Greece In Brief

The Greek economy, having achieved high growth rates until 2008, showed signs of recession in 2009 as a result of the global financial crisis, whereas in 2010 the recession has been intensified considerably due to country’s fiscal imbalances.

The need for consolidation has led the country to embark on a trilateral mechanism of financial support, comprising the EU, the IMF and the ECB.

The restrictive income policy and drastic limitation of public expenses had a negative impact on GDP growth in 2010, leading to its decrease by 4.35% (constant prices of year 2000). However, reforms and restrictive policy implementations have already begun to bear positive results, even though fiscal targets are not yet completely met.

Additional facts

Despite of current developments, there is absolutely no doubt that the long term outlook will retain Greece as an investment destination. This is demonstrated strongly by the attention the country is getting by the leading economies worldwide. One must not forget that the county had evolved as the Balkan Region's leading economy due highly skilled and productive workforce, which ranked as the second most productive in a 2008 study of OECD members.

In addition to productivity, large percentages of the population are proficient in foreign languages, with English and French being widely used, especially in business circles. Greece's EU membership and the adoption of the Euro as the official currency help facilitate international trade and foreign investment. Many incentives exist for potential investors, both through Greek government channels and through the European Union's many investment subsidy programs. Furthermore, the wide availability of transportation to various international destinations ensures that distribution of goods can occur in a timely fashion.

Greece also enjoys one of the most advanced telecommunications networks in the region, with new developments constantly being made in the technological sector to ensure that the highest standards are maintained both in the availability of high speed broadband access and in mobile telephony. A strategic location, a productive workforce, and the world's largest shipping fleet have solidified Greece's economic presence in the European community, specifically in the Balkan Peninsula, and will continue to do so for many years to come.

Greece In the World

Despite the economic crisis that emerged in 2010, Greece still remains appealing as an investment location because it offers businesspeople a wide variety of investment opportunities that take advantage of the country’s strategic geographic location and unique competitive advantages.

Greece is a natural gateway to more than 140 million consumers in Southeast Europe and the Eastern Mediterranean, a region with a GDP of almost 1 trillion Euro. As the hub of diverse emerging markets, Greece provides access to populations with a strong demand for consumer goods, infrastructure modernisation, technology and innovation networks, energy, tourism development, and light manufacturing.

Retaining a country’s economic and political relevance in today's dynamic geopolitical age is a feat that is very difficult by any standards; however, the Greek government, through the implementation of a variety of political and economic policies, aims to do just that. Furthermore, by establishing economic relations with both emerging and highly developed economies, investment promotion can be utilised to maximise economic benefit and development.

Economic reforms in the coming years will serve as a tool to ensure that Greece remains the most influential Balkan economy, and that its status as a gateway to many emerging African and Middle-Eastern economies remains intact. Greece is also in the process of implementing a system to accelerate the rate at which foreign investment a progress, thus allowing foreign governments and enterprises to bypass the bureaucracy that often hinders such investments.

Greece Economy

Greece has significant investment opportunities arising primarily from its geopolitical position, its inclusion in the European Union and the Eurozone, its natural resources, its human resources and its infrastructure

Undoubtedly, the economic crisis that emerged in 2010, triggered by the global financial crisis and fiscal imbalances, resulted in the inclusion of Greece in the support mechanism of the IMF and the EU and the implementation of strict economic policy, with negative effects on economic fundamentals.

However, the necessary structural reforms accompanying the efforts for financial rationalisation have resulted in the creation of a favorable investment and business environment and create additional investment opportunities.

In 2011 it became evident that the recession was deeper than expected, thus additional measures were implemented, and a debt haircut at a level of 50% has been agreed upon. The Hellenic Statistical Authority provides an estimation of GDP for the second quarter of 2011 at –7.3%, compared to the same period in 2010. Estimates of research analysts (for example, Business Monitor International, Greece, Q4 2011), expect a decline in real GDP growth of 7.1% for 2011, of 3.5% for 2012 and positive values from 2013 and beyond.

The Greek economy has evolved into a service-based economy, with services accounting for more than 73% of GDP. Tourism has been the leading sector, accounting for 15% of the country's GDP, with the annual number of tourists visiting Greece expected to surpass 20 million within the next few years.

Greece also has the largest merchant fleet in the world with 9% of merchant ships globally under Greek ownership. As a result, shipping contributes 4.5% of GDP and has ensured that Greek ports remain busy. In the past, agriculture had been a very important economic sector, but it has seen a sharp decline in recent years and currently represents only 5% of GDP. Other important sectors of the Greek economy include food and beverage, textiles, chemicals, tobacco, and pharmaceuticals.

Trade Profile

Greece has traditionally been a country that has operated with a negative trade balance. Since joining the European Union, trade has been steadily improving due to the abolition of restrictive trade policy that had previously been in place. Most of Greece's international trade occurs within the European Union, with the United States being Greece's largest trading partner outside the EU.

