The government encourages foreign capital investment and protects foreign investors against compulsory appropriation of their assets in Greece. Incentives include reduced tax rates and increased depreciation rates.

Total direct foreign investment (FDI) was estimated at $3.78 billion in 1995. From 1995 to 1997, FDI inflow averaged about $1 billion a year. In the wake of the Russian financial crisis of 1998, FDI inflow fell to $700 million in 1998 and to $567 million in 1999. FDI inflow in 2000 reached over $1 billion and grew to a record $1.56 billion in 2001. In 2002, FDI inflow fell nearly 90% to $50.3 million. For the period 1999 to 2002, FDI inflow averaged about $833 million. Total FDI stock in 2002 was over three times the 1995 level, totaling $12.5 billion.

Outward FDI flow was $542 million in 1999, over $2 billion in 2000, and $611 million in 2001. Outward FDI increased to $655.3 million in 2002. For the period 1999 to 2002, average outward FDI from Greece was $993.3 billion. The total stock of outward FDI held by Greek investors was $5.86 billion in 2002.

The corporate income tax rate in Greece in 2002 was 35%. The profits of general partnerships (OE) and limited partnerships (EE) were taxed at 25%. A discount of 2.5% was given to companies that settled their corporate tax liability in full when they filed their tax returns. A 3% surcharge was applied to gross rental income, but the surcharge was not to exceed the primary corporate tax. Capital gains were taxed at rates between 20% and 35%.

The progressive personal income tax schedule for 2002 had six brackets: 0% on income to €6,163; 5% on the next increment of income to €8,352; 15% on the next increment to €13,359; 30% on the next increment to €23,257; 40% on the next increment to €50,028; and 42.5% on the increment of income above €50,028. There was a 5% surcharge on non-resident incomes that exceeded €5,869, but EU residents were exempt if 90% of their income comes from Greek sources. Various deductions or tax credits can be applied to taxable income for medical and hospitalization expenses; social security taxes; interest payments on home loans; and donations to charitable organizations, with special deductions for families whose income is derived primarily from their own work on agricultural enterprises. The withholding tax is 35% on interest income and 24% on royalty payments, but these are often reduced or eliminated in bilateral double tax prevention treaties, of which Greece has concluded more than 35. There is no withholding on dividend income in any case. Gift and inheritance taxes range from 0% to 60%. There is a tax of 0.7% on large estates valued at more that €176,082, and a real estate transfer tax of 11% to 13% on urban property and 9% to 11% on rural property.

The main indirect tax in Greece is its value-added tax (VAT) introduced in January 1987. The standard VAT rate in 2002 was 18%. There were also three reduced rates-0% on domestic transportation; 4% on books, newspapers and periodicals, admissions to cultural events, and some food production; and 8% on foodstuffs, the water supply, some pharmaceuticals, medical equipment, medical care and dentistry, social housing, social services, agricultural inputs, hotels, sporting events, use of sporting facilities; and waste collection and treatment-and a higher 36% rate for a few restricted and luxury goods. Excise duties are charged on tobacco, alcohol, gasoline, and automobiles.

The import tariff protects domestic products and provides a source of government revenue. Many Greek industries are not yet large enough or sufficiently modern to compete in price with foreign products, either in markets abroad or in Greece itself. As a full member of the European Union since 1981, Greece eliminated its remaining tariffs and quotas on imports from EU nations by 1986 and aligned its own tariffs on imports from other countries with those of EU members. Greek exports to EU countries are tariff-free. Imports from non-EU countries are subject to the EU's common customs tariff. Most raw materials enter duty-free, while manufactured goods have rates between 5% and 7%. Textiles, electronics, and some food products have higher rates. Motor vehicles, yachts, and motorcycles are subject to special duties. In addition, Greece imposes an 8% to 18% value-added tax and special consumption taxes on alcohol and tobacco up to 150%.

The Greek insurance market is small, with 1994 premium income at just D384 billion, equivalent to 1.4% of the GDP. This figure is compared to a European average of 5%. However, there has been some strong expansion in the life sector. There is a concentration of activity among a few companies, and in 1993 the top ten general insurance companies had 51% of the market and the top ten life companies, 84%. Around one-third of the companies operating in the market are foreign-owned, and most of the larger domestic firms have foreign connections. Most large insurance companies are partly or wholly owned by banks. Insurers are required to join several unions, trade groups, and insurance pools. Brokers in Greece also must be accepted by the Ministry of Trade. In Greece, the social security scheme and third-party automobile liability insurance are compulsory.

