Withholding tax on wages increases

The new blow is the insistence of the government on taxation of benefits in kind, received by business executives and employees.

Loans, company cars, mobile phones and even advance salary (over three months) are taxed on 01/01/2014 by income tax bracket. This means that this year increased the withholding tax wages.

Senior official of the Ministry of Finance, according to "Kathimerini" newspaper, clarifies that possible distortions will be corrected by Ministerial Decisions and circulars. The same official states that a CEO of a company cannot enjoy an array of facilities such as cars, cards , cell phone , etc. , and not taxed for them. Conversely, a salesman who uses car or mobile phone to sell products will not be taxed if proved that the use of benefits consider work.
Under the legislation (Law 4172 Article 13) any benefits in kind received by an employee or a relative of that person included in taxable income at market value, if the total value of benefits in kind exceed the amount of EUR 300 per tax year.

The Greek General Confederation of Labor asked Finance Minister G. Stournara, directly promote legislation to repeal the provisions that provide for the taxation of benefits in kind, noting that the Council of State has declared that the inclusion in taxable income of the above benefits is unconstitutional. As pointed out by the GGCL, in accordance with Decision 29/2014 of the Council of State, a provision of the Income Tax Code (Law 4172/2013) -which incorporates the taxable employment income of every kind benefits paid by the employer to the employee to cover the expenses of the execution of work entrusted to him- was declared unconstitutional.

For corporate mobile phones, the amount that exceeds 300 per year will be taxed at rates up to 42 %. Concerning the loans and wages-in advance, the amount to be taxed is the interest arising from interest rate set by the Bank of Greece. The amounts shall be aggregated with the other income of the taxpayer and will be taxed at the income tax bracket. Taxation concerning benefits in kind obtained from 1 January 2014 onwards.

According to the legislation, since 01/01/2014, the following are taxed at the income tax bracket:

• The market value of a vehicle conceded to an employee or partner or shareholder of a natural or legal person or legal entity, for any period of a fiscal year. It will be calculated on 30% of the cost of the vehicle is entered as an expense in the books of the employer form of depreciation including road tax , repairs and maintenance , and the related financing costs corresponding to the purchase of a vehicle or rent. If the cost is zero, the market value of the grant is set at rate of 30% percent of the average expenditure or depreciation over the last three years.

• The benefits in kind in the form of a loan valued at the amount of the difference between the interest that would be paid by the employee during the calendar month in which received the grant, if the rate of interest calculation was the average market rate, as defined by decision of the Minister of Finance, in the same month and any interest paid by the employee during that calendar month. If there is no written loan agreement, the entire principal amount is treated as a benefit in kind. Also, the advance salary of more than three months is considered a loan.

• The market value of benefits in the form of options to acquire shares determined at the time of option exercise or assignment of whether still valid employment relationship. The market value of exercising the right is the closing price on the stock minus the issue price of the right.

• The market value of the residence concession employee or partner or shareholder of a natural or legal person or legal entity, for any period of a fiscal year, valued at the amount of rent paid by the company or in the case of freehold residential rate of 3% the objective value of the property.