Greece exports a variety of goods, mostly food and beverages, manufactured goods, petroleum products, chemicals and textiles. Its top export partners are Italy, Germany, Bulgaria, Cyprus, the United States, the United Kingdom, and Romania. Most of Greek exports come from SITC sections 5-8, which are composed of manufactured goods. Despite the economic crisis that has recently plagued the troubled Greek economy, beverage and tobacco exports (SITC section 1) have increased by 1.6% in 2009.

Greece has always imported many more goods than they exported. This has been one of the primary worries about the Greek economy. As a result of the global financial crisis, imports have decreased at a very fast rate; however, the amount of goods imported remains well ahead of the country's exports. The key import partners for Greece have been Germany, Italy, Russia, France, China, and the Netherlands. The leading category for Greek imports is Manufactured goods, with machinery and transport equipment (SITC section 7) being the primary sector, accounting for 30.5% of total imports.

Economic Forecasts

Although Greece faced a devastating economic recession following the global financial crisis of 2008, the austerity measures implemented by the government have already ensured that the Greek economy is already on the road to recovery. Despite the fact that the upward trend in the unemployment rate is expected to continue for the next 2 years, the country's economy will slowly recover due to the decrease of the national debt that is predicted in the next 4 years. Economic growth is set to resume in 2012, and the development of several key investment sectors will surely provide an added boost to the recovering economy.

In addition to all the austerity measures implemented by the Greek government to ensure that Greece recovers from the recession, there were other measures taken to promote economic growth. The decrease in taxes for corporations coupled with the new legislation to reduce bureaucracy and accelerate foreign investments will surely facilitate the recovery process.

Furthermore, the recession resulted in sharp declines in both imports and exports. The government aims to keep imports at this lower level while increasing exports by utilising new systems of promoting Greek products abroad. Greek companies have also taken advantage of European Union funding to market their products in international markets.

Important Investment Sectors

There exist a variety of investment sectors that can be designated as being preferable within the Greek economy. The sectors that can be expected to possess the highest degree of potential profitability are tourism, energy, and food and beverage.

Tourism has long been one of the staples of the Greek economy. The number of tourists that visit Greece annually is rapidly expected to pass 20 million, with China having recently disclosed that Greece is the preferred tourist destination of its residents. As a result of this constantly increasing influx of foreign visitors, there are ample opportunities for investment in this sector, with conference centres, golf courses, spas, and integrated resorts being at the top of the list.

Alternative energy sources have rapidly become one of the most important investment opportunities globally. Producers of wind, geothermal, and photovoltaic energy in Greece can reap the benefits of a variety of Greek government and European Union subsidy programs aimed at reducing fossil fuel dependence. Furthermore, inexpensive financing is available to those that require funding for the development of alternative energy installations.

Food and beverage has also been a prevalent investment sector in Greece, with large multi-national corporations, such as Nestle and Coca-Cola having chosen Greece as a regional distribution hub for their products. Being that food and beverage is a category that represents over 20% of Greek exports, and the proximity to Piraeus, one of the largest ports in Southern Europe, Greece is a prime location for investment in this sector.

Useful Websites

Greece Business Environment

Greece experienced a period of rapid development after the adoption of the Euro as the official currency in 2002. Furthermore, there were many improvements in infrastructure prior to the 2004 Olympic Games, which have effectively modernised Greece and prepared them to deal with additional transportation adequately. As a result of these improvements, Greece now has an excellent infrastructural network that makes conducting business in Greece more problem-free than it had been in the past.

Overview

In 2010, fixed capital formation in Greece reached 33.2 billion Euros, showing a decrease of 13% compared with the levels of 2009 (38.2 billion Euros). This decrease is due to the drastic reduction of public expenses and the restrictive fiscal policy resulting from the financial crisis in Greece. The export of Greek goods during 2010 showed a significant increase, reaching in current prices 20.7 billion Euros, up from 18.5 billion Euros in 2009. This increase is due to the gradual easing of the global financial crisis, especially in traditional markets for Greek products, and also due to the reduction of the prices of goods, intermediate goods, and production factors as a result of the domestic economic crisis.

Major Economic Indicators

Language

Greek is the official national Language, but English and French are both very widely spoken, especially in business circles. Most business and government documents are available in both Greek and English, and most websites are also available in both languages.

Punctuality and Dress Code

Punctuality is expected and the business dress code is fairly conservative. Meetings are to be requested one to two weeks in advance and are to be confirmed a few days prior to the meeting date.

Meetings

It is customary to greet people with a handshake, and the exchange of business cards typically occurs at the beginning of a meeting. People in a decision-making position typically conduct meetings and it is expected that all meetings requested will be with someone in management. Meetings can also be conducted over a meal, and it is customary for the person that requested the meeting to pay for the meal.

