Tax exemptions for investments in CapEx under the Greek investment incentives Law
9 April 2020
Working capital with a two-year interest rate subsidy
Working capital with 100% interest rate subsidy for the first two years from TEPIX II
12 May 2020

Subsidies for new personnel, hardware, software & communication systems for companies in Greece

About business subsidies of Law No.89 / 1967 for expenses of new staff, costs of information technology and communication systems

The provisions of Law 89/1967 as amended by the recent development law allow companies established in Greece of Law 89/1967 to provide services to Greek companies with which they belong to the same group.

This means in practice, that international groups having such offices in Greece and providing services to other companies in the group, will now be able to do business in Greece as well.

Key Benefits of Companies of Law 89/1967:

(a) their taxable profits accrue as a fixed percentage of their expenses

(b) the profit margin of their intra-group transactions is approved in advance by the Ministry of Development

(c) their foreign staff shall be taxable only for income derived in Greece

(d) aid for the costs of new staff, the costs of installing information and communication systems, and aid for the recruitment of disadvantaged workers and persons with disabilities

This law is one of the most widely available tools for attracting foreign investment in Greece, as it allows foreign and domestic groups to set up in Greece an organized “Administrative Services Center”, in accordance with the standards of overseas Shared Services Centers.

The operation of such a Center in Greece consists of providing administrative support (eg research and development, quality control, advertising, accounting support, consulting services) to the headquarters or businesses of the same group abroad.

The Ministry of Development is considering adding other support services (eg supply chain supervision, legal support, logistics, etc.) to the already permitted categories, to make the status of Greek Administrative Services Center even more functional and directly competitive with their foreign counterparts.

Companies established in Greece providing services either intra-group (overseas parent) or to third parties (overseas parent or affiliated or Greek companies) and falling within the following business areas of:

  1. advisory services
  2. central accounting services
  3. quality control on production, processes and services
  4. design of studies, plans and contracts
  5. advertising and marketing
  6. data processing
  7. receiving and providing information
  8. research and development
  9. software development, computer programming and IT support
  10. file and information storage and management
  11. supplier, customer and supply chain management excluding self-executing transport
  12. management and training of human resources
  13. computer center-based call center and telephone information activities
under the Law 89/1967 may, cumulatively or alternatively, receive subsidies in the following categories of expenditures:

  • Aid for the recruitment of disadvantaged and disabled workers.

Eligible for support costs are the wage costs over a maximum period of twelve (12) months of the employee recruitment, who:

  • had no regular paid work during the previous six (6) months, or
  • has not completed two (2) years from completing full-time education and had no previous regular paid employment, or
  • is over 50 years of age, or
  • lives alone with the care of one or more members, or
  • has been recognized as a disabled worker under national legislation.

Recruitment should serve the new activity and lead to an increase in the number of employees of the enterprise concerned in relation to the average of the 12 months.

The aid consists of a subsidy of wage costs by providing a sum of money to cover part of it and the aid rate is 50% of eligible expenses paid. The company may not receive for the same workers any other aid on the salary costs of the period of the first twelve (12) months from the recruitment of each.

The company may receive aid for up to 100 employees and gross earnings are eligible for aid expenditure, for a period of up to twelve (12) months from the hiring of each employee, and up to the amount corresponding to gross salary, maximum of 2,000 euros per month.

  • Aid for vocational training programs

The aid is granted for programs organized by the legal person for the training of staff in relation to the new activity. No aid shall be granted for training undertaken by companies to comply with the required national training standards.

The following costs of vocational training programs are eligible for aid, up to the total amount of 500,000 euros:

  • staff costs of the trainers for the hours during which the trainers participate in vocational training,
  • travel expenses of trainers and trainees,
  • costs of purchasing materials and supplies directly related to the vocational training program,
  • costs of consulting services in connection with the vocational training program,
  • personnel costs of trainees and general indirect costs (administrative expenses, rents, overheads) for the hours during which trainees participate in vocational training.

The aid consists of subsidizing the costs of the training program by providing a sum of money to cover part of it and the aid rate is 50% of the eligible costs.

  • Support of wage costs and computer and communications systems installation costs.

Expenses eligible for aid are:

  • gross earnings paid to employees for a period of up to twelve (12) months from the hiring of each employee and up to the amount corresponding to gross salary of 2,000 euros a month.
  • expenses for the purchase of hardware and software if they are installed and operate productively.

The aid intensity is up to fifty percent (50%) of the eligible costs.

The aid consists of a subsidy on wage costs and subsidize the cost of purchasing the hardware and software by providing funds to cover part of them and the aid rate is 50% of the eligible costs which may not exceed in total 400.000 €.

The aid granted in this category, summed with other aid granted by the State, cannot exceed two hundred thousand (200.000) euros over a period of three (3) financial years.

  • Aid for research and development projects. (To be announced soon)

This category of aid is granted to companies falling within the scope of this Law for the purpose of providing research and development services. The aided part of the research and development project shall completely fall within one of the following categories as they are defined in the above Regulation: industrial research, experimental development, feasibility studies.

The research and development expenditure eligible for aid relates to a specific category of research and development and is as follows:

  • staff costs: researchers, technicians and other support staff if they are exclusively employed in the project,
  • expenditure on buildings, instruments and equipment, if and for as long as they are used for the project. For buildings, instruments and equipment not used throughout their lifetime for the project, eligible are only depreciation costs corresponding to the duration of the project, which are calculated on the basis of generally accepted accounting principles,
  • expenditure on contract research, as well as expenditure on consultancy services used exclusively for the project,
  • additional overheads and other operating expenses, including costs of materials, supplies and related products, which are a direct result of the project,
  • expenditure on carrying out feasibility studies.

The aid intensity of the eligible costs shall be up

  • to fifty percent (50%) for industrial research,
  • twenty-five percent (25%) for experimental development and
  • Fifty percent (50%) for feasibility studies.