Investment in Greece Updates

UPDATES

Numerous amendments have been introduced since the publication of the8th edition of Investment in Greece at the end of March 2011 and evenmore fundamental changes are expected by the end of 2012.

The 9th edition is anticipated to be issued in the first part of 2013 in orderto incorporate the next wave of changes as well. In the meantime anddue to the number and nature of the various measures introduced overthe last year or so (the most important of which we have highlighted inour Tax Newsletters and Newsflashes), this Addendum summarizing themost important interim changes has been issued.

The intention for this Addendum, as for the Guide, is for all relevantinvestment areas to be covered in a succinct and informative manner.However, the information provided can only be general in nature andcannot provide the comprehensive and detailed guidance necessary toformulate specific investment decisions. As stated, relevant legislationand detailed regulations are subject to change.

KPMG would be pleased to assist you to evaluate and implement yourinvestment plans. For details on services available and how to contactKPMG in Greece, please see Appendix 5 of the Guide.

Every effort has been made to ensure that the information provided in thisAddendum is current as of 30 September 2012.

Addendum to8th EditionKPMG Certified Auditors AE30 September 2012

Preface to Addendumto 8th Edition

Preface | 3

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4 | Investment in Greece

On page 28, under Strategic Investments under Law 3894/2010 thefirst two bullets and the fourth bullet read are replaced by the following:

the investment exceeds EUR 100 000 000,

the investment exceeds EUR 40 000 000 and at least 120 newemployment positions are created,

150 new long term employment positions to be created

On page 33, under Mergers the second and third sentences of the firstparagraph are replaced by the following:

The application of this law was extended indefinitely in 2012.

Also on page 34, at the end of the second last paragraph, the words

and the disadvantage that the absorbing company waives its right toutilize existing tax losses.

are deleted.

Chapter 2

Opportunities for international investors

On page 47, all paragraphs under Formation of an AE are replaced by the following:

All actions required for the establishment are carried out by a NotaryPublic who is considered as a One Stop Authority, including for thepurposes of making most payments and submitting all documents andapplications to the authorities involved in the establishment. The OneStop Authority interfaces with the other authorities as applicable andshort deadlines apply for the completion of the procedures.

In general, the following are required:

Preparation and signature by the founders before a Notary Public ofArticles of Incorporation which must include provisions relating to the:

- Corporate name: this must necessarily include the words "AnonymosEteria".

- Duration of the corporation: the length is not prescribed but it usuallyvaries from 20 to 50 years which may later be extended.

- Corporate purpose (objects of activity).

- Share capital and the number and nature (registered or bearer) of theshares to be issued.

- Composition, operation and authorities of the Board of Directors andof the General Meeting of the shareholders.

Payment of certain amounts to the One Stop Authority to be furtherpaid to public authorities (capital concentration tax equal to 1% of thecapital, etc).

Registration of the corporation with the General Commercial Registry.

Receiving establishment approval from the Ministry of RegionalDevelopment and Competitiveness (only for specific corporations suchas Banks, insurance companies etc.).

Publication of the establishment in the Government Gazette.

Chapter 4

Business entities

Chapter 4 | Business entities | 5

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The corporations establishment for corporate law purposes isconsidered to have been completed upon the registration of theCorporation with the General Commercial Registry.

The Articles of Incorporation of an AE can be executed by one or morefounding shareholder(s), either individuals or legal entities. Ifincorporated by more than one shareholders, all its shares may besubsequently held by one shareholder.

On page 54, under Compulsory publication the third paragraph isreplaced by the following:

The balance sheet and the profit and loss account together with theauditors' report (required only when the audited company isobligatorily audited by a certified auditor), must be published in theGovernment Gazette and in one daily financial newspaper at least 20days prior to the day on which the general meeting of theshareholders is to be held. Alternatively, the financial statements canbe posted on the Companys website (if the Company has notified thesupervising authorities of the details of its website).

On page 55 under Government supervision the second and thirdparagraphs are replaced by the following:

All other AEs are not subject to government supervision at the time ofestablishment. Following establishment, government supervision oversuch AEs is exercised by the General Commercial Registry togetherwith the local Regions (Peripheries).

Some aspects of the government supervision exercised overcorporations include the following:

Actual payment of share capital is certified by the General CommercialRegistrys or Region's officials (as applicable).

