Greece has announced tax measures intended to increase business liquidity, bolster the country’s economic recovery from the coronavirus pandemic, and attract new investment.
Starting in 2022, businesses will pay a 22 percent corporate tax rate, down from 24 percent, Prime Minister Kyriakos Mitsotakis said during an April 22 teleconference meeting. His New Democracy government previously slashed the rate from 28 percent to 24 percent in late 2019.
Mitsotakis said Greece will also reduce advance tax payments for individuals and businesses, extend the suspension of the solidarity levy for economic recovery, and cut pension contributions by 3 percentage points.
“The government has shown that its constant priority is to reduce taxes before, during, and after the pandemic,” Mitsotakis said. He said the new tax measures will allow companies that suffered economic damage during the pandemic to recoup their losses and grow.
Mitsotakis said starting this year, Greece will reduce advance tax payments for freelancers and self-employed individuals from 100 percent to 55 percent permanently, overturning the increases imposed by the Syriza government in 2015. The government will temporarily reduce advance tax payments for businesses from 100 percent to 70 percent for 2021, he said. From 2022, they will be required to make advance tax payments of 80 percent.
The government will extend to 2022 the suspension of a special solidarity contribution on foreign-source income for private sector workers, with plans to completely phase out the levy in 2023, said Mitsotakis.
The tax plan also extends the reduction of pension contributions by 3 percentage points for private sector employees to 2022, said Mitsotakis.
The reduction in advance tax payments and the corporate tax rate is expected to cost €900 million in 2021 and €200 million annually starting in 2022, according to an April 22 statement from Finance Minister Christos Staikouras. The other measures are expected to cost €1.6 billion in 2022, he said.
Greece’s tourism industry, which generates €30 billion annually, has struggled during the coronavirus lockdowns. In March Greece announced €1 billion in new stimulus measures to support the tourism and leisure industries, along with a €57 billion recovery plan aimed at generating jobs.
Greece has also attempted to lure investment during the pandemic by offering several tax incentives for foreigners and reducing taxes for companies struggling because of the crisis. In the first several months of the pandemic, Greece put €24 billion toward saving jobs in the travel and tourism industry, which included temporary VAT cuts on some products and reduced advance tax payments.