The issue has resurfaced amid calls from opposition parties for higher taxation of investment income, but officials insist that no proposal to double the dividend tax rate is under discussion. They suggest that only a significant deterioration in tax receipts from dividends could prompt a review, and even then, the most likely adjustment would be a modest increase to 7% rather than 10%.
Government officials argue that dividend taxation should not be viewed in isolation. Instead, they contend that the effective tax burden on investors must be assessed together with Greece’s corporate income tax. Under the current system, corporate profits are first taxed at 22%, leaving the remaining earnings available for distribution to shareholders.
For example, on pre-tax profits of 100 monetary units, companies pay 22 units in corporate tax, leaving 78 units for dividends. Applying the current 5% dividend tax results in an additional levy of 3.9 units, bringing the combined tax burden to 25.9% of the original profits. Raising the dividend tax to 7% would increase the total effective burden to 27.46%.
The debate has intensified after PASOK, Greece’s main center-left opposition party, proposed introducing a progressive dividend tax structure. Under its plan, annual dividend income between €50,000 and €100,000 would be taxed at 10%, while amounts exceeding €100,000 would face a 15% rate. A shareholder receiving €70,000 in annual dividends, for instance, would pay €4,500 in tax instead of the current €3,500, with the first €50,000 continuing to be taxed at 5% and the remaining €20,000 at 10%.
Analysts warn that a substantial increase in dividend taxation could reduce Greece’s attractiveness to investors by significantly raising the overall taxation of corporate profits. They estimate that combining higher dividend taxes with the existing corporate income tax could push the effective tax burden above 33%, compared with 25.9% under the current regime, potentially undermining the country’s competitiveness as it seeks to attract capital and sustain economic growth.