Increases and decreases of share capital, as well as any amendmentto the Articles of Incorporation, must be registered with the relevantsupervising authority. For companies whose capital is higher than EUR3 million or for certain categories (banking institutions, insurancecompanies etc.) amendments to the Articles of Incorporation needapproval of the General Commercial Registry or Region.

The Ministry or Region may apply to the courts to arrange for a specialaudit of the corporation under the conditions prescribed by law.

On page 56, under Formation of an EPE the first paragraph is replacedby the following:

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Similarly to AE companies, all actions required for the establishment ofEPE companies are carried out by the Notary Public who is consideredas the One Stop Authority, including for the purposes of making mostpayments and submitting all documents and applications to theauthorities involved in the establishment. An EPE is formed byexecuting the Articles of Incorporation before a Notary Public,payment of the capital concentration tax of 1% and then filing of theArticles with the General Commercial Registry, with the establishmentalso being published in the Government Gazette.

On page 58, all paragraphs under Compulsory publicationare replaced by the following:

The documents concerning amendments of the Articles ofIncorporation and the administrators must be filed with the GeneralCommercial Registry and published in the Government Gazette.

Copies of the financial statements, the administrators' report and theauditors' report (where applicable) must also be filed with the relevantsupervising authority. The financial statements of an EPE (with theexception of the Notes to the financial statements) and the auditors'report (where applicable) must be posted on the EPEs website and ifthere is no such website they must be published in the GovernmentGazette and in one financial newspaper.

On page 59, under Branch the first, third and sixth paragraphs arereplaced by the following:

A branch of a foreign company may be established in Greece throughregistration with the General Commercial Registry. For this purpose,certain documents must be filed with the General CommercialRegistry, including the Articles of Incorporation of the foreigncompany, a certificate of good standing issued by the foreigncompanys competent supervising authority, a resolution of the foreigncompanys competent corporate body approving the establishment ofa branch in Greece, a Power of Attorney appointing the branch's legalrepresentative and the person authorized to receive correspondence.

The branch is administered by an individual (representative) appointedby the foreign company by virtue of a Power of Attorney. The legalrepresentative's personal data and documents detailing responsibilitiesmust be filed with the General Commercial Registry. If the individualappointed as the legal representative of the branch is not an EUcitizen, he must secure a Greek residence permit. The establishmentof the branch and certain details concerning its object of activities,

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registered address at legal representative must be published in theGovernment Gazette.

A branch must file a copy of the financial statements of its head officeannually with the General Commercial Registry. Depending on sizecriteria and/or industry (for example banking and finance institutions,insurance), branches are subject to audit by certified auditors andcertain publication requirements.

On page 61, under General Partnership - Omorythmos Eteria (OE)the second paragraph is replaced by the following:

The Articles of Association of a partnership need not be signed beforea Notary Public and may take the form of a private agreement.General Partnerships are established through One Stop Authorities(General Commercial Registry of the Chamber of Commerce etc.) andtheir Articles of Incorporation are filed with this Registry. Underparticular circumstances a summary of OE articles may need to bepublished in the Government Gazette.

At the end of page 62, a new section called Private Capital Company Idiotiki Kefalaiouhiki Eteria (IKE) is inserted as follows:

A Private Capital Company (Idiotiki Kefalaiouhiki Eteria) is exclusivelyliable for its corporate debts, whereas the liability of its partners forcorporate debts towards third parties is limited to the amountsspecifically mentioned in its Articles of Association.

The Articles of Incorporation of a private capital company must takethe form of a notary deed only in certain cases; otherwise a privateagreement is sufficient. Private Capital Companies are establishedthrough the General Commercial Registry of the Chamber ofCommerce and their Articles of Incorporation are filed with thisRegistry.

The minimum capital is EUR 1 and can be contributed in cash or inkind, in the form of personal services to the firm, or in the form ofguarantees/liability undertaken by the partners towards third parties.

The affairs of the company are administered by one or moreadministrators and the accounting period is the same as thatpreviously described for AEs.

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On page 70, under Deductibility of payments to residents of non-cooperating countries or of countries with preferential tax treatmentthe first sentence of the last paragraph is replaced by the following (theunderlined words are added):

For income tax purposes, an individual or an entity is considered toenjoy a preferential tax treatment in a country outside Greece, if theyare not subject to any tax in that country or although subject to tax, arenot actually taxed, or are subject to tax at a rate which is equal to or lessthan 60% of the rate which would be applicable to their income in casethey were resident in or had their registered address or a permanentestablishment in Greece.

