Business law in Greece
Business Law in Greece
Greece has a developed legal system that regulates various aspects of business, offering a mix of traditional laws and European Union (EU) regulations. It has a stable business environment that is particularly attractive for foreign investment due to its strategic location in Europe, access to EU markets, and attractive tax incentives. The legal framework for business in Greece consists of Greek national laws, EU directives, and international treaties.
Here's an overview of the key aspects of business law in Greece:
1. Legal System
Greece's legal system is based on civil law, influenced by Roman law and French legal traditions. Business law is largely codified, with statutory laws being the primary source of regulation. Key sources of business law include:
- The Greek Constitution: Establishes the legal framework and guarantees basic economic rights and freedoms.
- Greek Civil Code: Regulates contracts, property rights, and civil matters.
- Commercial Code (Code of Commerce): Governs business practices, including company formation, partnerships, and trade regulations.
- European Union Legislation: As a member of the EU, Greece follows EU directives and regulations in areas such as competition law, consumer protection, intellectual property, and corporate governance.
2. Types of Business Entities in Greece
Greece offers various forms of business structures, each with different legal and tax implications. The most common forms are:
a. Sole Proprietorship (Individual Business)
- A sole proprietorship is the simplest form of business structure, where an individual runs the business alone and is personally liable for its debts and obligations.
- It does not require formal incorporation but must register with the Tax Authority for a Tax Identification Number (TIN).
b. Partnerships
- General Partnership (OE): A partnership where all partners share equal responsibility for the management and liabilities of the business. Each partner has unlimited liability for the debts of the business.
- Limited Partnership (EE): Similar to a general partnership, but with at least one general partner with unlimited liability and at least one limited partner whose liability is limited to their capital contribution.
- Partnerships must be registered with the Greek Chamber of Commerce.
c. Limited Liability Company (LLC) – EPE (Eteria Periorismenis Efthinis)
- An EPE is a popular choice for small to medium-sized businesses. It combines limited liability protection with a relatively simple corporate structure.
- Shareholders’ liability is limited to their contributions to the company.
- At least one director is required, and the company must be registered with the Greek Chamber of Commerce.
- The minimum capital requirement for an EPE is €1 (though practical capital is usually higher).
d. Private Limited Liability Company (A.E.)
- The A.E. (Anonymous Company) is the most common structure for large companies, especially those wishing to raise capital through the issuance of shares.
- Shareholders’ liability is limited to their contributions.
- The minimum share capital requirement for an A.E. is €24,000.
- This structure requires at least three shareholders and one director.
e. Public Limited Company (S.A.)
- A S.A. is a public limited company that can issue shares to the public and is listed on the stock exchange.
- The minimum share capital for a public limited company is €60,000.
- It is regulated by the Hellenic Capital Market Commission (HCMC).
f. Branch of a Foreign Company
- Foreign companies can establish a branch in Greece. A branch is not a separate legal entity, but part of the parent company.
- The branch must be registered with the Greek Chamber of Commerce, and its activities must comply with local regulations.
g. Cooperative Societies
- Cooperatives are legal entities formed by a group of individuals or businesses aiming to achieve a common economic goal (e.g., in agriculture or trade).
- These entities are governed by the Cooperatives Law.
3. Business Registration and Licensing
Before a business can legally operate in Greece, it must be properly registered and obtain necessary licenses:
- Company Registration: All businesses, except sole proprietorships, must register with the Greek Chamber of Commerce.
- Tax Registration: Businesses must register with the Greek Tax Authority (AADE) to obtain a Tax Identification Number (TIN). For foreign entities, this step is mandatory to comply with tax laws.
- Sector-Specific Licenses: Depending on the nature of the business, specific licenses may be required. For example, businesses in banking, insurance, and gambling are regulated by specific authorities such as the Bank of Greece and the Hellenic Gaming Commission.
4. Taxation in Greece
Greece has a comprehensive tax system that applies to businesses operating within the country. Key taxes include:
a. Corporate Income Tax
- The corporate tax rate in Greece is 22% for most companies.
- Small businesses with annual revenues under €2 million may benefit from reduced tax rates under certain conditions.
- Companies that qualify as small and medium-sized enterprises (SMEs) may also benefit from specific tax incentives.
b. Value Added Tax (VAT)
- Greece applies a Value Added Tax (VAT) system, in line with EU regulations. The standard VAT rate is 24%, with reduced rates of 13% and 6% for certain goods and services, such as food and medicines.
c. Withholding Taxes
- Greece imposes withholding tax on certain payments, including dividends (5%), interest (15%), and royalties (20%).
d. Tax Incentives
- Greece offers various tax incentives to encourage investment in certain sectors, such as tourism, renewable energy, and technology.
- Tax credits and other incentives are available to businesses involved in research and development (R&D) or innovation.
e. Social Security Contributions
- Both employers and employees contribute to social security in Greece. These contributions fund pensions, health insurance, and other welfare benefits.
- The total contribution rate is approximately 40% of the employee’s salary, shared between the employer and the employee.
5. Labor Laws and Employment
Greece has extensive labor laws to protect employees while allowing businesses to operate efficiently. Some key features include:
a. Employment Contracts
- Employment contracts are mandatory in Greece and must specify the terms of employment, including job responsibilities, salary, and working hours.
- Employment contracts can be fixed-term or indefinite, depending on the nature of the work.
b. Working Hours and Overtime
- The standard working week in Greece is 40 hours (8 hours per day, 5 days per week).
- Employees are entitled to overtime pay for hours worked beyond the standard working time.
c. Paid Leave
- Employees are entitled to at least 20 days of paid annual leave.
- In addition to annual leave, employees are entitled to 13 public holidays each year.
d. Termination of Employment
- Employees can be terminated for just cause (e.g., misconduct, poor performance) or through mutual agreement.
- Severance pay is required in cases of dismissal without just cause, and the amount depends on the length of service and the employee's salary.
6. Intellectual Property (IP) Protection
Greece follows international intellectual property (IP) standards and EU regulations to protect trademarks, patents, copyrights, and industrial designs. Key laws include:
- The Greek Industrial Property Law governs patents and trademarks in Greece.
- Copyright Law protects literary, artistic, and other creative works.
- The European Patent Convention is implemented in Greece for patent protection.
7. Dispute Resolution
Greece has a well-established judicial system for resolving business disputes. Options include:
a. Court System
- The Greek Civil Courts handle most business disputes, including contract disputes, commercial disputes, and property disputes.
- For disputes involving companies, the Commercial Court has jurisdiction.
b. Arbitration and Mediation
- Greece is a signatory to the New York Convention on Arbitration, allowing for international arbitration.
- The Athens Chamber of Commerce and Industry (ACCI) provides alternative dispute resolution mechanisms, including mediation and arbitration.
Conclusion
Business law in Greece offers a stable and regulated environment for both local and international businesses. Greece’s legal system ensures compliance with EU regulations, offering protection for investors, intellectual property rights, and labor laws. The attractive tax incentives, strategic location, and access to the EU market make Greece an appealing destination for businesses, especially in sectors such as tourism, shipping, manufacturing, and technology.
RELATED Blog
0 comments