Athens-listed cement giant Titan announced on Thursday that it is transferring its headquarters to Cyprus, at a time when the Greek state is strangling enterprises with its high taxes and social security contributions.
Titan made it clear that its shift will not affect the company’s production in Greece. However, it is one of many firms looking abroad in the belief that elsewhere in Europe they will enjoy better and faster access to bank financing – which is almost nonexistent in Greece – and with lower interest rates, while their costs will be significantly lower.
Greece has one of the highest corporate tax rates in Europe, and the highest in its region of the Balkans and Eastern Europe, reaching up to 39.65 percent (earnings and dividends rates) and undermining the growth of enterprises.
The Greek income tax rate for companies has risen to 29 percent from 26 percent in 2014, while the dividend tax climbed to 15 percent from 10 percent. In Bulgaria the corporate tax and the dividend tax stand at 10 percent. In Cyprus, where Titan is moving to, the corporate tax rate stands at 12.5 percent, and is 0 percent for the non-Cypriot stakeholders who reside in Cyprus.
According to the latest available data, 6,692 Greek corporations registered in Cyprus in the period from 2012 to 2017, most of which did so in the last couple of years: In 2016 1,799 Greek firms relocated to Cyprus, followed by almost 1,800 in 2017. Many Greek companies even decided to move their activities to Cyprus when that country was in a bailout program. In the two years from January 2014 to December 2015 1,700 Greek firms joined the Cypriot register.
Registrations of Greek companies and self-employed professionals in Bulgaria rose last year from 2016, according to tax experts in Thessaloniki.
The common conclusion of reports on the Greek business sector is that unless tax rates are reduced, the Greek economy will not be able to grow, with a report by Grant Thornton earlier this year showing that 58 percent of corporate profits in the last three years in Greece have gone toward taxes.