On page 71, the second paragraph under the heading Filing of the taxreturn is deleted and after this heading, a new section called Annual TaxAudit Certificate issued by Certified Auditors is inserted as follows:

AE and EPE companies which are obliged to be audited by certifiedauditors must have an Annual Tax Audit Certificate issued by theircertified auditor who verifies the companys tax position after carrying outspecial audit procedures. The Certificate is submitted by the Auditor to thecompany within 10 days of the income tax return filing deadline and to theGeneral Secretariat Information Systems (GSIS) of the Ministry of Financewithin 10 days of the approval of the Companys accounts by its GeneralAssembly of Shareholders. If the certificate does not include anyqualifications then the tax authorities will not carry out a tax audit unlessthe company falls within the sample of at least 9% of the companieswhich were audited by Certified Auditors (cases will be selected to beaudited by the tax authorities based on criteria set by the Ministry ofFinance in accordance with the provisions of Article 80 of Law3842/2010). Such criteria will include the companys legal form, thecategory of books, the gross revenues, the place of operations etc.

Apart from the companies selected for audit based on the sampleabove, the Ministry of Finance may conduct regular audits on an

Chapter 5

Business taxation

Chapter 5 | Business taxation | 9

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additional number of companies in certain cases (such as in case ofissuance of fictitious tax records, transfer pricing infringements,criminal proceedings for money laundering actions against membersof the Board of Directors etc.).

Strict penalties may be applied on both the companies and theauditors for violations and/or non-compliance.

On page 77, under Investment income a third paragraph is inserted asfollows:

The sale of government or corporate bonds at a price higher thantheir acquisition cost is considered investment income.

On page 78, under Interest a new paragraph is inserted as follows:

Special tax provisions were introduced in relation to the new bondsreceived by investors participating in the Private Sector Involvement(PSI) in the course of restructuring Greeces debt, summarized asfollows:

The new bonds are considered to be a continuation of the bondssurrendered. Therefore, the exemption from income tax on interest isapplicable in case the bond holder is a foreign resident.

Interest on bonds issued by the European Financial Stability Facility(EFSF) have the same tax treatment as the interest on bonds of GreekState, i.e. they are exempt from income tax for foreign residents.

Financial instruments issued by the Greek State within the context ofPSI (whose return is linked to the Gross National Product) areconsidered as derivatives.

The loss arising from the exchange of Greek State bonds or corporatebonds in the context of PSI is tax deductible in equal annualinstallments over the life of the bonds received in exchange.

Any withholding tax on interest on Greek State Bonds, Treasury Billsand corporate bonds that has not been recovered and appears in thebooks of banks in 2010 onwards.

On page 79, under Tax on stock exchange transactions the lastparagraph is replaced by the following:

The sale of listed shares acquired from 1 January 2013 will not betaxed as above and any profits (gains) arising from the sale of listedshares will be taxed according to the general provisions of tax law, andany losses will be tax deductible.

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On page 85 under Overview the last three paragraphs are replaced bythe following:

An individual is considered to be resident (domiciled) in Greece if heresides in Greece for more than 183 days in total within the calendaryear. Residence (permanent) is assumed to exist unless the taxpayercan prove the opposite.

Non-Greek tax residents, need to file with the Non-Greek Resident TaxOffice the following documentation:

Where the individual is tax resident (i.e., taxed on his/her worldwideincome) in a country with which Greece has concluded a DoubleTaxation Treaty (DTT), the individual should file a tax residencecertificate in a form which is determined by the applicable DTT andissued by the competent authorities of the treaty country (anexception exists for the United States and Turkey which issue taxresidence certificates of a different type);

Where the individual is tax resident (i.e., taxed on his/her worldwideincome) in a country with which Greece has not concluded a DTT (anon-treaty country), the individual should file the followingdocumentation with the Greek tax authorities:

a) an income tax return filed with the tax authorities of the individualsnon-treaty home country (provided that such a filing obligation existsin that home country), or

b)a certificate issued by the competent authorities of the non-treatyhome country (i.e., tax authorities or municipal authorities, etc.),which should certify the worldwide income of the individual, aswell as the permanent residence status of both the individual andhis or her family members (i.e., spouse and children), in order toprove that the individual has strong bonds with the non-treaty homecountry.

