According to World Bank data, about 32% of the Greek workforce is self-employed. If global companies want to tap into the country’s talent and hire Greek contractors, they need to comply with the Greek Civil Code and find the best way to pay them.
Before you onboard an independent contractor in Greece, read this guide to learn how to avoid misclassification, fulfill the right tax obligations, and pay Greek freelancers in euros with minimal hassle.
Step #1: Classify your workers in Greece
Greek labor laws, including the Greek Civil Code, draw distinctions between employees and independent contractors. Employees fulfill obligations stipulated by employment contracts. On the other hand, independent contractors are self-employed, acting as their own legal enterprise, and fulfilling obligations stipulated by time-bound contracts.
In Greece, misclassifying a work relationship can result in misclassification penalties, including administrative fines, back taxes, and even a loss of intellectual property protection.
Greek authorities look at both the written agreement and the facts of the working relationship to gauge misclassification. The table below lists the differentiating criteria.
High level of worker control. Contractors typically get more flexibility over when, where, and how they work.
More guidance from the employer. Employees are under the direct control and supervision of a company, which can dictate when, where, and how work is performed.
Workers provide their own tools and equipment.
Companies provide tools and equipment to employees.
Less integrated. Contractors work independently, often outside the realm of day-to-day company processes and events.
Highly integrated. Employees are more involved in daily company processes and usually work on-site.
No benefits entitlement. Contractors get state-funded unemployment, pension, and health insurance benefits, but aren’t entitled to other statutory benefits guaranteed for employees.
Entitled to benefits. Employees are entitled to certain benefits and protections, such as termination notice periods, sick leave, parental leave, maximum working hours, and more.
Time-bound contract. Contractors often work on a per-project basis. The working relationship has a set end date.
Indefinite engagement. While Greece recognizes some forms of part-time and fixed-term employment, employees can typically expect a working relationship to continue indefinitely.
Non-exclusive services. Contractors can provide services to multiple clients at once.
Exclusivity of service. Employees are typically prohibited from providing services for competitors unless otherwise stated in the employment agreement.
Subcontracting. Contractors can reassign work to other businesses or individuals.
No subcontracting. Employees have to complete their own work unless they have explicit permission to delegate it.
Step #2: Determine the best way to pay your contractors in Greece
The contractor agreement should stipulate how and when you’ll pay your Greek freelancer, so it’s important to have a payment method in place before onboarding.
You should also make sure you have their bank information before they submit their first invoice.
Common payment options for Greek contractors include:
- Bank wires. If you open a Greek bank account, you can submit funds to Greek sole traders via direct deposit. Alternatively, you can use an existing account to send an international wire transfer through SWIFT, which comes with fees and service charges.
- International money orders. This approach involves physically mailing a contractor’s payment. But, the process can be time-consuming. Businesses have to commute to a Western Union, post office, or bank to buy the money order. Subsequently, contractors have to commute to their local bank to deposit the money order. In addition to this being a lengthy process, money orders are also subject to unstable exchange rates and fees.
- Digital wallets or payment platforms. Another option is to use an online payment platform to transfer funds. Paypal has widespread adoption in Greece. According to a European Central Bank survey, one in five Greek consumers uses Paypal. Other options won’t be available (e.g., Venmo is exclusive to the US), and companies should also consider vendor fees and fluctuating exchange rates.
- Global payroll services. Independent contractors aren’t typically included in the same payroll system as employees since they handle their own taxes. If you invest in a global payroll service like Rippling, you can pay both employees and contractors in euros, in a single pay run.
Step #3: Use global payroll software to process payments for Greek contractors
If you want to avoid slow processing times and international compliance issues, you can pay Greek contractors through global payroll software.
With Rippling, you can pay employees and contractors around the world simultaneously in their local currencies. You can also send out compliant agreements, collect e-signatures, and store them all in Rippling’s easy-to-use platform.
Here’s a glimpse of Rippling in action:
Step #4: Ensure your Greek contractor has the right tax information
Greek independent contractors are responsible for filing their own taxes and making social security contributions to the national pension scheme, employment insurance, and health insurance. In order to pay taxes, the freelancer needs to register as a sole trader at their local office of Greece’s Chamber of Commerce. They can register their legal name as the name of their business if they intend to operate under a sole proprietorship, or register a separate business name that serves as their corporate entity.
Greek contractors file annual income tax returns and make social security payments on the Greek government’s tax portal. Income is taxed at a progressive rate and contractors pay quarterly installments, along with a fifth slice at year’s end. Contractors often have to pay an additional value-added tax rate of 24%.
In order to file taxes in Greece, contractors typically need:
- A Greek tax identification number (AFM)
- A sole trader’s license via the regional Chamber of Commerce Branch
- Office address
- Registration with the Organization for Self-Employed (OAEE) for social security
Frequently asked questions about running payroll for contractors in Greece
Do you need to withhold taxes when paying contractors in Greece?
No, Greek contractors are responsible for paying their own taxes, and employers don’t need to withhold income taxes or social security contributions on a self-employed worker’s behalf. In addition to filing their own income taxes, Greek freelancers need to contribute to the state-funded pension scheme, health insurance, and unemployment insurance—known collectively as social insurance.
What is the minimum wage in Greece?
As of April 2023, Greece’s minimum wage is EUR 780 per month. National minimum wages are often pegged to inflation and subject to change.
Do Greek contractors get benefits?
In Greece, independent contractors are entitled to health insurance, unemployment insurance, and pension—all of which are nationally administered. They are not, however, entitled to other employee benefits such as paid annual leave, maternity leave, paternity leave, severance pay, and more.
Can you pay contractors in Greece in your home currency?
While foreign companies are allowed to pay Greek contractors in their native currency, it’s generally expected to pay them in euros. The type of currency should always be stipulated in the contractor agreement.
How do you turn a contractor into an employee in Greece?
After collaborating with a Greek contractor for some time, you may want to hire them as an employee. This can be tricky without intricate knowledge of Greek labor laws (and overarching employment laws from the European Union). But with Rippling, you can transition contractors to full-time employees, onboard them in minutes, and administer benefits and payroll.
Rippling and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.