What To Consider When Starting A Business In Greece 2024

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.

 

Legal And Regulatory Framework

 

Greece has made substantial reforms to simplify the process of starting a business, making it an attractive destination for entrepreneurs and investors. The government’s official website provides comprehensive guidance on the current legal framework, making the process transparent and accessible.

Entrepreneurs can choose from several business structures. The Limited Liability Company (EPE) is popular among small to medium enterprises due to its minimal capital requirement of €4,500 and limited liability protection. The Private Company (IKE) offers greater structural flexibility with a minimum capital requirement of €10,000.

For larger enterprises, the Public Limited Company (AE) is suitable, requiring a minimum capital of €60,000 and offering the potential to raise capital via the stock market.

The registration process has been streamlined and allows businesses to register electronically via the General Commercial Registry (GEMI). This online platform simplifies the process by consolidating various registrations into a single step, requiring a valid Tax Identification Number (TIN) and an active TAXIS system login.

 

 

Taxation And Financial Management

 

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

 

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.