If the individual wishes to transfer his residence to another country, heis obliged to provide evidence/documentation to be determined by the

Chapter 6

Taxation of individuals

Chapter 6 | Taxation of individuals | 11

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Ministry of Finance (in practice such requestedevidence/documentation amongst others is in the form of a taxresidence certificate issued by the authorities of respective country).

An individual who has been Greek tax resident cannot be consideredto have changed his tax residence and become a tax resident of acountry included in the list of non cooperating countries issued by theMinistry of Finance. Furthermore, an individual who has been Greektax resident for five consecutive years and wishes to transfer hisresidence or usual residence to a country with a preferential taxregime and has in Greece substantial financial interests is consideredto be subject to tax in Greece for his global income for a period of fiveyears after the change in residence. This period commences from thefiling of the declaration for the change of the residence.

On page 86, the second sentence of the last paragraph of the sectionunder Basic Principles is replaced as follows:

For other foreign tax resident individuals, the progressive income taxrates commence at 10% and not 0%, while they are not entitled todeductions from taxable income or tax credits available to Greek taxresidents.

In the same paragraph, the last sentence as follows is deleted:

A 1.5% discount or EUR 118 (whichever is lower) is granted if theannual income tax return is filed electronically (through the internet).

On page 87 under Determination of the income tax liability allparagraphs under the subheading Deductible expenses are replacedby the following:

The following expenses of a personal nature are deductible oncondition that appropriate receipts exist:

employees share of obligatory social security contributions paid tosocial security funds established by law;

10% of the amount of sponsorship to cultural non for profit entities asdetermined by Law 3525/2007;

20% or 40% (depending on specific conditions) of the amount ofinvestment for film productions.

On page 87 all paragraphs under the subheading Tax creditsare replaced by the following:

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The tax payable is decreased by 10% of:

Total annual amount of medical and hospital care expenses; up to EUR3 000.

Annual rent for the primary residence of the taxpayer and his family;up to EUR 100.

Annual rent for the accommodation of children attending courses inapproved schools; up to EUR 100.

Annual expense for the taxpayer and dependent children for privatelessons at home or for tuition of any recognized educational level orforeign language; up to EUR 100.

Interest on loans granted for the acquisition of a primary residence ofup to 120 sq.m. The amount of interest recognized for this purpose islimited to interest payments corresponding to a loan principal of up toEUR 200 000.

Interest on loans granted for the restoration, repair and maintenanceof buildings which are considered as preservable or are located intraditional areas, for loans up to EUR 200 000;

Life, health and personal accident insurance premiums up to EUR 120for single taxpayers and EUR 240 for families.

Alimony paid to ex spouses; up to EUR 1 500.

The value of medical equipment and ambulances donated to state ormunicipal hospitals;

Cash donations to the State, municipalities and certain other localinstitutions (religious, philanthropic, educational, medical) whichexceed the amount of EUR 100. The amount of expense recognizedfor this purpose cannot exceed 10% of total taxable income;

Cash donations to charitable institutions and non for profit entitieswhich exceed the amount of EUR 100. The total amount of expenserecognized for this purpose cannot exceed 10% of total taxableincome;

Amount of obligatory social security contributions paid by non salariedindividuals to funds established by law;

Total amount of expenses for the energy upgrading of a building whichare made within the framework of the business programEnvironment Sustainable development according to the provisionsof Law 3614/2007 and Law 3661/2007 for the energy inspection ofbuildings; up to EUR 300.


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an amount equal to 20% of the cash donation for the settlement ofthe state deficit;

an amount equal to twice the amount of rental payment made tocertain businesses.

Cash donations and sponsorships exceeding EUR 300 must generallybe deposited with a bank or the Fund of Deposits and Loans (notapplicable for donations to the State).

The tax payable is also decreased by EUR 60 for each child for ataxpayer who earns employment income on condition that he offershis services in or resides for at least nine (9) months within the taxableyear in certain border areas of Greece.

