Athens is to Greece what New York and London are to the United States and England. Its unique location at the heart of Europe, Asia, and Africa makes it ideal for international businesses seeking to expand their operations. 

With a skilled workforce of 4.7 million people and a growing digital economy, Greece offers amazing opportunities to employers across technology, tourism, shipping, and renewable energy sectors.

However, it is important to note that the Greek payroll system supports social security and public services through mandatory contributions from both employers and employees. If your company is planning to hire in Greece, understanding the payroll tax obligations will help you remain compliant and budget accurately.

To learn more about the business operations in Greece, check out our comprehensive guide on doing business in Greece.

What is Payroll Tax in Greece?

In Greece, payroll tax operates as a set of social security contributions known as koinonikes eisfores. This system is funded through contributions from both employers and employees.

Definition and purpose of Payroll Tax in Greece

Payroll tax in Greece doesn’t operate in the traditional sense. Instead, it consists of mandatory social security contributions made by both employers and employees. These contributions fund retirement benefits, healthcare coverage, unemployment benefits, work accident insurance, and family support programs.

Employer and Employee Responsibilities

Both employers and employees in Greece share the responsibility for social security contributions. Employers contribute 22.29% of each employee’s gross salary, while employees contribute 13.87% of their own salary.

Employee Responsibilities

Employees in Greece are responsible for contributing 13.87% of their gross salary toward social security. These contributions are automatically deducted from their paycheck by the employer, who then remits them to EFKA.

Employer Responsibilities

Employers contribute a larger portion of the social security burden. They are required to contribute 22.29% of each employee’s gross salary plus an additional €20 annual fee. 

They are responsible for registering employees with EFKA on the first day of employment, calculating and withholding employee contributions from wages.

For businesses that need help with their payroll management, our recruitment agency services can help you find qualified local talent, while our PEO services can handle all payroll management and compliance requirements on your behalf.

Employer Payroll Tax Rates in Greece

As explained in the previous section, both the employer and employee have different contribution rates. The employee contributes a percentage of their gross salary to reduce the burden on employers.

Breakdown of Employer Contributions

Greek employers must contribute to the following funds and insurance schemes to support the social security system. Here’s a detailed breakdown of where your contributions go:

  • Main Insurance Fund: The bulk of employer contributions goes to the main social insurance fund. This covers:
    • Pension Insurance: For old-age pensions, disability benefits, and survivor benefits. This plays a major role in Greece’s retirement system.
    • Healthcare Contributions: These contributions fund the national healthcare system (EOPYY). It ensures employees can have access to medical care, hospital services, and prescription medications.
    • Unemployment Insurance: It provides unemployment benefits to employees who lose their jobs. The insurance funds job training programs and employment services for workers.
    • Work Accident Insurance: This contribution covers medical expenses and compensation for employees injured on the job or suffering from occupational diseases.
  • Annual Administrative Fee: Each employee pays €20 per year, and the fee covers administrative costs for managing social security accounts and services.
  • Housing Fund Contribution: In some cases, employers may need to contribute to housing assistance programs, though this is determined by the industry niche and company size.

Industry-Specific Tax Rates and Considerations

The Greek government uses a standard social security contribution rate that applies to most industries in the country. However, certain sectors may have specific requirements or considerations that employers should be aware of:

  • Maritime Industry: The shipping sector in Greece operates under special social security arrangements. Seafarers are often covered by the Navigation Ministry’s social security fund, which may have different contribution rates and benefit structures. Companies operating in shipping should consult with maritime law specialists for specific requirements.
  • Construction Industry: Construction companies in Greece have to pay additional insurance due to the higher-risk nature of their work. The work accident insurance contribution is higher for construction companies, and there may be additional requirements for safety training and equipment.
  • Tourism and Hospitality: Greece has a thriving tourism industry, and seasonal employment is common in hospitality. Employers in this sector must properly register seasonal workers, calculate their contributions based on working hours, and manage all employment procedures for these kinds of workers.
  • Technology and Digital Services: Greece’s tech sector is growing, and many companies are exploring remote work arrangements. Companies in this sector must note that Greek employees working remotely still require full social security coverage, regardless of where they physically work.
  • Small Businesses: Smaller businesses in Greece are eligible for reduced rates or support programs. The Greek government periodically introduces incentive programs to encourage employment, which can temporarily reduce contribution rates for such employers.

