Hire in Greece with Confidence

Businesses hiring in Greece should understand the legal distinction between independent contractors and employees. Businesses hiring independent contractors under the guise of employment risk facing fines in addition to increased taxation. In Greece, several important aspects must be taken into account by both companies and contractors before establishing a relationship. It’s crucial to work with a partner like Worksuite when engaging contractors abroad, to establish a compliant and legal hiring framework. 

There are two distinct legal statuses that govern the relationship between a hiring organization and its employees (εργαζόμενος,ergazómenos), workers (εργάτες, ergátes) or independent contractors (ανεξάρτητος εργολάβος, anexártētos ergolávos). A standard employment contract (σύμβαση εργασίας, sýmvasi ergasías), and a well-demonstrated presence of subordination among other specific contractual obligations, indicate the traditional relationship between an employer and an employee or worker. A project contract (σύμβαση έργου, símvasi érgou), also called “a contract for provision of liberal services” indicates a freelance engagement whereby an independent contractor, acting as a legal enterprise, agrees to provide a defined piece of work for a set amount of money. 

Greek independent contractors are highly valued among businesses across the globe, thanks to their skills, expertise, relatively cheap cost of services, and proficiency in English.

Greek labor and civil laws are constantly subject to revision and policy changes. In addition, the country’s legislation defines a very strict registration procedure for independent contractors. It is important to work with a partner like Worksuite to ensure that you have an engagement framework that properly classifies freelancers able to work as independent contractors.

Self-employment as an independent contractor is a popular income model for many individuals. The latest pandemic restrictions have prompted more and more Greek professionals to work as self-employed independent contractors. Moreover, hiring independent contractors from Greece is currently a booming trend among organizations from all over the world. More and more representatives of Greece’s highly-educated workforce choose to be their “own bosses” and engage with companies as established self-managed businesses.

In Greece, independent contractors are classified as sole traders or freelancers rendering services as an enterprise. Independent contractors and companies conclude a project agreement that stipulates such cooperation. Greek Civil law is based on the principle of employee protection. If opposing issues are regulated simultaneously by different legal acts, the regulation most favorable for the employee or contractor prevails.

Who is an Independent Contractor?

Any individual who independently and consistently carries out a gainful activity in the form of providing services for a set fee to a given organization while not abiding by its internal legal directives under an employment contract, and acting as a registered business, is considered an independent contractor. Independent contractor engagement implies no professional subordination between the worker and the employer. Independent contractor’s source of income is project-based and thus may not be constant.

Under Greek law, an independent contractor is NOT obliged to:

• Complete work for a set period of time each day, nor from a specified location
• Make arrangements with the employer to take time off from work
• Follow the employer’s disciplinary procedures

The following aspects also distinguish between employees and independent contractors:

• Lack of legally-binding supervision
• Possibility to provide services to more than one organization at the same time
• An ability to designate the work to another person

The following facts are evaluated by the Greek tax authorities when challenging the determination of  a worker as  an independent contractor:

• Character of relationship between an organization and a contractor (permanent or temporary)
• The arrangements that cover the worker’s/operator’s social insurance
• Submittal of the legally required reports to authorities
• The matters agreed upon in the text of the contract
• Worker’s/operator’s degree of personal autonomy and independence
• Tools, materials and supplies the worker works with
• The time when work is done
• The place where work is done
• The principles of compensation
• Termination policy

To become a contractor in Greece, a person must register as a sole trader with the regional branch of the Greek Chamber of Commerce. For this, an individual AFM tax ID and an office address are needed. After a legal entity is established, contractors are required to register with the local branch of the Organization for Self-Employed (OAEE) and apply for a mandatory state-granted pension, unemployment, and health insurance benefits. 

Self-employed workers with their own business are classified as sole traders.

There are two primary engagement models for working with independent contractors in Greece.

A. Direct engagement of the worker as self-employed and registered via their own company. Under this model, the hiring company engages directly with the independent contractor and draws up an agreement to provide services. The hiring company then pays the independent contractor directly.

B. Umbrella company. Companies operating under Employer of Record services in Greece are often split into two categories, but both are essentially designed to vet and engage freelancers compliantly as either contract employees or independent contractors on your behalf.

• Staffing agency: Some contractors may work under an umbrella company. In this case, the contractor is responsible for finding and performing their work, but they are an employee of the umbrella company, which manages payroll and applies an administration fee on the contractor’s earnings.
• Hiring partner: The hiring company can also work with a hiring partner who helps them vet potential contractors, set up contracts, ensure the contractor is properly classified, onboard and manage contractors, and make payments to them.

Independent contractors typically get paid upon issuing an invoice on net 30-day terms to the employer at the end of each month unless otherwise stipulated in the contract. Payments are made through direct deposits to their bank accounts or another preferred method stipulated in the contractor agreement. Payments are issued upon the completion of a project. Alternatively, the project fee can be paid in installments, if the contract permits so.

Alternatively, companies may partner with wage processing providers. They can process wage calculations, prepare tax statements, and make deposits and withdrawals for contractors. 

Terms, conditions, and frequency of payments can be settled between a contractor and an employer. Currencies other than the Euro can be used in Greece, and they are subject to fluctuating exchange rates, which may impact a  contractor’s paycheck. 

If you work with a hiring partner like Worksuite, it becomes significantly easier to streamline contractor payment processes. A dependable partner can help you hire contractors legally and pay them quickly, accurately, in euros, and in a way that complies with Greek regulations.

Independent contractors submit their own income tax reports. Moreover, since they operate as businesses, their annual tax reports are more detailed. Contractors file annual personal income tax reports and pay social security contributions online by 30 June using their personal tax ID. Personal income tax is paid in 5 installments: at the end of each quarter and at the end of the year. Social security contributions are paid before income tax is calculated.

Independent contractors’ earnings are subject to an annual state solidarity contribution, whose rate is progressive according to the size of the annual income. The following rates were applied in 2022:

up to EUR 12,000: 0%

EUR 12,001 – EUR 20,000: 2.2%

EUR 20,001 – EUR 30,000: 5%

EUR 30,001 – EUR 40,000: 6.5%

EUR 40,001 – EUR 65,000: 7.5%

EUR 65,001 – EUR 220,000: 9%

Above EUR 220,001: 10%

In September 2022, the solidarity contribution was temporarily suspended until further notice.

Gross Income Tax

Income tax in Greece is progressive depending on a contractor’s annual earnings. The following tax rates apply in 2022:

Up to EUR 10,000: 9%

EUR 10,001 – EUR 20,000: 22%

EUR 20,001 – EUR 30,000: 28%

EUR 30,001 – EUR 40,000: 36%

Above EUR 40,001: 44%

Value-Added Tax

The majority of services, imports of goods and services, and the sales value of items are subject to a mandatory VAT deduction of 24%. Contractors must file VAT returns online by the last working day of the month after:

• The reference month (tax period) for persons using a double-entry accounting system
• The reference calendar quarter (tax period) for persons using a single-entry accounting system, and for persons not obliged to keep accounting books and issue tax records