Office Hours

Typical office hours are Monday to Friday 08:30 to 17:30 with a typical one hour lunch break sometime in the afternoon. Business is very rarely conducted on weekends, unless it is regarding retail stores, most of which are open on Saturdays.

Titles

Greek business contacts are typically addressed using personal or professional titles accompanied by the person's surname. Business is conducted on a first-name basis, but only after a good working relationship has been established. It is customary to wait for your business contact to initiate the use of first names prior to using them yourself.

Women in Business

Greek society advocates the equal treatment of men and women, and this is a policy that has been implemented in the workplace as well. It is very common to see women occupying senior positions in both the private and public sectors.

Strengths of the Greece Economy

Strengths of the Market

• European business culture
• Workforce is highly educated/very productive
• Easy transportation (by air and sea)
• High Awareness of international products and Brands
• English and French widely spoken
• Easy access to many markets (Europe, Middle East, North Africa)

The significant advantages of Greece as an international business centre

• Member of the European Union
• Democratic country with a free market economy
• Political stability
• Government and EU incentives to invest

Other benefits of Greece companies

• Low fees for company formation and administration
• Low capital requirements to establish a corporation
• Double Taxation Treaties signed with 44 nations
• Declining corporate tax rate

Greece: Important Information About Conducting Business

Taxation

Greece is a country that is characterised by its high and frequently increasing personal tax rates, which range from 0-40% depending on an individual's declared income. Corporate taxes on the other hand are being steadily reduced. Corporate profits were taxed at 25%, which was reduced to 24% for 2010, and will be steadily reduced to 20% in the next few years. In addition to this tax break for enterprises, a new law has been proposed that will provide 5 years of tax-free operation to any new enterprise established and operated by a person under the age of 30. This proposal is aimed at curbing Greece's increasing unemployment rate among young people. V.A.T. in Greece is one of the highest in Europe at 23%, with certain products viewed as necessities being taxed at respective rates of 11% and 5.5%. The Aegean islands, with the exception of Crete, enjoy a V.A.T. that is reduced by 30% on all goods and services.

Taxes for Foreign Enterprises

Foreign corporations that conduct business in Greece are taxed by the Greek government on all income that is generated in Greece at the same rates that are specified for domestic enterprises. The same policy applies to offshore companies in all fields, with the exception of real estate ownership. Offshore companies that own real estate in Greece are taxed at a rate of 10% of the value of their property annually.

"Fast Track" Legislation

Recently passed legislation was designed to "fast track" foreign investment in Greece. Investments that fulfil a set of pre-determined criteria will be able to bypass many of the bureaucratic processes that have previously deterred investors. The proposed investment must meet one of the following criteria:

• Total investment exceeds €200 million
• Total investment exceeds €75 million and includes the creation of 200 jobs
• More than €3 million is invested every 3 years in high technology or innovations projects that are integrated into the investment
• More than €3 million is invested every 3 years in projects involving Greece's environmental protection
• More than €3 million is invested every 3 years in projects that cause increases in value of education, research, and technology, through qualitative and quantitative increase in knowledge
• The investment must create 250 sustainable new employment positions

Establishing a Business in Greece

Businesses in Greece are divided into four categories that depend upon the number of investors involved and on the liability of those investors.

General Partnership

• Founding parties may be natural or legal persons (at least 2 people required)
• Partners are jointly responsible with their entire estate for all company obligations
• Terminating the company does not terminate the partners' responsibility for existing company debts
• Public document is not required to establish a general partnership

Limited Partnership

• Founding parties may be natural or legal persons (at least 2 required)
• Split into general and silent partnerships
• General partners have unlimited liability for any company obligations
• Silent partners' liability may not exceed their initial investment in the company
• Public document not required

Limited Liability Company

• Can be established by any natural or legal person (one person may not be the sole shareholder of multiple Limited Liability Companies)
• Minimum capital of 18,000 Euro required
• Capital must be divided into "participation units" comprised of shares. Each "participation unit" must have a minimum value of 30 Euro
• Specific publicity rules
• Specific lifecycle duration
• Limited responsibility of the partners
• Decision making based on majority will
• Must have 2 structures: General Assembly and Manager of Managers
• The following are excluded from the scope of a Limited Liability Company: Banking, Insurance, Stock Exchange, Portfolio Management, Mutual Fund Management, Leasing, Promotion and Implementation of High Technology Investments and Athletic Activity

Limited Company (Societe Anonyme)

• Requires at least 2 natural or legal persons
• Minimum capital of 60,000 Euro
• Capital must be divided into equal shares
• Strict publicity rules
• Long life cycle (usually 50 years)
• Limited responsibility of shareholders
• Decisions made by majority will
• Existence of 2 structures: General Assembly of shareholders, and Executive Board Further information can be obtained from the Invest in Greece Agency