Amazingly, it’s been seven years since Greece became the first eurozone country to be bailed out by the European Union (EU), European Central Bank (ECB) and International Money Fund (IMF).
It looks like the the nation’s economic fortunes could finally be on the up – Fitch Ratings has upgraded Greece’s credit rating to B-, up one notch from its CCC rating – but the crisis-battered country is still well below investment grade.
In spite of this ongoing economic uncertainty, or maybe because of it, Greece could offer a great investment opportunity – so if you’re thinking of exporting to Greece, here’s everything you need to know…
What are the pros and cons of exporting to Greece?
Greece is currently undergoing a major public sector privatisation programme, and many UK consultants, law firms and auditors are already taking advantage of these opportunities by getting involved in the planning of and first phases of these schemes.
There are a number of benefits for UK businesses looking to invest in Greece, including close educational and cultural links between the two countries, which means British products and services are well received provided prices are competitive.
The strengths of the Greek market include:
- Over 20 million tourists visit Greece every year with about 2 million from the UK
- Rich in natural resources
- Highly educated and skilled workforce
- Strong entrepreneurial tradition
- Low labour costs.
And there are currently around 35,000 British citizens living in Greece, and a number of UK companies are active there, including Vodafone, Dixons, Marks & Spencer, Unilever, GlaxoSmithKline, British Airways and Astra Zeneca.
Although the debt crisis has led to a decline in UK exports, it remains an important market for British goods and services, which are worth a combined £2.2 billion (£0.9 billion goods and £1.3 billion services).
What are the main UK exports to Greece?
The top 10 exports from the UK to Greece are:
- Medicinal and pharmaceutical products
- Miscellaneous manufactured articles
- Petroleum and petroleum products
- Clothing and clothing accessories
- Road vehicles
- Oils, resinoids and perfume materials
- Telecommunications and sound recording equipment
- Electrical machinery and appliances
- General industrial machinery and equipment.
Doing business in Greece is not without its challenges though, not least because of the issues arising from the sovereign debt crisis. Other problems include:
- Perception that UK products might be considered too expensive, even though they are high quality
- Inconsistent and non business friendly taxation system
- Reduced consumer purchasing power
- 60th in the World Bank’s Ease of Doing Business ranking.
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How does tax work in Greece?
A double taxation agreement exists between the UK and Greece, so tax isn’t paid twice – once in each country – on exported goods and services.
The main tax rates include:
- Corporate Tax – general rate is 29%
- Income tax – following the introduction of emergency tax rates, income tax is payable between 22% and 45%, depending upon annual earnings.
- Capital Gains Tax – A capital gain in Greece is added to regular income and is taxable at the same rate as regular income for a company, other than in specific instances as defined in law.
- Valued Added Tax (VAT) – between 6% and 24%.
How will I be affected by customs in Greece?
The internal EU single market allows for the free movement of goods and services without any import duties being applied, and testing is mandatory for some imported goods, especially technical and electrical equipment.