Insurance companies have begun to develop private pension schemes and corporate pension schemes. However, most occupational pension funds remain under state control because they are part financed by state-enacted levies. Insurance companies have also been responsible for the recent explosion in unit trusts (mutual funds), from two in 1989 to 152 in December 1995, when there were more than D2 trillion (7.8% of GDP) under management.

The state budget includes ordinary revenues and expenditures and a special investment budget administered by the Ministry of Coordination. The public sector, which employs 15% of the workforce, has many more civil servants than required for a country the size of Greece. Public payrolls, liberal social security benefits, and loss-generating state owned companies have all contributed to a government deficit. Recent austerity measures implemented to meet the criteria for European Monetary Union membership significantly lowered the budget shortfall.

The US Central Intelligence Agency (CIA) estimates that in 1998 Greece's central government took in revenues of approximately $45 billion and had expenditures of $47.6 billion. Overall, the government registered a deficit of approximately $2.6 billion. External debt totaled $63.4 billion.

Because it imports more than twice the value of its exports, Greece has registered chronic annual deficits in its balance of payments. The major contributors to Greece's foreign exchange earnings are tourism, shipping services, and remittances from Greek workers abroad. Greece's relatively small industrial base and lack of substantial investment since the mid-1990s limited the country's export potential. Greece's productive base expanded in 1999 and 2000, however, in part due to a thriving stock exchange, and low interest rates. A devaluation of the drachma in 1998 and its inclusion in the euro zone in 1999 restored Greek competitiveness.

The US Central Intelligence Agency (CIA) reports that in 2002 the purchasing power parity of Greece's exports was $12.6 billion while imports totaled $31.4 billion resulting in a trade deficit of $18.8 billion.

The International Monetary Fund (IMF) reports that in 2001 Greece had exports of goods totaling $10.6 billion and imports totaling $29.7 billion. The services credit totaled $19.5 billion and debit $11.6 billion.

The government-controlled Bank of Greece (founded in 1927) is the central bank and the bank of issue; it also engages in other banking activities, although the European Central Bank is in charge of monetary policy. There are 33 Greek commercial banks, which are dominated by two massive, state-controlled banking groups, the National Bank and the Commercial Bank. 19 of the commercial banks are foreign, including three American banks. The two leading private banks are Alpha Credit and Ergo, which ranked third and fifth, respectively, in 1997 in the Greek banking industry in terms of assets. Banks still must redeposit 70% of all their foreign exchange deposits with the Bank of Greece at the going interest rate plus a small commission. In 1999, as part of a general privatization program, the government began selling shares in the National Bank of Greece and Ionian Bank was sold outright and taken over by Alpha Credit.

The Currency Committee, composed of five cabinet ministers, controls the eight specialized credit institutions: the Agricultural Bank, National Investment Bank, National Investment Bank for Industrial Development, Hellenic Industrial Development Bank, National Mortgage Bank, Mortgage Bank, Postal Savings Bank, and Consignments and Loans Fund. The money supply in 2001, as measured by M1, was 24.7 billion euros.The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $22.2 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $129.6 billion.

The Athens Stock Exchange (Chrimatisterion) was founded by royal decree in 1876. In 1967, significant reforms were instituted, including more stringent listing requirements, bringing about a rapid increase in the number of listed securities. New legislation was introduced in 1988 to expand and liberalize its activities. The rule changes provided for the establishment of brokerage companies, thus breaking the traditional closed shop of individual brokers. In 1997 there were 53 brokerage houses and just 6 private brokers. Computerized trading was implemented in 1992 and there has since been a rapid evolution of the market. The aim is to secure total dematerialization of shares and to allow brokers to screen-trade from their offices. A satellite trading floor was established in Thessaloniki in 1995. In 1996, Greek law was harmonized with the EU financial services directive, and banks may now be directly represented on the floor of the exchange instead of having to establish subsidiary brokerage houses. The late 1990s witnessed a boom on the exchange. In 1998, the index rose 85%, while the first five months of 1999 saw a further jump of 43.7%. However, this expansion did not continue into the new millenium. Between 2002 and 2003, the index lost 33.1% of its value.