On page 88 under the subheading Income tax scale/Tax rates the firstparagraph and table are replaced by the following:

The income tax scale and corresponding tax rates for individuals (self-employed/free-lancers as well as employees and pensioners) are asfollows for 2012 (amounts in Euro):

Income bracket Tax rate Tax per Aggregate Aggregate bracket income tax

First 5 000 Exempt 0 5 000 0

Next 7 000 10% 700 12 000 700

Next 4 000 18% 720 16 000 1 420

Next 10 000 25% 2 500 26 000 3 920

Next 14 000 35% 4 900 40 000 8 820

Next 20 000 38% 7 600 60 000 16 420

Next 40 000 40% 16 000 100 000 32 420

Exceeding 100 000 45%

On page 89 the third and subsequent paragraphs are replaced by thefollowing:

The amount of receipts required is calculated at 25% of the taxpayersdeclared income which is taxable according to the general provisionsfor income up to EUR 60 000 (i.e. maximum amount of receiptsrequired EUR 15 000 per taxpayer). In case the value of submitted

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expenses (receipts) does not reach the required amount, a tax penaltyat the rate of 10% is imposed on the difference.

The tax-free amount of the first income bracket is increased by EUR 2000 for each of the first two children of the taxpayer, by EUR 3 000 foreach child above two. The Tax-free amount of the first income bracketis increased by EUR 2 000 which is considered as expenses withoutsupporting documentation if the taxpayer and/or his dependants aredisabled, blind, or war victims.

A supplementary tax is computed at the rate of 1.5% or 3% on grossrental income from real estate that is taxable. The 3% rate applieswhere the real estate is used for residential purposes and exceeds300 square meters or in case of commercial lease agreements.Foreign residents are taxed on the basis of the above income taxscales but they must pay tax at the rate of 10% on the first EUR 5 000of their income (except for EU residents earning over 90% of theirincome in Greece).

On page 90 under the heading Return filing and payment proceduresa new paragraph is inserted after the first paragraph as follows:

For 2012 filing season (for income earned during 2011) electronic filingwas obligatory for taxpayers whose total income exceeded EUR 12 000.

The third and fourth paragraphs of page 90 are replaced by the following:

A 1.5% discount is granted if the tax assessed is paid in a lump sumwithin the deadline for the payment of the first installment. Anadditional discount if the return is filed through the Internet is nolonger given.

The tax assessment will include an amount equal to 55% of therelevant year's tax payable as an advance against the following year'stax. An exemption from the advance tax applies only if:

(a) the amount of advance tax does not exceed EUR 30;

(b) the income declared includes only employment income and incomearising for the owner occupying his own residential real estate.

Also on page 90, all the paragraphs under Illustrative tax computationare replaced by the following:

The Illustrative tax computation for income earned in 2012

Assumptions:


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Salaried residents living in Athens insured for social security purposesafter 1992 for the first time, married with two children whose spousehas no taxable income with living expenses enabling them to fullyutilize the tax free bracket. Annual salary of EUR 41 000. For thepurposes of this computation no tax has been withheld at source.

Euro

Gross annual salary 41 000.00

Less Social security contributions (16.50%) (6 765.00)

Taxable income 34 235.00

Calculation of income tax payable: Euro

Tax free bracket corresponding to two children of EUR 9 000 (i.e EUR 5 000 plus EUR 4 000) Exempt

10% tax on EUR 3 000 300.00

18% tax on EUR 4 000 720.00

25% tax on EUR 10 000 2 500.00

35% tax on remaining EUR 8 235.00 2 882.25

Income tax thereon 6 402.25

Income tax payable 6 402.25

On page 91 under Income tax withholding on salaries in the secondsentence of the first paragraph the rate of tax withholding of 30% isreplaced by 45%.

On page 92, the second full paragraph is replaced by the following:

As of 1 January 2012, remuneration paid to administrators of an EPEand fees paid to Board members of an AE out of corporate profits aresubject to a withholding tax at the rate of 25%. The 25% withholdingextinguishes the income tax liability of the recipient of theremuneration/fees.

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Before the section Professional income two new sections calledSolidarity contribution and Annual entrepreneurship duty areinserted as follows:

Solidarity contributionA solidarity contribution was introduced in 2011 and it is imposed onindividuals with annual income exceeding EUR 12 000. The applicablerates range from 1% to 4% (the highest rate is imposed on incomeexceeding EUR 100 001). The contribution is imposed on the totalincome reported not taking into consideration any tax credits ordeductions stipulated under Greek tax law. A solidarity contribution atthe rate of 5% applies to high ranking state officers (i.e. the Presidentof the Parliament, Ministers, General and Special MinisterialSecretaries). A special contribution is imposed on private cars whoseccs exceed 1,929, on pleasure boats, swimming pools etc.

