Greece

Contractor Classification in Greece

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.

Employment Laws

In Greece, employment relations are regulated by various national legal acts, collective bargaining agreements, the European Union legislation, and the Greek Civil Code.

There are three types of employment classification:

Employees – those who provide services that require mostly intellectual skills
Managerial employees – those who perform supervisory functions
Workers – those who are engaged in physical labor

There are four types of employment agreement in Greece:

Full-time (πλήρους απασχόλησης, plírous apaschólisis)
Part-time (μερικής απασχόλησης, merikís apaschólisis)
Fixed-term (απασχόληση ορισμένου χρόνου, apaschólisi orisménou chrónou)
Agency contract (σύμβαση εργασίας πρακτορείου, sýmvasi ergasías praktoreíou)

Internal, regional, and national collective bargaining agreements (CBAs) apply.

Most employment contracts are concluded verbally. Part-time employment agreements must be concluded in writing. There is no requirement to draw up contracts in Greek.

Independent contractors render services as sole traders (ατομικές επιχειρήσεις, atomikés epicheiríseis).

Independent contractor engagements are covered by articles 681 and 694 of the Greek Civil Code, in addition to terms and conditions of the project contract.

Freelancer engagements are not categorized.

Hiring Practice

Candidates are recruited externally through job boards and advertising. An applicant must submit their CV to the employer.

Selected applicants receive an offer letter, and a written contract, if concluded, must be provided within 2 months since the employment start date.

In Greece, any employment contract that does not specify the duration of the agreement is considered to be indefinite by default.

The following aspects must be collected and included in the contract, in addition to special clauses, if applicable:

Names of the company and the employee
Place of work
Position
Type and duration of contract
Paid leave (duration, time and manner)
Rules of severance pay
Salary and payment frequency
Work schedule
CBAs

Employers reserve the right to perform background checks during the hiring process, but they must not request any information that is not related to the nature of the work and any information pertaining to an applicant’s health and criminal record. This process can be delegated to third parties, provided that they comply with the European Union privacy regulations.

Employers are required to register all new employees with the online information system ERGANI.

Probation period must not exceed 12 months.

Through professional employer organizations or directly.

Contractors can be hired directly or via a third party, such as a staffing agency. Contractors may be found via word-of-mouth, job boards, social networks, industry bodies, or other forums. Although hiring practices vary, the contractor may be asked to provide a CV, portfolio, and references, and possibly sign an NDA.

An independent contractor agreement must state that the worker is free to organize his/her work and his/her working time for an agreement to be considered a valid freelancer contract. Apart from that, an independent contractor agreement contains the same details pertaining to the nature of the assignment. The following aspects must be stipulated:

Pay rates and arrangements
Scope of services
Contract duration
Termination terms

There is no limitation on the use of independent contractors.

The Greek Civil Code stipulates that an agreement is valid when the nature of a contractor’s work is clearly specified in the contract. Lack of subordination must be emphasized.

Tax Documents

The tax year runs from 1 January to 31 December.

Companies are obliged to pay for mandatory health insurance, make unemployment, solidarity, and pension contributions, as well as to withhold personal income tax (προσωπικός φόρος εισοδήματος, prosopikós fóros eisodímatos) in addition to other corporate taxes.

Mandatory returns and contributions can be submitted online through the portal of the Greek Tax Authority.

Personal income tax, social security contributions are paid and submitted annually by 31 March of the following financial year.

Independent contractors must pay:

Personal income tax – 9-44%
VAT – 24%
Pension, health, unemployment insurance – 14.12%
Solidarity tax – 0-10% (temporarily suspended in 2022)

Payer's Tax Withholding & Reporting Requirements

Employers must withhold the following deductions each year for each employee:

Pension, health, unemployment insurance – 36.66% (22.54% is paid by employers and 14.12% is withheld from an employee’s salary)
Solidarity tax – 0-10% (temporarily suspended in 2022)
Personal income tax – 9-44%

Contractors file annual personal income tax reports and pay social security contributions on their own.

Payer’s Withholding / Reporting Requirements for Independent Contractors:

N/A

Remuneration

Employers are expected to pay their staff via automatic monthly payroll deposits to their bank accounts in euros.

