Starting a Business in Greece: IKE vs Sole Proprietor (2026 Guide)

What Is a Sole Proprietorship (Ατομική Επιχείρηση)?

A sole proprietorship (atomiki epicheirisi) is the simplest business form in Greece. You operate as an individual using your personal AFM (tax number). There's no separate legal entity — you and your business are one and the same. This means simpler administration but also personal liability for all business debts. Most freelancers, small shop owners, and independent professionals in Greece start as sole proprietors because it's fast, cheap, and straightforward to set up.

What Is an IKE (Ιδιωτική Κεφαλαιουχική Εταιρεία)?

An IKE (Idiotiki Kefalaiouchiki Etaireia, or Private Capital Company) is a modern corporate form introduced in Greece in 2012. It's become the most popular company type for small and medium businesses. An IKE is a separate legal entity from its owners (partners/shareholders), which means limited liability — your personal assets are generally protected from business debts. You can form a single-member IKE (monoprosopi IKE) where you're the sole owner and manager, making it ideal for solo entrepreneurs who want corporate protection.

Tax Comparison: The Numbers That Matter

This is where the decision usually gets made. The tax structures are fundamentally different:

Sole Proprietor taxation:
• Income taxed on the progressive scale: 9% (up to €10K), 22% (€10-20K), 28% (€20-30K), 36% (€30-40K), 44% (above €40K)
• Solidarity contribution: Currently suspended for most income
• Professional tax prepayment: 55% of previous year's tax
• EFKA contributions: Fixed monthly based on chosen category (€250-€650/month)
• All EFKA contributions are tax-deductible

IKE taxation:
• Corporate income tax: Flat 22% on profits
• Dividend withholding tax: 5% when distributing profits to shareholders
• Combined tax on distributed profits: approximately 25.9%
• Manager's salary: Taxed as employment income on the progressive scale
• EFKA for the manager/partner: Required if you're the managing partner
• Annual GEMI fee: €320/year for the General Commercial Registry

Real Scenario: €50,000 Net Profit Comparison

The IKE saves approximately €2,000-€2,500 per year at the €50,000 profit level. The advantage grows significantly as income increases — at €80,000 profit, the IKE saves approximately €5,000-€7,000 per year compared to a sole proprietorship.

Setup Costs & Process

Sole Proprietor setup:
• Cost: Essentially free (just administrative time)
• Process: Register at your local DOY (tax office) or via myAADE online, declare your KAD (activity code), register with EFKA
• Timeline: 1-3 days
• Minimum capital: None
• Accountant needed: Not strictly required but highly recommended

IKE setup:
• Cost: €400-€1,200 (lawyer/accountant fees for articles of incorporation, GEMI registration)
• Process: Draft articles of incorporation, register with GEMI (General Commercial Registry), obtain AFM for the company, register with EFKA if applicable
• Timeline: 1-2 weeks (can be done via the one-stop-shop e-YMS platform)
• Minimum capital: €1 (technically, though banks may require more for a business account)
• Accountant needed: Yes, mandatory — IKEs must maintain double-entry books
• Annual GEMI fee: €320

EFKA Contributions: A Critical Difference

Both sole proprietors and IKE managing partners must pay EFKA contributions. However, there are nuances:

• Sole proprietors choose from 6 fixed categories (€250-€650/month in 2026). First 5 years automatically start in Category 1.
• IKE managers who are also partners pay EFKA as self-employed (same categories). If you're a salaried manager without ownership, EFKA is calculated as a percentage of salary like any employee.
• Key optimization: In an IKE, you can set your manager salary at a level that minimizes the combined EFKA + income tax burden, while taking the rest as dividends (which are not subject to EFKA). This isn't possible with a sole proprietorship where all income is subject to the fixed EFKA category.

Ongoing Administrative Costs

Sole Proprietor:
• Accountant: €50-€150/month (optional but recommended)
• Single-entry bookkeeping (simpler)
• Annual tax return filing
• Quarterly VAT returns (if applicable)
• Total annual overhead: €600-€1,800

IKE:
• Accountant: €150-€350/month (mandatory, double-entry books)
• GEMI annual fee: €320
• Annual financial statements publication
• General Assembly minutes
• More complex tax filings
• Total annual overhead: €2,100-€4,500

The IKE costs approximately €1,500-€2,700 more per year in administrative expenses. This needs to be weighed against the tax savings.

Pros and Cons Summary

Sole Proprietor — PROS:
• Free and fast setup (1-3 days)
• Minimal paperwork and administration
• Lower accountant costs
• Simple single-entry bookkeeping
• Better for income under €30,000/year
• Easy to close down

Sole Proprietor — CONS:
• Unlimited personal liability
• Higher tax rates above €30,000 (up to 44%)
• No salary/dividend optimization possible
• Less professional image for some clients
• All income is personal income — harder to retain profits in the business

IKE — PROS:
• Limited liability (personal assets protected)
• Flat 22% corporate tax rate
• Salary + dividend optimization reduces effective tax rate
• Professional image — clients and banks take you more seriously
• Easier to bring in partners or investors later
• Can retain profits in the company for reinvestment

IKE — CONS:
• Higher setup costs (€400-€1,200)
• Mandatory accountant with double-entry books (€150-€350/month)
• Annual GEMI fee (€320)
• More complex compliance and reporting
• Harder to close (liquidation process)
• Tax prepayment is 80% (vs 55% for sole proprietors) in first years

Our Recommendation: When to Choose What

Choose Sole Proprietor if:
• Your annual profit is under €30,000-€35,000
• You're just starting out and testing a business idea
• You want minimal paperwork and costs
• You're a freelancer with low liability risk (e.g., consulting, writing, design)
• You plan to convert to an IKE later when revenue grows

Choose IKE if:
• Your annual profit exceeds €35,000-€40,000
• You need liability protection (e.g., you work with large contracts)
• You want to optimize your tax through salary/dividend split
• You plan to bring in partners or seek investment
• You need a more professional corporate image
• You want to retain profits in the business for growth

Frequently Asked Questions