ESTABLISHING A COMPANY IN GREECE – Types of companies and the process of the registration
Today, the legal framework as well as the digital reformation of the bureaucratic procedures has led to new, easier ways, of company establishment and companies’ registration in Greece. The procedure of incorporation can even last only one to two business days.
This form of enterprise is easy to set up and gives high flexibility and initiative to the entrepreneur as regards the enterprise decisions. On the other hand, the entrepreneur is wholly responsible for any liability for taxes and debts in general. There is no minimum capital requirement. An individual company requires a pre-approval of the company name and the distinctive title by a relevant confirmation of the competent, depending on the type of the business activity, chamber of commerce. Moreover, it requires insurance with the competent obligatory insurer for all self-employed professionals. The next stage includes the declaration of the commencement of the business activity at the competent tax office, where the company is registered.
The partners of this type of company are jointly responsible against third parties for the company’s obligations. Such responsibility is considered as personal, direct and unlimited. The liability of the partners for the company’s debts is unlimited meaning that partners are liable not only up to their contributions, but also with their individual property. There is no minimum capital requirement for the establishment of a general partnership, since the assets of the company are not distinguished from the partner’s asset and partners are liable with their personal assets for all of the partnership’s obligations.
A general partnership is established digitally at the one-stop shop services, after filling in the standard model Statute with all the basic details of the company.
A limited partnership has the same characteristics with a general partnership, since it is a variant of it. The main difference between a limited partnership and a general partnership is within the scope of responsibility meaning the existence of partners with or without limited personal responsibility and the limitation of the management of the limited partners. A limited partner who has paid out its contribution to the company is not responsible for the partnership’s debt. In the opposite case the partner is responsible up to the amount of their contribution. The same general rules applying to a general partnership must also hold for a limited partnership.
A simpler and more flexible corporate form, namely the Private Company (IKE), has been introduced by Law 4072/2012, which is also the most usual type of corporation in Greece. IKE is a private capital company which has capital and the liability of its members for the company debts, except for those with guarantee contribution, is limited. Participation to a private capital company requires the acquisition of one or more company shares.
The private capital company has capital of at least one (1) Euro. Partners may participate with capital, non-capital or with guarantee contributions. Capital contributions are contributions in cash or in kind. Capital contributions in kind are only allowed when they refer to assets which can be evaluated in cash. There must be at least one company share representing a capital contribution. Non-capital contributions refer to benefits, which cannot be the subject of a capital contribution. These benefits must be specified in the company’s statutes and must be executed for some time or indefinitely. Guarantee contributions are contributions which consist of taking responsibility against.
The ΙΚΕ can be easily established digitally at the one-stop shop services, after filling in the standard model Statute with all the basic details of the company.
A Company Limited by Shares, namely the Société Anonyme, is a capital company with legal personality, which is responsible for its debts with its assets. The company’s capital is divided into shares. Businesses organized as companies limited by shares are typically more significant in financial terms. Shareholders own shares of the company which are either registered or bearer shares. Shareholders are not personally liable and their liability is limited to the amount of their investment. A minimum initial capital of 25,000 Euro is required for the formation of a company limited by shares to be paid entirely or partially. Shareholders’ contributions may be in cash or in kind. The company’s capital is divided into shares, which can be incorporated into equity securities of one or more shares or, with the preconditions of the law, to be intangible. The nominal value of each share cannot be defined to an amount less than four euro cents (0.04) nor more than one hundred (100) Euro. The nominal value must be equal for all shares. All rights deriving from the company’s share must correspond to the percentage of the company’s share capital each share represents.
The S.A. can be easily established digitally at the one-stop shop services, after filling in the standard model Statute with all the basic details of the company.
At the process of registration the digital system requires the payment of the relative fee, depending on the type of company. There is also a yearly fee to the Business Registry according to the type of company, between 20 and 300 euros.
When the establishment is done exclusively through the e-One stop shop service, then the cost of establishment is set at 30% of the Unified Fee Note, i.e. €18.00 for S.A. and I.K.E. and €15,00 for O.E. and E.E. and there is no extra amount for each additional founder irrespective of the total number of founders.
The prices may change according to the regulations, although they are more or less the ones mentioned.
Βefore initiating the registration process the interested parties must accumulate all the partners’ and administrators’ details (identification information) as well as the company’s details (e.g. capital, shareholders’ percentages, company’s official seat, official activities).
Furthermore, a foreign person to become partner or shareholder of a Greek company they shall issue a Greek Tax number, although they cannot be administrator or part of the Board of Directors if they are not Greek or European citizens (holding a Greek ID or a European passport).
Finally, when someone is willing to establish a Greek company, they have to proceed with the issuance of a power of attorney giving the order to a proxy in Greece including all the needed actions of the incorporation. This power of attorney can be either before a foreign notary, bearing the Apostille stamp, or at a Consular office of Greece in their home country.
After the registration of the company is completed the first required actions are the opening of a bank account, as well as the bookkeeping assignment to a CPA (accountant). The bank account is required in order for the company members to deposit the company capital and certify its deposit to the Business Registry. The assignment to a CPA is required in order for the company to file the company in the tax office, as well as to proceed with all the VAT declarations, tax payments etc.
Corporation tax is a tax levied by the government on the profits of companies. Corporate tax varies from country to country, with some even having zero rates as a result of which they are considered tax heavens. In Greece, however, things are not exactly like that, so every investor must know what tax they must pay to the state at the end of the tax year. Here, it is important to clarify that corporate tax is levied on business profits and not on revenue.
The taxation of all the above types of Companies is the one where the profits are taxed at a rate of 22% and 5% on the distribution of its profits with an advance tax rate of 80% for the following year (40% for the first 3 years).
The Individual enterprise is a different case and possibly the simplest type of business in Greece. However, the entrepreneur has unlimited liability, in which case he fully undertakes all the risk of the business with their personal property. Regarding the taxation of individual companies, the tax scale is as follows: 0-10.000à 9%, 10.001- 20,000 à 22%, 20,001-30,000 à 28%, and 30,001- 40,000 à 36%, more than 40,001 à 44%.