There is no obligation to pay independent contractors monthly. Employers are responsible for providing consistent compensation. There are no standard payment terms. Remuneration frequency is to be agreed upon between the contractor and the employer. Payments become due after the contractor issues an invoice. Currencies other than the euro are allowed.

Workers’ Rights

In Greece, employees enjoy the following rights:

Paid annual leave – 20 days during the first year of employment; 22 days starting with the second year; 25 days after 10 years of employment
Sick leave – 1-6 months; first three days are paid by the employer at 50% salary rate, the rest – by the Social Insurance Institute at 100% or 50% during the first year of employment
Maternity leave – 17 weeks; first month is paid by the employer and the rest – by the Social Insurance Institute at 50% salary rate
Paternity leave – 14 days
Parental leave – 4 months; additional 4 days may be granted to check a child’s school performance
Marriage leave – 5 days
Bereavement leave – 2 days
Elections leave – 1-3 days
Premium payment rate for overtime work – 140% for the first three hours per day; 160% for the rest. Overtime should not exceed 3 hours per day and 150 hours per year.
Termination notice – based on a duration of the employment, from 1 to 4 months
Severance pay – based on a duration of the employment, from 1 to 12 months

Independent contractors are not entitled to any employee rights, unless otherwise stipulated in the contract.

Benefits

All employees must have health, pension, and unemployment insurance, which the employer is required to pay for. Contributions are deducted from employees’ salaries and are paid by employers. Employees may be granted additional internal benefits not otherwise governed by labor laws.

Unemployment, pension, and health insurance benefits are granted by the state.

There is no protection from a sudden termination of the contract.

Third-party benefits granted by professional employer organizations may apply when an independent contractor is hired through such organizations (i.e. umbrella company) and is considered their employee.

When Paid

Last day of the month.

Typical contractor invoices are issued monthly on net 30-day terms. Each invoice usually includes the following details:

Invoice number and date
The client’s name and address
The contractor’s bank details
Agreed payment terms and due date

Employment Laws

In Greece, employment relations are regulated by various national legal acts, collective bargaining agreements, the European Union legislation, and the Greek Civil Code.

There are three types of employment classification:

Employees – those who provide services that require mostly intellectual skills
Managerial employees – those who perform supervisory functions
Workers – those who are engaged in physical labor

There are four types of employment agreement in Greece:

Full-time (πλήρους απασχόλησης, plírous apaschólisis)
Part-time (μερικής απασχόλησης, merikís apaschólisis)
Fixed-term (απασχόληση ορισμένου χρόνου, apaschólisi orisménou chrónou)
Agency contract (σύμβαση εργασίας πρακτορείου, sýmvasi ergasías praktoreíou)

Internal, regional, and national collective bargaining agreements (CBAs) apply.

Most employment contracts are concluded verbally. Part-time employment agreements must be concluded in writing. There is no requirement to draw up contracts in Greek.

Hiring Practice

Candidates are recruited externally through job boards and advertising. An applicant must submit their CV to the employer.

Selected applicants receive an offer letter, and a written contract, if concluded, must be provided within 2 months since the employment start date.

In Greece, any employment contract that does not specify the duration of the agreement is considered to be indefinite by default.

The following aspects must be collected and included in the contract, in addition to special clauses, if applicable:

Names of the company and the employee
Place of work
Position
Type and duration of contract
Paid leave (duration, time and manner)
Rules of severance pay
Salary and payment frequency
Work schedule
CBAs

Employers reserve the right to perform background checks during the hiring process, but they must not request any information that is not related to the nature of the work and any information pertaining to an applicant’s health and criminal record. This process can be delegated to third parties, provided that they comply with the European Union privacy regulations.

Employers are required to register all new employees with the online information system ERGANI.

Probation period must not exceed 12 months.

Tax Documents

The tax year runs from 1 January to 31 December.

Companies are obliged to pay for mandatory health insurance, make unemployment, solidarity, and pension contributions, as well as to withhold personal income tax (προσωπικός φόρος εισοδήματος, prosopikós fóros eisodímatos) in addition to other corporate taxes.

Mandatory returns and contributions can be submitted online through the portal of the Greek Tax Authority.

Personal income tax, social security contributions are paid and submitted annually by 31 March of the following financial year.

