Are you planning to open your own sole proprietorship or enter into business for the first time? The individual enterprise is the oldest and simplest form of business in the world. See what the start-up procedures are and your key tax obligations.
At the service of the citizen and with the main aim of valid and immediate information, the AADE has created a useful guide for taxpayers who intend to do business for the first time, describing step by step the process of starting operations as a natural person and sole proprietorship, as well as the basic tax obligations arising from the status of a new self-employed person and the operation of a sole proprietorship. It is a first introduction to the business world and aims to facilitate, from a tax point of view, the new entrepreneur in his first steps.
Before the visit to the D.O.Y. (Public Finance Service)
It is useful to know, before your visit to the D.O.Y., the forms that you will fill out and the necessary supporting documents that you must collect in order to submit a declaration of starting a business activity of a natural person.
Note: You have the possibility to do business with more than one activity even if they are very different from each other. In this case, you must select the relevant CAD for each of them. If you have selected an activity for which there is no CAD (eight-digit activity code), then you select the CAD of the wider group to which it belongs (from seven to four-digit activity code).
Start at the competent D.O.Y
After you have completed the preparatory work, as provided, you are required to come to the Department of Administrative and IT Support (Registry Department) of the D.O.Y., in the territorial jurisdiction of which the headquarters of the business activity belongs, before carrying out any transaction within the framework of the activity your.
Know that: If you carry out an activity that also includes intra-community transactions, it will be necessary to carry out an on-site inspection (autopsy) of your business premises. In any other case, an autopsy may be performed on the order of the Head of the D.O.Y.
See what your main Tax liabilities:
1. Income Tax
The Income Tax Code (ITC) is the law that regulates issues related to income taxation, such as the categories of income and the way they are taxed, the way taxes are paid, the submission of the income tax return, etc. .etc (Law 4172/2013).
a) Submission of Income Tax returns
For the income you obtain from your business activity, you must submit an income tax return by June 30 of the current year (forms E1, E3) for the taxable income you obtained in the immediately preceding tax year. Taxable income is the income remaining after deducting the expenses deducted from the gross income from business activity.
Note: Natural persons are entitled to a discount of fifty percent (50%) of the tax rate from the first step of the income tax scale for the first three (3) years of their activity, as long as their annual gross income from business activity does not exceed ten thousand (10,000) euros.
– Calculation and payment of the tax
Personal income tax is calculated on the basis of the income included in the annual tax return you submit and the amount of your tax liability is determined after deducting: a) the tax withheld, b) the tax paid in advance, c) the tax paid abroad.
In the total income acquired as a natural person, as it results from the summation of income from salaried work and pensions, from business activity, from capital, from capital transfer capital, whether it is taxable or exempt, real or presumed and if it exceeds the twelve thousand (12,000) euros, a special solidarity levy is imposed and is calculated based on a scale, as provided by the current legislation.
Note: Disabled people with a disability rate of 80% or more, as well as the totally blind, are exempt from the imposition of the special solidarity levy, for all their incomes (exemptions are detailed in article 43a par.2 of the Civil Code).
– Advance payment of Income Tax from Business Activity acquired by Natural Persons
Based on the tax return you submit, an advance payment is confirmed, as a percentage of the tax resulting from business activity, during the current tax year.
b) Payment of annual Business Fee
As long as you are engaged in business activity, you are liable to pay an annual business fee, which is confirmed with your personal income tax return.
c) Submission of Withholding Tax Returns If you employ staff or make service payments subject to withholding tax, you must file withholding tax returns no later than the end of the second month from the date the withholding payment was made.
- In the event that the amount of tax you have paid in advance or withheld from you is greater than the resulting tax due, the excess difference is refunded.
2. Books – Data
As long as you have income from business activity, you are required to maintain a reliable accounting system and appropriate accounting records, in accordance with the accounting standards provided for in Greek legislation, for the preparation of financial statements and other information in accordance with tax legislation.
a) Keeping Accounting Records (Books)
1. You must keep a simple accounting system (book of income and expenses) which includes all kinds of: a) income separated into income from the sale of goods, from the sale of products, from the provision of services and other income, b) profits, c) purchases of assets, purchases of goods, materials (raw and auxiliary materials), fixed assets and purchases of other assets, d) expenses classified in personnel fees including contributions to insurance organizations, depreciation, expenses from receiving other services and other expenses, e) damages and f) taxes and fees, separately by type.
2. You must update the income-expenditure book, for each calendar quarter, no later than the end of the month following the end of the quarter. In addition, you can maintain and save other records as the case may be, such as a record of fixed assets, stocks, etc.
b) Information issued by the company (sales documents)
You must issue the following sales documents:
1. Sales invoice: is an item issued for every sale of goods and provision of services to entities, within the country or to any other country as well as any transaction subject to VAT.
- Self-invoicing: the invoice is issued by the recipient of the goods or services.
2. Retail receipt or service receipt: for each sale of goods or services to private consumers, instead of an invoice you should issue a retail item (retail receipt or service receipt) and a copy of this is delivered, sent or made available to customer.
