One of Greece’s largest companies, Titan Cement, said it is moving its headquarters to Cyprus as more companies are fleeing an avalanche of tax hikes at the same time Prime Minister and Radical Left SYRIZA leader Alexis Tsipras is trying to lure foreign investors that elements in his party don’t want.
Titan had revenues of 1.505 billion euros ($1.74 billion) in 2017, during a continuing economic crisis when companies have also been hit with higher social security contributions and struggling Greek banks have been cutting back on lending.
Greece had been surviving on three international bailouts of 326 billion euros ($375.89 billion) since 2010 before those ended on Aug. 20, although a cash buffer of 22 billion euros ($25.37 billion), enough money to last 22 months or until there’s a return to the markets.
Titan said the move won’t affect the company’s production in Greece, said Kathimerini, but many companies have also left, saying they will have better and faster access to financing in other countries, with lower interest rates and lower costs.
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 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, the paper said.
Registrations of Greek companies and self-employed professionals in Bulgaria rose last year from 2016, according to tax experts in Thessaloniki.
A report by Grant Thornton earlier this year showed that 58 percent of corporate profits in the last three years in Greece have gone toward taxes, a disincentive to stay in the country and a key reason why foreign companies aren’t interested in coming, along with SYRIZA’s anti-business attitude and political instability.