Payer's Tax Withholding & Reporting Requirements

Employers must withhold the following deductions each year for each employee:

Pension, health, unemployment insurance – 36.66% (22.54% is paid by employers and 14.12% is withheld from an employee’s salary)
Solidarity tax – 0-10% (temporarily suspended in 2022)
Personal income tax – 9-44%

Remuneration

Employers are expected to pay their staff via automatic monthly payroll deposits to their bank accounts in euros.

Workers’ Rights

In Greece, employees enjoy the following rights:

Paid annual leave – 20 days during the first year of employment; 22 days starting with the second year; 25 days after 10 years of employment
Sick leave – 1-6 months; first three days are paid by the employer at 50% salary rate, the rest – by the Social Insurance Institute at 100% or 50% during the first year of employment
Maternity leave – 17 weeks; first month is paid by the employer and the rest – by the Social Insurance Institute at 50% salary rate
Paternity leave – 14 days
Parental leave – 4 months; additional 4 days may be granted to check a child’s school performance
Marriage leave – 5 days
Bereavement leave – 2 days
Elections leave – 1-3 days
Premium payment rate for overtime work – 140% for the first three hours per day; 160% for the rest. Overtime should not exceed 3 hours per day and 150 hours per year.
Termination notice – based on a duration of the employment, from 1 to 4 months
Severance pay – based on a duration of the employment, from 1 to 12 months

Benefits

All employees must have health, pension, and unemployment insurance, which the employer is required to pay for. Contributions are deducted from employees’ salaries and are paid by employers. Employees may be granted additional internal benefits not otherwise governed by labor laws.

When Paid

Last day of the month.

Employment Laws

Independent contractors render services as sole traders (ατομικές επιχειρήσεις, atomikés epicheiríseis).

Independent contractor engagements are covered by articles 681 and 694 of the Greek Civil Code, in addition to terms and conditions of the project contract.

Freelancer engagements are not categorized.

Hiring Practice

Through professional employer organizations or directly.

Contractors can be hired directly or via a third party, such as a staffing agency. Contractors may be found via word-of-mouth, job boards, social networks, industry bodies, or other forums. Although hiring practices vary, the contractor may be asked to provide a CV, portfolio, and references, and possibly sign an NDA.

An independent contractor agreement must state that the worker is free to organize his/her work and his/her working time for an agreement to be considered a valid freelancer contract. Apart from that, an independent contractor agreement contains the same details pertaining to the nature of the assignment. The following aspects must be stipulated:

Pay rates and arrangements
Scope of services
Contract duration
Termination terms

There is no limitation on the use of independent contractors.

The Greek Civil Code stipulates that an agreement is valid when the nature of a contractor’s work is clearly specified in the contract. Lack of subordination must be emphasized.

Tax Documents

Independent contractors must pay:

Personal income tax – 9-44%
VAT – 24%
Pension, health, unemployment insurance – 14.12%
Solidarity tax – 0-10% (temporarily suspended in 2022)

Payer's Tax Withholding & Reporting Requirements

Contractors file annual personal income tax reports and pay social security contributions on their own.

Payer’s Withholding / Reporting Requirements for Independent Contractors:

N/A

Remuneration

There is no obligation to pay independent contractors monthly. Employers are responsible for providing consistent compensation. There are no standard payment terms. Remuneration frequency is to be agreed upon between the contractor and the employer. Payments become due after the contractor issues an invoice. Currencies other than the euro are allowed.

Workers’ Rights

Independent contractors are not entitled to any employee rights, unless otherwise stipulated in the contract.

Benefits

Unemployment, pension, and health insurance benefits are granted by the state.

There is no protection from a sudden termination of the contract.

Third-party benefits granted by professional employer organizations may apply when an independent contractor is hired through such organizations (i.e. umbrella company) and is considered their employee.

When Paid

Typical contractor invoices are issued monthly on net 30-day terms. Each invoice usually includes the following details:

Invoice number and date
The client’s name and address
The contractor’s bank details
Agreed payment terms and due date

Who classifies as an Independent Contractor in Greece?

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.

Contracting Models

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

Engagement Models

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.

Contractor Payments

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.

Contractor Taxes

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