The solidarity contribution is imposed on income earned in financialyears 2010, 2011, 2012, 2013 and 2014 (fiscal years 2011, 2012, 2013,2014 and 2015 respectively).

Furthermore, employers are also obliged to withhold and remit to theGreek tax authorities the special solidarity contribution via payroll as ofJanuary 2012 onwards. Employers normally calculate the specialsolidarity contribution corresponding to the total annual remunerationof each employee and then withhold and remit to tax authorities theamount corresponding to the monthly remuneration of the employee.

Annual entrepreneurship dutyAn Annual entrepreneurship duty of EUR 400 is imposed on enterprisesand freelancers having their registered seat in a town or village with apopulation of up to 200 000 residents. The above annual duty is EUR500 for freelancers and enterprises having their registered seat in areaswith a population exceeding 200 000 residents. Moreover, an annualentrepreneurship duty of EUR 300 is also imposed on branch operationsof such enterprises/freelancers. Exemption from the above duty isprovided for freelancers and enterprises having their registered seat inareas with a population of up to 500 residents and on islands with apopulation of under 3 100 residents. Moreover, an exemption from theabove obligation is provided for sole traders and freelancers for the firstfive years of their business activity as well as for professionals for threeyears prior to their retirement.

On page 93 all the paragraphs under Dividends are replaced by thefollowing:


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As of 1 January 2012 a withholding tax of 25% is imposed ondividends of Greek corporations. The 25% withholding extinguishesany further income tax liability. The same treatment applies todividends received from foreign entities. The 25% withholding tax isimposed on the net amount of the dividend (i.e. gross amount offoreign dividend minus foreign tax paid).

On page 94 the first paragraph under Capital gains tax is replaced bythe following:

Capital gains tax, as discussed in Chapter 5, also applies to individualsexcept that capital gains on the transfer (sale) of private assets(excluding shares or participations in partnerships or EPEs) are nottaxable. Capital gains tax imposed on individuals is a final tax with theexemption of capital gains from the transfer of corporate and Greekstate bonds effected as of 29 February 2012, which are subject to awithholding tax at a rate of 20%. Notwithstanding the rates set out inChapter 5, it should be noted that the transfer of individual enterprisesor participations in partnerships between relatives is subject to thefollowing lower capital gains tax rates:

On page 96 under Foreign employees the last sentence of the firstparagraph is deleted. It reads as follows:

For expatriate employees, it has been possible for items such ascompany provided housing and school fees to be non-taxablereimbursement given that they offset costs of the expatriates due torelocation.

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On page 97, under Wage regulations/Labor Agreements the firstparagraph is replaced by the following:

Minimum rates of pay are set each year (or every two years) by theNational General Collective Labor Agreement. However, in accordancewith announcements of the Greek government in 2012, the method ofdetermination of the minimum rates of pay is anticipated to beamended as of April 2013. Certain industries and trades haveestablished their own Collective Labor Agreements (CLAs) whichprovide their own minimum wage and salary rates on the basis of thenumber of years of service (Sectorial or Professional CLAs). However,since February 2012, when major amendments to Greek employmentlegislation were introduced, the majority of Sectorial/ProfessionalCLAs have expired and no new Sectorial/Professional CLAs have beenconcluded. Further, Business CLAs, which apply to the employees of acertain business, can also be concluded to provide for the wages toapply in the specific business. In accordance with the legal frameworkcurrently in force, neither the Sectorial or Professional CLAs nor theBusiness CLAs can set rates of pay lower than those prescribed bythe National General Collective Labor Agreement, but Business CLAscan set rates of pay lower than those prescribed by the Sectorial orProfessional CLAs which would apply to the certain business.

On page 98, under Working hours, vacations, and public holidaysthe first sentence of the first paragraph is replaced by the following:

The working week is generally 40 hours over five days althoughdiscussions are made for the extension of the working week to sixdays.

On page 99, under Overtime the third paragraph is replaced by thefollowing:

During periods of increased demand and following a certain procedureprovided for by law, employees working up to 40 hours may berequested to work two additional hours daily with a corresponding

Chapter 7

Labor

Chapter 7 | Labor | 19

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reduction of working hours in other weeks (the period of increasedand reduced employment cannot exceed six months in total duringtwelve months). Alternatively, it can be agreed between theemployees and the employer that the daily working hours duringcertain periods not exceeding thirty two weeks per year can beincreased by up to 256 working hours per calendar year provided thata corresponding reduction in other weeks is also agreed.

