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Greek enterprises coming to Bulgaria in droves, opened another 20,000 jobs

22 November 2015 / 20:11:13  GRReporter
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Hundreds of Greek companies of all kinds, but particularly SMEs, are flooding neighbouring countries like Bulgaria, Albania, or Cyprus, in search of a better business climate and lower taxes, even on their cars alone.

Data from the Bulgarian Commercial Register show that in just one year (from 2013 to 2014, before the imposition of capital controls) the number of companies with Greek owners has reached 11,500. This is an increase of 28%. Reportedly, Greeks have lodged over 60,000 requests to create companies or open a personal or corporate bank account. Cyprus has received about 10,000 such requests.

Officials from neighbouring countries often visit Greece as part of a policy to attract potential new employers. They advertise their countries' friendlier taxation, lower wages and social security contributions as well as their borrowing opportunities. Some of them even promise free stay for those who create jobs. An Albanian MP and president of the Albanian development and investment commission recently visited Athens to promote the attractive business environment of his home country. He pledged free housing for a period of 100 years for those who open 50 jobs for Albanians in Albania.

Business run

According to the President of the Hellenic Confederation of Commerce and Entrepreneurship, Vassilis Korkidis, there is a risk of this wave becoming even stronger. He talked about the danger of a 'business run' on Greece and quoted data showing that Greeks have applied for approximately 60,000 tax numbers in Bulgaria and 10,000 in Cyprus. Korkidis also cited data published in the summer, showing that the Bulgarian Industrial Association forecasts that Greek employers will create up to 20,000 jobs in Bulgaria (70,000-80,000 Bulgarians are currently working in Greek companies). Representatives of the Greek Embassy in Bulgaria say that the interest in moving over among the Greek companies, which was very strong in the summer because of capital controls, is now tapering off. But figures speak by themselves: in 2014 alone, 2,500 new companies were created by Greek owners, if only to declare a luxury SUV as their single asset (Bulgaria has a far more favourable tax regime than Greece).

The prospects for business in the Balkans create a peculiar kind of market in Athens. Financial advisors, accountants, lawyers, etc. are acting as intermediaries for those who want to relocate their businesses. Panagiotis Pantelis, an accountant and a taxation expert, just a few days ago invited the Albanian MP, Artan Gaci, to present the benefits his country grants to potential investors: salaries of about €220 including employer's social contributions, 15% corporate tax (against 29% in Greece) with the prospect of a further reduction to 10%, and housing for a rent of €1 per year for a period of 100 years for those who open 50 jobs for albanians registered as unemployed.

Other countries offer similar conditions. Bulgaria not only boasts a corporate tax of 10%, but also offers up to 100% of tax exemptions for five years if a company is registered in an area with over 35% unemployment. Special incentives are offered to companies that hire registered unemployed (subtracting wages and contributions from the employer's profits for up to 12 months).

Country data

This is how the investment climate in the neighbouring countries looks:

Bulgaria: The average salary in the second quarter was €449, increasing annually by 7.6%. The average wage has seen increases in recent years: it has gone up 15% since early 2013. The 2015 minimum wage is €194 for an 8-hour day. Bulgaria has invested heavily in job creation and this has provided palpable results. There were 384,500 unemployed in 2014 against 433,200 in 2013. In percentage terms, unemployment has fallen from 13% to 11% (this is the 11th highest rate in the EU). Bulgaria makes employers pay 18% of social insurance contributions (in Greece the percentage is 25% and an increase is being mooted). Workers pay 13%. Corporate tax is at a flat of 10%, and dividends are only taxed 5%. Tax on interest on deposits is 8%. VAT (20% vs. 23% in Greece) is only levied on companies with a turnover above €25,000 (in Greece the corresponding amount is €10,000).

Cyprus: Registering a company in Cyprus costs about €1000-1200, another €1,000 per year are paid for basic legal expenses for representation (headquarters, office). The corporate tax rate is 12.5%. An annual fee of €350 is also due. Contributions paid by the employer reach 11.5%, while those paid by workers are 7.8%. VAT in Cyprus is 19%, and 9% for some categories (restaurants, hotels, etc.).

Albania: The average monthly salary is €325, the minimum wage is €155. Small businesses with a turnover of up to €57,140 pay 7.5% corporate tax. Larger companies pay 15%, VAT is 20%. Contributions are 15% on the employer and 9.5% on the employee. Greece is the strongest investor in Albania with an over 25% share of foreign investment. More than 640 Greek companies operate in the country according to the Albanian statistical office, which amounts to roughly 12% of foreign companies.


Tags: Greek companies Balkan countries Albania Bulgaria Cyprus jobs taxation
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