New businesses
IKE, OE, EE or Sole Trader? How to Choose the Right Legal Form
Published · 7 min read · NS Accounting & Tax Office
One of the most critical decisions before starting a business is choosing its legal form. That decision affects your taxation, your personal liability and your running costs for years. At NSTAX, an accounting firm in Athens with 10 years of experience, we guide new entrepreneurs through this choice every day. In this article we explain the key differences between a Sole Trader, a General Partnership (OE), a Limited Partnership (EE) and a Private Company (IKE).
Sole Trader
The simplest and cheapest way to start a business activity. It has no separate legal personality — the business is identified with the entrepreneur as an individual.
- Liability: Unlimited personal liability. If the business has debts, your entire personal property is at risk.
- Taxation: Progressive income tax, from 9% to 44% depending on the level of profits.
- Cost & paperwork: Low set-up cost and simpler bookkeeping (usually single-entry books).
- Best for: Professionals starting with low business risk and moderate expected profits.
General Partnership (OE)
A personal company requiring at least two partners, built on mutual trust.
- Liability: All partners are jointly and unlimitedly liable for company debts — the personal property of every partner is at risk.
- Taxation: A flat 22% rate on profits, with no additional distribution tax.
- Best for: Partnerships between people with strong mutual trust who want a stable tax rate.
Limited Partnership (EE)
Similar to an OE, but with one key difference: there are two categories of partners.
- General partners: unlimitedly liable, as in an OE.
- Limited partners: liability is capped at the amount of their contribution to the company.
- Taxation: The same regime as an OE — a flat 22% rate.
- Best for: Structures where some partners want to participate financially without taking on full management liability.
Private Company (IKE)
The most popular choice for new businesses in Greece in recent years, thanks to its flexibility.
- Minimum capital: Just 1 euro — no high initial capital is required.
- Liability: Limited liability; partners are liable only up to their contribution, except for guarantee contributions or cases of manager fraud or negligence.
- Taxation: A flat 22% rate on profits, plus a 5% dividend distribution tax — charged only when profits are actually distributed to the partners.
- Set-up speed: It can be incorporated within 1-3 working days through the e-YMS online service.
- Best for: Entrepreneurs who want protection of personal assets, a stable tax rate and flexibility, especially when profits above €15,000-20,000 per year are expected.
Which Form Suits You?
There is no single 'right' answer for everyone — the choice depends on expected profits, the number of partners, business risk and how important protecting your personal assets is to you. At NSTAX we study your specific case and guide you to the option that genuinely works for you, not a generic recipe. See also the services for businesses we provide.
Right after choosing a legal form come the first obligations: activity codes, books, EFKA and myDATA. Read what to sort out from day one of a new business.
Contact NSTAX About Setting Up Your Business
NSTAX, an accounting firm in Athens with 10 years of experience, has guided more than 1,600 businesses in choosing the right legal form and completing the incorporation process. Contact us for a free initial consultation.
The information in this article is valid at the time of publication and may change with new legislation. For the current situation of your business, please contact us.