On page 100, under Termination/Dismissals the last paragraph isreplaced by the following:

Dismissal of a female employee during the period of her pregnancy aswell as for a period of eighteen months after the birth of her child orduring her absence for a longer period due to sickness because of thepregnancy or the delivery of the baby is legally invalid, unless thedismissal is for a serious cause and the procedure provided for by theapplicable legislation is followed. The above period of protection canbe extended to twenty one months under certain conditions. Thedeterioration of the employees performance due to the pregnancyitself does not qualify as a serious cause. Termination of employmentby the employer during sickness is not prohibited by law. Duringperiods of sickness and for up to one month depending on theemployees term of service, the employer is obliged to pay all or partof the salary to the employee, whereas a sickness benefit is also paidto the employee by the Greek social security authorities provided thatthe absence from work due to sickness has lasted more than threedays (other conditions must also be met).

On page 101, under Social security system the last paragraph isreplaced by the following:

From time to time, incentives are provided to employers in the form ofreduced contributions or subsidies for the purposes of maintaining orcreating employment positions. Provisions have been introducedobliging employers to make social security contributions on behalf ofdismissed employees under certain conditions.

On page 101, under Foreign employees the first paragraph is replacedby the following:

Foreign employees may, in certain circumstances, be exempt fromregistering with the Greek social security system. For instance, foreignnationals who are insured in EU countries or in non-EU countrieshaving bilateral Social Security Agreements with Greece may be

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temporarily exempt from being insured with a Greek social securityfund on the normal condition that they have been seconded to work inGreece by their employers and they continue to be insured in thecountry of their origin. For persons insured in other EU countries,exemptions can also be provided in other cases based on theprovisions of EU legislation.

On page 102, under Social Security contributions the table isreplaced by the following:

The contributions are calculated on the gross salaries or salary ceilingsat the following rates:

Fund Employer (%) Employee (%) Total (%)

IKA 25.56 13.50 39.06

ETAM 3.00 3.00 6.00

Total 28.56 16.50 45.06

Further, under this heading, a new paragraph is inserted as follows:

Employers social security contributions are anticipated to be reducedshortly.

On page 103, under Pensions the fourth paragraph is replaced by thefollowing:

Following amendments to social security legislation, both the age andthe insured working days required for the proportional pension areincreased on an annual basis until 1 January 2015 when the generalrequirements are the 60th year of age and 12 000 insured workingdays. Based on a recent announcement of the Greek government, the age limit is expected to rise to the 67th year of age.

Also on page 103, all paragraphs under Sickness are replaced by the following:

Persons insured with IKA for at least 90 working days (to increase to 100 working days as of 1 January 2013) during the previous calendaryear or during the previous fifteen months (not taking into account thelast three months of the fifteen-month period in question) are entitled tomedical treatment by IKA doctors free of charge and to dental treatmentat reduced cost. Medicine prescribed by doctors may generally be obtained at reduced prices and, in some cases, free of charge.

Chapter 7 | Labor | 21

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In addition, an insured employee is entitled to collect a sicknessbenefit provided that during the previous calendar year or during theprevious fifteen months (not taking into account the last three monthsof the fifteen-month period in question) he has accumulated at least120 working days. The sickness benefit is equal to half of the deemedwages of the insurance category within which the insured person falls.In the case of sickness, the employer is obliged to pay up to onemonths salary to each employee. However, the amount payable bythe employer is reduced by the relevant amount paid by the SocialSecurity Fund.

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On page 106, under Ownership the third sentence of the firstparagraph is replaced by the following:

For real estate owned by individuals, this tax is levied at progressiverates ranging from 0.2% to 1% of the objective value whereas the taxfree threshold is EUR 200 000 per owner.

