Private passenger vehicles are subject to Classification Duties before their initial circulation in Greece.

The classification duties, which are applied on the taxable value of the vehicle, are effectively linked to how environmentally friendly the vehicles are.

The vehicles fall into four broad categories, vehicles that satisfy EU Directive 94/12/EU or a subsequent Directive are subject to the lowest classification duties ranging from 16% to 128%, depending on the engine capacity of the vehicles.

Vehicles satisfying EU Directive 91/441/EU are subject to classification duties ranging from 37% to 230% depending on the vehicles engine capacity.

Vehicles satisfying EU Directives 89/458/EU and 88/76/EU are subject to classification duties ranging from 61% to 540%. Conventional technology vehicles are subject to classification duties ranging from 93% to 560%.

The taxable value is made up of the manufacturer's wholesale price, insurance costs and transportation costs. In the case of second hand vehicles the value is reduced depending on the age of the vehicle.

Trucks and other commercial vehicles are subject to separate classification duty tables, which are considerably lower, that those applicable to private passenger vehicles.

Individuals

Income Tax on cars

The acquisition and use of certain specific assets like cars, boats etc. give rise to deemed income for the owners of such assets. If the total notional income amounts to more than 20% of the actual taxable income, then the notional income forms the base for taxing the individual.

The above provision not only applies to individuals but also to businesses that own such vehicles. In the case of corporations, limited liability companies and partnerships, the deemed income is assessed on the Chairman/Board of Directors, Administrators and Partners respectively.

The annual amounts of notional income for private cars, is based on the taxable horsepower (HP) and number of years of circulation in Greece.

Taxable HP is computed by multiplying the engine capacity (in cubic centimetres) by 0.007.

The lowest annual notional income relating to cars having a taxable horse power of 7 or less is 4,800 Euros and extends to a maximum of 112,900 Euros for cars with taxable horse power of 28 or more.

The notional income is however reduced by 15% after the automobile has completed five to 10 years of circulation in Greece, 25% after the automobile has completed between 10 years to 15 years of circulation in Greece, 40% after the automobile has completed more than 15 years of circulation in Greece or has been purchased from the Organisation for Management of Public Materials, or is specially designed for the use of invalid persons.

Also, the notional income is reduced by 50% after the automobile has completed more than 10 years of circulation in Greece and the taxpayer is over 60 years old and earns income from pensions or imputed income from a principal or secondary residence.

For each automobile in addition to the first the amount of notional income is increased accordingly.

Circulation of the car in Greece on foreign license plates (“temporary import” regime)

According to the related regulations it is permitted for an EU citizen to bring his private car in Greece and circulate it under the car's EU license plates for a period of six months from the date of entrance, without having to pay any car import duties in Greece.

After the lapse of such six months period the owner should drive the car out of Greece. In order to have the right to drive the car and circulate it in Greece again the car should remain outside Greece for at least a period of six months.

It should be noted that in this case evidence (such as a relevant customs verification) for the date of car entrance and exit from Greece are required in order for the owner to prove that he has not violated the above time limits.

This is because circulation of a car beyond the above said time limits provided by the legislation will lead to the imposition of monetary penalties.

Deductions of company car costs

Maintenance, operational and repair expenses as well as depreciation charges (generally 15% per annum) and lease payments made for the company cars are deducted from the company's taxable profits.

The amount of the deduction depends on the engine capacity of the car. Cars with an engine capacity of up to 1.400 cc are eligible to deduct 60% of the above-mentioned costs whereas for cars with a larger engine capacity can only claim 25% of the above costs.

The same deductibility percentages apply for the costs operated for leasing cars, however if the company cars are rented from a car rental company, the rental is deducted 100% irrespective of the car's engine capacity.

Company cars (owned, rented or leased) should be declared on the company's tax return as well as on the individual income tax returns filed by the company's President, member of the BOD etc.

VAT treatment

Any input VAT paid on the purchase, importation or intra-Community acquisition of private passenger cars up to nine seats is not recoverable.

The same applies to other costs associated with the car such as fuel, maintenance, repairs as well as leasing charges. VAT is however recoverable if the car is acquired for the purpose of resale, leasing or the transport of persons for a fee.

Intra-Community acquisition of new means of transport like cars is subject to tax in Greece irrespective of whether it is made by an individual, a taxable entrepreneur or a non-taxable legal entity on the condition that the new vehicle is registered for use in Greece. With respect to the acquisition of used cars VAT may apply depending on the circumstances of each case.

A car is characterised as used if a) a time period of six months has lapse from the date of its first circulation and b) the car has covered a distance of more than 6.000 km.