Common Mistakes to Avoid When Forming a Company in Greece

Introduction

Greece has become an increasingly attractive jurisdiction for company formation thanks to its strategic location in southeastern Europe, membership in the European Union, improving business environment, competitive cost base in many sectors, and targeted incentives for foreign investment. Yet forming a company in Greece involves a number of legal, administrative and tax steps that can be unfamiliar to foreign founders and first-time local entrepreneurs. This article highlights the most common mistakes to avoid when forming a company in Greece and provides practical, actionable guidance on costs, timelines, requirements and documentation. Use this as a checklist to reduce delays and avoid unnecessary expense during company registration and early operations.

Why Greece is attractive for business

Greece offers several advantages for businesses:

• EU single market access and participation in the Schengen area (for travel facilitation).
• Strategic gateway to Southeastern Europe, the Balkans, the Eastern Mediterranean and North Africa.
• Established sectors with global reach (shipping, tourism, export-focused manufacturing) and growing tech and services hubs in Athens and Thessaloniki.
• Competitive labor and operational costs relative to many Western European countries.
• Incentives and grants for investment, digitalization and R&D, often administered by national and regional authorities.

When planning company formation in Greece, it is critical to combine an understanding of these benefits with a realistic view of administrative, legal and tax obligations to avoid common pitfalls.

Common mistakes to avoid

1. Choosing the wrong corporate structure

Choosing an inappropriate corporate structure can create unnecessary costs, reporting burdens, or limited growth capacity. The most common entity types are:

• IKE (Private Company — flexible, popular with small/medium entrepreneurs)
• EPE (Limited Liability Company — traditional LLC)
• AE (Société Anonyme / public limited company — for larger capital structures)
• Partnerships (general and limited)

Mistake: selecting an AE or EPE unnecessarily for a small business instead of an IKE, leading to higher minimum capital and heavier compliance.

2. Underestimating capital and banking requirements

Some corporate forms require minimum share capital (EPE: typically €4,500; AE: €24,000; IKE often permits low/nominal capital). Mistake: failing to deposit or document share capital properly at a Greek bank or not understanding the requirements for demonstrating source-of-funds for anti-money laundering (AML) checks, leading to bank account delays.

3. Ignoring sector-specific licenses and permits

Certain activities (financial services, food, transport, regulated professions) require licences or approvals before operation. Mistake: registering a company and starting operations before obtaining necessary permits, resulting in fines or closure orders.

4. Delays in tax and social security registration

A Greek tax number (AFM), VAT registration (if required), and social security registration for staff are mandatory. Mistake: assuming registration is automatic with company formation and delaying registrations, which can trigger penalties and impede hiring.

5. Poor accounting setup and compliance planning

Greek accounting and VAT rules require careful local compliance (invoicing requirements, VAT filing, employer payroll deductions, year-end financial statements). Mistake: engaging only part-time bookkeeping or neglecting local statutory formats, leading to fines or inaccurate tax filings.

6. Not preparing notarized / translated documents in advance

Non-Greek shareholders or directors often need apostilled documents and certified translations. Mistake: not arranging apostilles/translations before arrival or submission, causing formation delays.

7. Underestimating timeline and hidden costs

Some entrepreneurs expect company registration to be immediate. Reality: plan for typical setup time of 4–6 weeks (and longer if sector licences or immigration issues apply). Mistake: poor planning leads to project delays.

8. Overlooking obligations for non-residents

Non-EU nationals and some non-resident entities may require additional documentation or local tax representatives for certain procedures. Mistake: assuming identical treatment to local residents without checking residency-based requirements.

Practical step-by-step process for company formation

Step 1 — Choose company type and name

• Confirm name availability with the General Commercial Registry (GEMI).
• Decide on corporate form (IKE common for SMEs).

Step 2 — Prepare constitutional documents

• Draft Articles of Association (statute) or company agreement.
• For corporate shareholders, prepare board resolutions, incorporation certificates and power of attorney documents.

Step 3 — Notary and signature

• Execute formation documents before a Greek notary public (or through a local proxy with notarized powers of attorney).
• Obtain electronic signatures where required for online filings.

Step 4 — Register with GEMI (General Commercial Registry)

• Submit notarized documents and application to GEMI and obtain company registration number.
• Register the company’s official address.

Step 5 — Obtain AFM (tax number) and VAT registration

• Register with the Independent Authority for Public Revenue (AADE) to receive company AFM and, if applicable, register for VAT.
• VAT registration is required if turnover meets or will exceed thresholds or if engaging in VAT-able transactions; Greece’s standard VAT rate is 24% with reduced rates for certain items.