Also on page 106, after Ownership a new section called Special dutyon buildings which are supplied by electric power is inserted asfollows:

A special duty in favor of the State is imposed on buildings which aresupplied by electric power and used for residential or commercialpurposes and which are subject to real estate tax on 17 September ofeach year. For the calculation of the special duty, the surface areasprice zone and age of the building as these are mentioned in the utilitybill issued by the Public Power Corporation or by the alternatedistributors of electric power, are taken into consideration with therates ranging from EUR 0.5 per sqm. to EUR 16 per sq.m. dependingon the price zone. The lowest bracket concerns persons who aredisabled or who have three or more children (under certain conditions)who own buildings in areas with price zones up to EUR 3 000 whereasthe highest rate of EUR 16 concerns buildings in areas with pricezones of higher than EUR 5 000. Also, there is a surcharge rate whichcorresponds to the age of the building (from 1 to 1.25).

The amount of the special duty is calculated by multiplying thefollowing: the surface area in sq. meters of the buildings on which theduty of par. 1 of article 24 of Law 2130/1993 (Real Estate Duty) wascalculated by the Public Power Corporation (or the alternatedistributors of electric power), the rate of the special duty whichcorresponds to the price zone of the building and the surcharge ratewhich corresponds to the age of the building.

The special duty burdens the owner of the building and in case ofusufruct, the user. n cases of joint ownership, the duty burdens the

Chapter 8

Acquisition of real estate/Other tenure forms

Chapter 8 | Acquisition of real estate/Other tenure forms | 23

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joint owners in proportion to the percentage ownership of each owner.The user of the building is liable for paying the special duty, which ispayable with the utility bill for the consumption of electric power. Incase the user is a lessee, the payment of such duty by the lessee isconsidered to set off any due or future rents. Any different agreementbetween the parties is not valid.

The special duty is collected by the Public Power Corporation or thealternate distributors of electric power. In case the special duty is notpaid, the Public Power Corporation and the alternate distributors ofelectric power must disconnect the supply of electric power and willreconnect it until the duty is paid.

Certain exemptions from the special duty are provided for buildingswhich belong to the Greek State, State Owned companies, Municipaland Communal Authorities and municipal enterprises, religious legalentities exclusively for buildings which are used for pursuing theirworship, educational, religious and charitable purposes, recognizedforeign religious entities for buildings which are used exclusively forpursuing their religious, church, charitable, educational, art or publicbeneficiary purposes, foreign states in case such buildings are usedfor the establishment of embassies and consulates on condition ofreciprocity etc.

Also, the following are exempted: common or public areas ofapartment buildings and hotels, and buildings which are characterizedas perceivable and are not owner occupied or do not provide incomeas well as buildings which are characterized as historical orarchaeological monuments. Finally, buildings used exclusively foragricultural or animal-breeding or small industry or industrial purposesare exempted.

The special duty is not deductible for income tax purposes.

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Branch AE EPE

Formation/Founders

Minimum number of founders - 1 1

Residence requirements No No No

Articles No Yes/Before Yes/BeforeOne Stop Authority One Stop Authority

Registration Yes Yes Yes

Publication Yes Yes Yes

Shareholders

Minimum number - 1 1

Residence requirements - - -

Meetings - Annual within Annual within6 months 3 months

of year end of year end

Board of Directors/Administrator(s)

Minimum number 1 3 1

Residence Yes Yes Yesrequirements (for at least one) (for at least one) (for at least one)

Meetings - - -

Appendix 3

Summary of CompanyLaw requirements

Appendix 3 | Summary of Company Law requirements | 25

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Appendix 3 on page 117 is replaced by the following:


Branch AE EPE

Shares/Units

Minimum value - EUR 0.30 EUR 30

Maximum value - EUR 100 None

Capital

Minimum None EUR 60 000 EUR 4 500

Accounts

Audit Yes Yes Yes(in selected cases)

Publications No (certain Annual Annualfiling requirements

only)

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F o r f u r t h e r i n f o r m a t i o n p l e a s e c o n t a c t :

KPMG3 Stratigou Tombra StreetAghia Paraskevi, Athens 153 42, GreeceTelephone:+30 210 60 62 100Fax:+30 210 60 62 111

400 esogeion Ave Aghia Paraskevi, Athens 153 42, Greeceel: +30 211 1815600

2 N. Kountouriotou StreetThessaloniki 546 25, GreeceTelephone:+30 2310 550 915Fax:+30 2310 543 670

email: [email protected]/gr

2012 KPMG Certified Auditors AE, a Greek Societe Anonyme and a member firm of theKPMG Network of independent member firms affiliated with KPGM InternationalCooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Greece.

The KPMG name, logo and cutting through complexity are registered trademarks ortrademarks of KPMG International.

Investment in Greece Updates

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