Greece is moving to sharply increase taxes on profit-based compensation paid to corporate executives, board members and employees, introducing a 15% rate on annual payments exceeding €60,000 ($70,000) while preserving the country's favorable tax treatment of shareholder dividends.
The proposal, included in draft legislation released by the Ministry of National Economy and Finance for public consultation until Nov. 1, would triple the current 5% tax rate on the portion of qualifying compensation above the threshold.
The measure would establish a two-tier tax structure for payments distributed from corporate profits to company directors, managers and employees. Under the proposed rules, the first €60,000 received annually by each beneficiary would continue to be taxed at 5%, while any amount above that level would face a 15% levy.
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Regular salaries would remain unaffected and continue to be taxed under Greece's existing employment-income tax rules. The changes could substantially increase tax liabilities for highly compensated executives, particularly in banking, energy and other profitable industries where profit-linked remuneration can represent a significant portion of annual compensation.
An executive receiving €200,000 in annual profit-based compensation, for example, would pay €24,000 in taxes, compared with €10,000 under the current system. For an executive receiving €500,000, the tax bill would rise to €69,000 from €25,000, an increase of €44,000.
The distinction between executive compensation and shareholder dividends is central to the proposal. Greece's general dividend tax rate would remain unchanged at 5%, regardless of the amount distributed.
Consequently, a shareholder receiving €1 million in ordinary dividends would continue paying €50,000 in taxes. An executive receiving the same amount as qualifying profit-based remuneration would face a €144,000 tax bill.
That difference could become particularly significant for business owners who also serve as directors or senior executives, because the tax treatment would depend on how payments are legally classified.
The legislation would also amend withholding-tax provisions to reflect the higher rate on qualifying payments above €60,000.
The proposed changes would introduce a more progressive structure for profit-linked executive compensation without extending the higher rate to ordinary investment income.
For companies, the measure could prompt a reassessment of executive remuneration arrangements, particularly where compensation packages include substantial distributions from annual profits.