3. Electronic invoice: is any invoice as well as retail item issued and received in electronic form. The use of electronic invoicing is subject to its acceptance, in paper or electronic form, by the recipient of the goods or services subject to invoicing.
d) Submission of Tax Information Statements for information cross-referencing (Customer-Supplier Statements) As a natural person with income from business activity, you are required to submit statements of tax information, customers and suppliers that contain aggregated data of issued and received invoices per counterparty Tax Identification Number as well as aggregated data of retail transactions and expenses. These statements are submitted exclusively on the website of A.A.D.E.
You should be aware that the sale of goods and the provision of services, the importation and intra-Community acquisition of goods are subject to value added tax (VAT). You will find everything you need to know about the obligations arising from the tax, as well as the exemptions that apply, in the VAT Code. which was sanctioned by law 2859/2000 (Government Gazette A΄248) as well as the related circulars and decisions.
Basic obligations for submitting VAT returns and key points of the VAT Code
a) Basic VAT Rates
The following rates apply: a) The normal rate which is set at 24% on the taxable value (valid from 1/6/2016), b) The reduced rate which is 13% on the taxable value, c) The reduced rate which is set at 6% of the taxable value.
Note: For goods and services for which reduced rates of 13% and 6% are applied, you should refer to Appendix III of the VAT Code.
b) Submission of VAT returns.
Those who are included in the normal VAT regime, i.e., carry out taxable transactions or transactions exempt from tax and for which they have the right to deduct the tax, should submit a VAT return. mandatory for each tax period regardless of whether the balance of their statement is debit, credit or zero.
When and how do you submit your VAT return?
The deadline for submitting the VAT return shall be the last working day of the month following the end of each tax period. Late returns, whether initial or amending, are subject to interest and to the penalties provided for in the Code of Tax Procedure.
When and how do you pay VAT?
1. If the result of the declaration is a debit: The payment of the tax is made on time until the last working day of the month of submission of the declaration. If the tax is over 100 euros, you can pay the amount in two equal installments as long as you fill in the relevant code on the VAT return, as long as the return is due. In this case, the deadline for payment of the second installment is the last working day of the month following the month of timely submission of the VAT return.
2. If the result of the statement is a credit: You have two options: a) either transfer the credit balance to the VAT statement. of the next period, b) either submit a refund request.
c) What you need to know if you wish to carry out intra-Community transactions
If you intend to trade goods or provide and receive services with other member states of the European Union, you must, before your first transaction, register in the V.I.E.S. Registry. with your application (form M2 “Declaration of commencement/change of activities of a natural person”) to the D.O.Y. where you belong.
1. Submission of a statement of Recapitulation Tables of intra-community transactions
Those of you who carry out intra-community transactions are invited to submit a declaration of Recapitulation Tables of intra-community transactions (forms Φ4 and Φ5). The statement is submitted on time on a monthly basis until the 26th day of the following month to which it relates. In case of a holiday, this statement is transferred to the next working day. If in a certain month you have not carried out intra-community transactions, you are not required to submit Summary Tables.
2. Submit an Intrastat declaration
If you carry out intra-Community transactions, you should be aware that you may be liable to submit an Intrastat declaration if the value of your transactions exceeds the amounts set each time by the Statistical Service, which are called statistical thresholds.
d) Transactions exempted from VAT.
It is important to know that certain transactions you carry out may be exempt from VAT. Exempt transactions are developed in articles 22 to 29 of the VAT code. Indicatively, some exempt transactions are mentioned that take place inside the country and for which no right to deduct the input tax is granted based on article 22 of the VAT Code.
e) Special VAT regimes
There are groups of businesses which can choose, if they meet certain conditions, to join a special VAT regime. See, for example, the following special regimes:
A) Special status of small businesses (article 39).
This regime is optional and it includes really small businesses for which compliance with the obligations of the normal VAT regime is essential. creates an additional administrative burden.
B) Special status of farmers (Article 41)
You can join this scheme if during the previous tax year: a) you received a subsidy of less than 5,000 euros and b) you made sales of agricultural products of your production and provision of agricultural services with a value of less than 15,000 euros.
Any change that occurs in the data declared at the start, should be notified, within thirty (30) days from the time the changes were made, to the Administrative and IT Support Department of the D.O.Y. to the territorial jurisdiction of which the seat of the business activity belongs.
Tax Exemptions – Reliefs
As a new self-employed person or a new sole proprietorship, you have the following tax exemptions and reliefs: A) The tax rate of the first step of the tax scale is reduced by 50%, for the first three years of activity, as long as your annual gross income from business activity does not exceeds €10,000. B) When you acquire income from business activity for the first time, the amount of advance income tax to be certified is halved. C) You are exempt from the imposition of a trade fee for the first five years from the start of trade. D) There is a possibility of exemption from VAT. if you have an annual gross income of less than 10,000 euros. E) No minimum mandatory capital is required when setting up a sole proprietorship.
- You will find details of the procedure on the AADE platform
Source: Starting a Business | AADE (aade.gr)