderating to around 2% in 2023 according to the European Commission. This pace, while more modest, aligns with pre-pandemic trends and indicates a stable economic environment.

Tourism, a cornerstone of the Greek economy, is experiencing a significant revival, contributing positively to economic recovery. Investment activities are also on the rise, encouraged by government stimulus measures and support from the EU’s Recovery and Resilience Package. These investments are crucial for job creation and stimulating domestic demand.

Nonetheless, the economy faces challenges, particularly from external factors. Rising energy prices, exacerbated by the ongoing conflict in Ukraine, are straining both household budgets and business operations. Additionally, Greece’s high public debt remains a concern, although efforts to reduce the deficit are ongoing and showing progress.

 

The Advantages Of Doing Business In Greece

 

There are several benefits of having a business located in Greece, all of which have made it an attractive option to entrepreneurs. Some of these include:

An expanding economy: The economy of Greece has experienced a recovering and growing phase with an increase in the tourism, shipping, real estate and technology sectors creating plenty of opportunities for investment.

Quality of life: The country has a favourable climate and relatively low cost of living compared to other European nations.

Growth in tech: Supported by domestic and foreign investors, the Greek startup ecosystem is profoundly developing in various sectors, especially in areas like fintech, healthtech and renewable sources of energy.

EU access: Being a member of the European Union, Greece gives access to the EU market with the Euro as its currency, making trade easier with the rest of Europe.

 

 

A Step-By-Step Guide To Setting Up A Business In Greece

 

Step 1: Select Your Business Type And Name

After you have calculated your initial capital requirements, you can choose your business structure depending on the size and activities of your business. The main four options are:

• Private Limited Liability Company (UAB): Ideal for small to medium-sized businesses. Requires a minimum share capital of €2,500.
• Public Limited Liability Company (AB): Ideal for larger businesses, requiring a minimum share capital of €40,000.
• Small Partnership (MB): Consider this for small businesses with a maximum of 10 owners.
• Individual Enterprise (IE): A sole trader with no need to provide any capital upfront.

Once this has been decided, you can choose a name for your business. It must be registered with the Greek General Commercial Registry (GEMI) to protect it.

 

Step 2: Register Your Business

The next step is to register the business with the GEMI. Depending on which sector you will be operating in, you may need additional permits. These usually apply to the tourism, food or health services.

 

Step 3: Apply For A Tax Identification Number

This is a requirement for all businesses to have and issued by the Greek Tax Authority. If you are a foreigner, you may need to provide your passport or a proof of residence for verification.

 

Step 4: Open A Greek Business Bank Account

You will need a business bank account to handle all company transactions. For this step, you will need to provide registration documents for your business, proof of identity and a minimum deposit in order to open the account.

 

Step 5: Register For Social Security

This is a requirement for all business operating in Greece. You will need to register your business and all employees with the Unified Social Security Fund (EFKA).

 

Taxation And Financial Management Considerations

 

Starting a business in Greece involves dealing with a competitive and streamlined tax system. The corporate income tax (CIT) rate has been reduced to 22% for most businesses, positioning Greece favourably compared to other European countries. However, credit institutions face a higher rate of 29%, reflecting the sector-specific taxation policies.

The Value Added Tax (VAT) system in Greece is tiered, with a standard rate of 24% applied to most goods and services. There are reduced rates of 13% and 6% for essential goods and services, providing some financial relief. Additionally, a special VAT regime offers a 30% reduction for businesses operating in certain Aegean islands, aimed at boosting local economies.

Businesses may also encounter other taxes such as withholding taxes on dividends and royalties, property taxes, and special solidarity levies. Understanding these various tax obligations is crucial for financial management and compliance.

Consulting with a tax professional can help ensure that all relevant regulations are met and that the business takes advantage of any available tax benefits.

 

Hiring And Managing Employees In Greece

 

Employment contracts must be written and detail key terms such as salary, working hours, vacation entitlements, and termination conditions.

The standard work week in Greece is 40 hours, with a maximum of 8 hours per day. Overtime is permitted but must be compensated at higher rates and is capped at 150 hours per year.

Employees are entitled to a minimum of 20 days of paid annual leave, which increases with tenure, alongside statutory benefits such as social security contributions covering healthcare, unemployment, and pensions.

Terminations require proper notice, which varies based on the length of service and ranges from one to three months. Severance pay is mandatory for dismissals without cause and is calculated based on the employee’s tenure and salary.

For new businesses, using an Employer of Record (EOR) service can be beneficial. An EOR handles payroll, taxes, and employee benefits administration, simplifying HR management.

In conclusion, Greece presents a promising environment for business ventures, thanks to its rich culture, robust tourism sector, and strategic location. However, starting a business here requires careful consideration of the economic landscape, regulatory requirements, taxation system, and labor laws.

With informed planning and adherence to local regulations, entrepreneurs can successfully navigate these factors and capitalise on Greece’s potential for business growth and success.