Greece improved its position in the Tax Competitiveness Index by three spots compared to last year Index, according to data released by the Greek-based Center for Liberal Studies (KEFIM) in cooperation with the Tax Foundation.
The country is ranked 23rd out of 38 OECD countries in the latest Index, achieving an overall score of 67/100 (up from 62.9 last year). Greece is positioned between Japan (22nd) and Finland (24th).
Sub-category rankings for Greece in the Tax Competitiveness Index
* 16th in corporate taxation,
* 4th in personal taxation,
* 30th in consumption taxation,
* 29th in property taxes,
* and 23rd in taxation of profits abroad.
Strengths and weaknesses of the Greek tax system
The authors of this year’s Index highlighted specific features of Greece’s tax code:
Key Weaknesses
Net Operating Losses (NOLs): Greek companies face strict limitations on the amount of net operating losses they can carry forward to offset future profits. Furthermore, they cannot use losses to reduce previous taxable income.
Tax Treaties: Greece has a relatively limited tax treaty network (58 treaties versus the OECD average of 76).
Consumption Tax: Greece has one of the highest VAT rates in the OECD (24%) combined with one of the most limited tax bases, as it covers only about 43% of final consumption.
Strengths
Individual Taxation: The effective tax rate on individual dividends is 5%, which is significantly below the OECD average of 24.7%. Additionally, capital gains from listed shares (without substantial participation) are exempt from taxation.
Corporate Taxation: The corporate income tax rate, at 22%, is lower than the OECD average of 24.2%.
CFC Rules: Greece’s Controlled Foreign Corporation (CFC) rules are moderate and apply only to passive income.
Nikos Rompapas, President of KEFIM, commented on Greece’s improvement: “The significant rise of our country by 3 positions demonstrates that targeted, feasible changes to the tax system can substantially boost the country’s competitiveness. In addition to further de-escalating the tax burden, interventions in areas such as international tax treaties and the depreciation system can further improve Greece’s tax profile without negatively affecting tax revenue.”
Estonia tops the list, France comes last
For the twelfth consecutive year, Estonia was named the country with the most competitive tax code, while France ranked last (38th).
Alex Mengden, the Index’s author and Tax Foundation International Tax Policy Analyst, provided a broader context on global tax policy: “Poorly structured tax systems are costly, distort economic decisions, and harm the economy. Many countries have identified this problem and have moved to reform their tax codes. However, not all recent changes in tax policy among OECD countries have led to the improvement of tax system structures; some have had negative effects.”
Related: One-Third of Greek Tourism Businesses Found Guilty of Tax Evasion
