Understanding Payroll in Greece: What Global Companies Need to Know About Greece’s Payroll
Jan 16, 2018
Having held an iconic influence over human history and civilization, Greece is known for its many contributions to modern life, including democracy, the Olympics, and political science. Greece is also home to great natural beauty, ancient architecture, and a modern culture that is teeming with life. With a population of 10.75 million and a GDP of $194.6 billion, Greece has the infrastructure and workforce required by companies looking to expand internationally.
Currently the government and people of Greece are in a state of flux as they navigate a new direction for their economy. Companies looking to set up an international payroll will benefit from a payroll solution provider who understands the cultural and financial institutions and requirements in this historic nation.
Companies must first register their name with the Commercial Chamber, before visiting the Notary Public and the General Commercial Registry to set up their organizations. In addition to the registration fees, businesses must provide their Articles of Association complete with information regarding the location, capital, and shareholders of the company. Non-EU companies will need to open a Greek bank account with a deposit of at least €60,000. Getting a bank account is relatively easy and shouldn't take longer than a couple business days, so long as companies have the proper paperwork. It's recommended that large companies do business in person with well-known bank branches.
Employment Law & Employee Rights
Employers are not required to provide written contracts to employees upon hiring, though they are highly encouraged to do so. Probationary periods are allowed, with the maximum length of time determined by the nature of employment. For those on fixed contracts with a firm start and end date, employers and employees should negotiate the probationary period prior to employment. For indefinite employment periods, probation cannot last longer than one year. Collective bargaining was established in Greece in 2016; however, it's not clear yet if or how it will be practiced among the workforce.
The standard workweek in Greece is 40 hours. Greece has overwork and overtime laws, based on how much additional work is done per week. If an employee works a few extra hours, they qualify for overwork compensation, paid at 120% of their regular wage. Usually, overwork is up to 5 or 8 hours of additional time, depending on the employer and industry. Any additional hours count as overtime and are paid at 140% the normal salary. If an employee works more than 120 overtime hours in a year, overtime compensation is increased to 160% of the regular salary.
Compensation & Severance
The minimum wage in Greece is €684 per month, with the average income being €780 per month. In addition to salary, employers are required to provide both a Christmas and Easter bonus, each equivalent to 50% of an employee's monthly wage. Annual raises are customary, although wage growth is determined on an individual basis by employer and employee. Severance in Greece is dependent on how much notice the employee is given and how long they've been with the company. Employers may pay up to double the amount of severance if they don't give employees the required advanced notice. For example, individuals with five years of service for a company are entitled to at least three months’ notice of termination. The employer may pay just 1.5 months of salary with advanced notice, as opposed to three full months with no advanced notice.
Tax Requirements & Withholding
The corporate tax rate in Greece is 29%, and personal income is taxed on a progressive scale. Employers are required to deduct taxes from the employee paycheck and distribute them to the appropriate tax offices. Social security is usually 27% of income; however, the percentage may be lower depending on your industry. VAT is anywhere from 6 to 24%. Tax exemptions include shares traded on the Athens Stock Exchange, as well as certain income derived from shipping.
|Personal Income||Tax Rate|
|Up to €20,000||22%|
|€20,001 - €30,000||29%|
|€30,001 - €40,000||37%|
|€40,001 and more||45%|
Time Off & Paid Leave
Time off allowances vary in Greece depending on the length of employment and whether the employee works a five- or six-day week as standard. Within the first year of employment, workers receive paid holidays in proportion to the time they’ve worked, meaning they accrue vacation for each month worked, for a total of 20 days for the year (24 days for employees working six-day weeks). In their second year of employment, workers earn 21 days (25 for six-day schedules). Upon commencing their third year of work, employees are entitled to 22 days of paid time off from the very start of the year.
In the case of extended illness, employees are entitled to 15 days off with no pay if they have worked less than a year for the company. If they've worked more than a year, they are to receive up to one month of time off with full pay. Generally, Social Security will pay an ill employee's salary if the employer does not. New mothers receive up to 17 weeks off, with 8 weeks taken prior to giving birth. Employers cover one month of pay if the employee has worked for the company for more than a year. In addition, there are 12 public holidays that employers are expected to cover at full pay.
|Date||Greece Public Holiday Schedule|
|January 1st||New Year's Day|
|7th Monday before Easter||Clean Monday|
|March 25th||Independence Day|
|Friday before Easter||Orthodox Good Friday|
|Monday after Easter||Orthodox Easter Monday|
|May 1st||Labor Day|
|50 days after Easter||Holy Spirit Monday|
|August 15th||Assumption Day|
|October 28th||The Ochi Day|
|December 26th||Synaxis of the Mother of God|
The resilient island of Greece has undergone several changes in recent months, including revised taxation laws and payroll regulations. Working with an experienced global payroll solution that understands and monitors those changes can make all the difference in establishing your international payroll and maintaining compliance.
This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.