Vincenzo Marzullo Comments on New Greek Tax and Pension Reforms

A package of unpopular pension and tax reforms has been approved and passed by the Greek government in a hope that it will convince creditors to unlock bailout funds.

Athens, 09/05/2016 – Section - International tax law.

The approved package provides the following measures:

• New unified retirement rules are to be introduced and a 2% cut in pension spending by 2019.
• The income tax free threshold has been lowered to 8,800 euros per annum from 9,500 euros.
•  The upper tax band has been increased from 42% to 45%, and the threshold lowered from 42,000 euros to 40,000 euros.
• There will be tighter rules on widower/legacy pensions.
• Social security contributions are to be set at 20% of employee’s net monthly income.
• Finally, dividend tax has been increased from 10% to 15%.

Vincenzo Marzullo, Partner and Head of Tax and Advisory Services at Giambrone commented: “Despite having been met by significant protest outside parliament, Greek reforms are needed and in line with what has been agreed with Germany, the EU and the IMF. This will surely help Greece regain bond market access and make its debt load sustainable.”

Greece’s Prime Minister Alexis Tsipras hopes there is an opportunity to end the country’s cycle of debt. Euro zone finance ministers are to discuss Greece’s eligibility for a 5 billion euro bailout package, allowing the country to make debt repayments in June and July. It is possible that the pension and tax reforms have been approved now with this in mind.

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