Business Environment - Taxation Analysis

This report analyzes the tax issues a Greek tax resident individual needs to consider before executing a business plan. It covers the determination of residential status, tax liabilities, and the application of tax principles for individuals and legal entities. The report also discusses the tax rates applicable to taxable income and royalty income, highlighting the importance of understanding tax regulations to avoid legal consequences. It further explains the conditions for availing tax benefits and the implications of foreign dividends. The report concludes by emphasizing the need for entrepreneurs to pay taxes on their taxable income and royalty income, while also clarifying the ambiguity related to foreign dividend treatment.

Business Environment -
Taxation
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Table of Contents
Analyze tax issues in order to advise the Greek tax resident individual to consider before
executing business plan...............................................................................................................3
REFERENCES................................................................................................................................5
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Analyze tax issues in order to advise the Greek tax resident individual to consider before
executing business plan
In the Greek taxation or in every taxation matter is essential for an individual to
determine the residential status of a person in order to determine its tax liabilities. Tax principles
are used by a person in order to ascertain the residential status of an individual by applying
several residency tests. The residency tests is different for several people in the taxation purpose
is given as below:
Individual
The residency tests for an individual involves permanent resident of a person in their
home country or habitual abode. There is one condition to be fulfilled by a person to be covered
in the category of habitual abode that a person should present in a particular country for 183 days
within 12 month period without any kind of stoppage.
Legal entity
There are three conditions to be fulfilled by a legal entity in order to be fall under this
particular section and avail all the benefits such as establishment of a firm in Greece, registered
seat in Greece and place of effective management in Greece.
In the given case scenario, Greek entrepreneur us to be called as resident under Greece taxation
as they called to be tax resident. Being a legal entity it is required by them to fulfill all the
conditions that its registered seat is in Limassol that is located in the Cyprus in Greece. The place
of effective management is Greece as the books of accounts of the firm is maintained in the
Cyprus.
Tax liabilities
Tax at the rate of 29% will be charged by the legal authorities on the taxable income
earned by an individual in a particular financial year as their basic objective is to charge tax on
the current income earned by an individual in order to avoid further legal consequences that may
incurred in the near future on an entity (Kaplanoglou, Rapanos and Daskalakis, 2016). In the
current case scenario, an individual charged the invoices for the rendered services on the name of
Cypriot company in order to avail the benefit of 12.5% in the tax rates but the basic requirement
of availing this tax rate is that any person resident in European union can avail this benefit in
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relation to the foreign dividend received out of a trading profit will provide benefit to an
individual.
Tax is charged on the royalty income received by an individual from patent contribution
on the share capital after acquiring shares of the company by shifting its status on their own
name provides complete possession of all the shares held by an entity (Artavanis, Morse and
Tsoutsoura, 2016). Tax rate applicable on the royalty income is 20% on the total income
received by an individual.
In the present case scenario, an entrepreneur are required to pay off tax on their taxable
income at the rate of 29% along with 20% tax charged on the royalty income received by an
individual in a particular financial year. 12.5% benefit will not be avail by an individual as there
is ambiguity related to the treatment of foreign dividend in hands of company.
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REFERENCES
Artavanis, N., Morse, A. and Tsoutsoura, M., 2016. Measuring income tax evasion using bank
credit: Evidence from Greece. The Quarterly Journal of Economics. p.qjw009.
Kaplanoglou, G., Rapanos, V. T. and Daskalakis, N., 2016. Tax compliance behaviour during the
crisis: the case of Greek SMEs. European Journal of Law and Economics. 42(3). pp.405-444.
Souliotis, K., and et.al., 2016. Informal payments in the Greek health sector amid the financial
crisis: old habits die last... The European Journal of Health Economics. 17(2). pp.159-170.
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