Step 6 — Open a bank account and deposit capital (if required)

• Open a corporate bank account and deposit share capital when required by the chosen corporate form.
• Prepare to satisfy AML controls and provide source-of-funds documentation.

Step 7 — Social security and employment registrations

• Register as an employer with EFKA (social security), register employees and set up payroll systems to withhold taxes and social contributions.

Step 8 — Licences & sector-specific approvals

• Apply for any industry permits, municipal licences or sector-specific authorisations necessary to begin active trading.

Timeline and estimated costs

• Typical setup time: 4–6 weeks for a straightforward formation (name check, notarization, GEMI registration, AFM and VAT). If sector licences or substantial due diligence is required, expect longer.
• State/registration fees: modest (often several hundred euros depending on form and services).
• Notary fees: vary by transaction size and complexity; typically several hundred euros for standard incorporations.
• Legal and accounting fees: expect professional fees between €500–€3,000 for standard advisory and registration support (ranges vary with complexity).
• Bank costs: usually minimal for account opening; additional costs for capital deposit confirmation if needed.
• Minimum share capital: IKE can be formed with very low capital (often €1 or small nominal amounts); EPE generally requires around €4,500; AE requires significantly higher capital (around €24,000). Confirm current requirements with local counsel.

These are estimates; actual costs will vary by provider, city (Athens vs. smaller municipalities), complexity and whether you use expedited services.

Required documents (typical)

For individual founders (Greek citizens and EU nationals):

• Valid passport or national ID.
• Proof of address (utility bill, bank statement).
• Tax identification number (AFM) or application form for AFM.

For non-EU founders:

• Passport with apostille or consular legalization, translated into Greek if required.
• Proof of address.
• Additional documentation if corporate shareholder (see below).

For corporate shareholders:

• Certificate of incorporation, Articles of Association (apostilled and translated).
• Board resolution authorizing formation and specifying representatives.
• List of directors and ultimate beneficial owners (UBO) information.

For company formation filings:

• Articles of Association / company agreement.
• Minutes of shareholders’ meeting (if applicable).
• Proof of registered office address.
• Bank confirmation of capital deposit (where applicable).
• Power of attorney for representatives (if founders are not present).

Always confirm specific document lists with your advisor or the notary; requirements can vary.

Taxation and ongoing compliance

• Corporate tax: corporate tax rate varies; as of 2024 the standard corporate tax rate in Greece is 22%. Check for updates to rates and special regimes.
• VAT: standard rate 24%, with reduced rates applying to certain goods and services.
• Employer and employee social security contributions: employers typically contribute a percentage of gross payroll for social security; employee deductions are withheld. Employer contribution rates commonly range in the low-to-mid 20% area depending on the sector and employee category. Confirm exact percentages with a Greek payroll advisor.
• Annual accounts and tax returns: companies must prepare annual financial statements in accordance with Greek GAAP, file corporate tax returns, and submit VAT returns as required (monthly or quarterly depending on turnover).
• Transfer pricing, controlled foreign company rules and other cross-border tax issues may apply to groups—seek specialist advice for multinational structures.

Practical tips to avoid delays and penalties

• Engage local counsel or a formation agent early to manage notary, GEMI, AFM and VAT filings.
• Prepare apostilled documents and translations in advance if any founders or shareholders are non-Greek.
• Ensure clarity on the required share capital and arrange bank introductions early for AML compliance.
• Don’t start regulated activities before securing sector licences.
• Set up payroll and accounting from day one to capture VAT, withholding and social security correctly.
• Document ultimate beneficial owners (UBOs) clearly and maintain up-to-date registers.
• Factor in the 4–6 week typical setup time when planning investments, hiring or contract starts.

Conclusion

Forming a company in Greece offers strong strategic advantages, but success depends on careful selection of corporate structure, timely completion of administrative steps, and strict compliance with tax and employment rules. Common mistakes—such as choosing the wrong entity, undercapitalizing, neglecting licensing and delaying tax/social registrations—are avoidable with upfront planning and experienced local support. Expect a typical setup time of 4–6 weeks for routine incorporations, factor in costs for notary, registration, professional services and possible capital deposit, and remember that the corporate tax rate can vary; the current standard rate is 22% (verify for changes). Use a local legal and tax advisor to navigate Greek procedures efficiently and to ensure your new company is compliant from day one.