Key Components of Payroll in Greece

Payroll Cycle and Pay Slips

Salaries are paid on the last working day of each month in Greece. Employers must calculate and deduct the social security contributions before disbursing the salaries to employees. Each employee must be given a payslip that details their gross salary, deductions made, and employer contributions for transparency.

Employer Responsibilities for Payroll Tax Compliance

The employer contributes a larger percentage of the social security burden. They are required to register employees with EFKA on the first day of employment. They calculate, withhold, and remit employee contributions deducted from monthly wages. Additional contributions, like administrative fees and the housing fund, may also apply.

Common Payroll Errors and How to Avoid Them

Even experienced employers can make costly mistakes when managing Greek payroll. Whether you’re new to Greece or looking to improve your current business operations, here are the most common errors and practical solutions to avoid them.

  • Miscalculating Contribution Rates: Never use outdated rates or apply incorrect percentages when calculating your employer contribution. Always verify the current EFKA rates from official government websites or subscribe to official updates from the Greek Ministry of Labour.
  • Late Employee Registration: Failure to register employees with EFKA before their first day can attract heavy penalties. We recommend creating a checklist that ensures registration of staff is done immediately and never after work begins.
  • Incorrect Holiday Pay Calculations: Holiday pay and bonuses have their own calculations under the Greek law. Employers must maintain detailed records of all payments and consult payroll experts for complex situations.
  • Missing Payment Deadlines: Late submissions to EFKA will incur penalties. Always set up automatic reminders for the 15th of each month, or consider electronic payment systems to ensure timely processing.
  • Inadequate Record Keeping: Poor documentation leads to audit problems. Consider using digital systems that automatically track all payroll transactions, employee changes, and compliance documentation for the required five-year duration.

Tax Compliance and Reporting Requirements

Employers in Greece must fulfill certain payroll tax requirements to remain compliant and avoid penalties:

  • Monthly Obligations: Employers must submit all social security contributions by the 15th of the following month. For example, June contributions must be paid by July 15th. Failure to adhere to this deadline will attract penalties and additional interest charges.
  • Required Documentation: Employers must include an APD file (EFKA social security file), a detailed payroll summary, employee hours, and earnings breakdowns in their monthly submissions. Any changes to employee status or benefits must also be documented.
  • Electronic Submission: All submissions must be made through EFKA’s electronic platform. This requires employers to maintain updated digital certificates and authorized user accounts.

Tax Penalties

Greek authorities take social security compliance very seriously; failure to comply may attract heavy penalties:

  • Late Payment Penalties: Payments submitted after the monthly deadline will attract immediate penalties. Defaulters would have to pay a percentage of the overdue amount plus daily interest.
  • Audit Requirements: EFKA will regularly examine your payroll records, employee classifications, and contribution calculations. Employers should make sure they maintain detailed records for at least five years.
  • Criminal Penalties: If you deliberately misclassify employees or fail to register workers, it will be counted as a criminal offense against company officers.

Greece Payroll Tax Calculator

The Remote People Global Payroll Calculator makes it easier to plan and calculate your Greek payroll. You can use the calculator to compare different salary levels and understand how the employee benefits in Greece affect the total costs.

Simply input the gross salary, country, employee type, and calculation period. The calculator will instantly provide accurate rates that can help you make informed decisions about your Greek operations.

Simplify Payroll Management in Greece!

Greece’s payroll tax system is a combination of employer contributions (22.29% plus €20 annually) and employee contributions (13.87%).

With the right understanding and preparation, employers can benefit from exciting opportunities in the country and successfully run their business operations while remaining compliant with the Greek tax laws.

Managing Greek payroll tax requirements doesn’t have to be overwhelming. Whether you’re hiring your first Greek employee or expanding an existing team, working with experts can save you time, money, and compliance headaches.

Remote People PEO services for Greece will handle all aspects of your payroll management, from employee registration with EFKA to monthly contribution, submission, and compliance duties. We just want you to focus on growing your business while we handle the Greek employment obligations.