IKE Formation: The Complete Guide for 2026

The IKE (Private Capital Company) is the most popular company structure in Greece in recent years. Thousands of freelancers and new entrepreneurs choose it every year, mainly because it promises limited liability with a small initial capital. However, behind the easy-to-understand name lies a framework of obligations that few are aware of before starting: third-category accounting books, a monthly accountant, double taxation of 22% plus 5% on dividends, and mandatory EFKA contributions for the manager.

In this guide, you will see in detail what an IKE is, what it costs to set up and maintain, how it is taxed, what responsibilities the manager bears, and for which business categories it is truly the right choice. At the end, you will also see the alternative that more and more Greek professionals are considering: an offshore company.

What is an IKE

The IKE is a commercial company with legal personality, established by Law 4072/2012. Its main characteristics are:

• It can be founded by one person (single-member IKE) or by several.
• The minimum capital is 1 euro, although in practice most start with 1,000 to 5,000 euros.
• It is established with a private document, without a notary, through the One-Stop Shop Service of GEMI.
• Company shares are not stocks and are not listed on a stock exchange.

The IKE was designed as the "light" alternative to the SA (Société Anonyme) and the Ltd (Limited Liability Company): quick setup, without notary fees, but essentially with the same accounting and tax obligations as a capital company.

Legal protection: what limited liability means

The main advantage of the IKE is that members are liable up to the amount of their contribution. If the company goes bankrupt, creditors cannot claim the personal assets of the members. This is the essential difference from a sole proprietorship, where you and your business are legally the same person.

However, there is an important exception: this protection does not cover debts to the State. The IKE manager is personally and jointly liable for unpaid company taxes and social security contributions. We will examine this in detail below.

Cost of IKE setup

Setting up an IKE is relatively economical compared to other company structures:

• GEMI and registration fees: approximately 50 to 150 euros, depending on capital and publications.
• Lawyer for drafting articles of association (optional): 200 to 500 euros, if you do not use the template from the One-Stop Shop Service.
• Accountant for the startup process: 150 to 300 euros.

In total, a simple single-member IKE can start with 300 to 800 euros. The issue is not the setup. It's the maintenance.

Third-category books: the hidden obligation

What surprises most people: the IKE is obliged to keep double-entry books (third category, according to the old nomenclature, meaning full books based on Greek Accounting Standards). It doesn't matter if your company has a turnover of 5,000 euros per year. From day one, you keep a balance sheet, income statement, general ledger, journal, and mandatory inventory books, or you are exempt only if you meet the criteria for simplified accounting, which in practice rarely applies to an active IKE.

This means you need an accountant on a permanent basis, not just for tax declarations. Every month: payroll if applicable, invoices, expenses, leases, parameters, VAT, withholdings.

Accountant cost

The monthly accountant cost for a small IKE typically ranges:

• Small IKE without staff: 70 to 120 euros per month.
• With 1-3 employees: 120 to 200 euros per month.
• Annual balance sheet and declarations: often charged an additional 200 to 500 euros.

On an annual basis, we are talking about 1,000 to 2,500 euros just for accounting, before any taxes or contributions.

IKE Taxation: the double taxation 22% + 5%

The IKE is taxed at two levels:

First level - corporate income tax 22%. Company profits are taxed at a rate of 22%. There is also an advance tax payment for the next fiscal year, which increases the actual burden in the first year of profitability.

Second level - dividend tax 5%. When the company distributes profits to its members, the dividend is taxed an additional 5%.

Example: The IKE has a net taxable profit of 30,000 euros. It pays 6,600 euros in income tax. From the remaining 23,400 euros, if distributed as dividends, it pays another 1,170 euros. Total taxation: 7,770 euros, meaning an effective rate close to 26%.

Important: this 26% only applies to the company's profits. The manager's EFKA contributions are additional, a personal burden, and do not depend on profits.

EFKA: who pays and how much

Here's a favorable provision that few people know about: in an IKE, ordinary members (partners) are not compulsorily insured with EFKA, provided they do not work for the company as managers. Only the manager has mandatory insurance, being insured in the category of non-salaried individuals.

The manager's contributions range from approximately 240 euros per month (lowest category) to over 650 euros per month, depending on the insurance category chosen and their income. On an annual basis, in the minimum category, we are talking about approximately 2,900 euros per year, which are due even if the company has zero profit.

The IKE manager: role and responsibilities

The manager is the person who legally represents the company. They are appointed by the articles of association or by a decision of the partners, and their responsibilities include signing contracts, invoices, declarations, and representing the company to banks, tax authorities, and third parties.

However, their responsibilities are serious and often underestimated:

• Personal liability for debts to the State: for taxes, VAT, withholding taxes, and social security contributions of the company, the manager may be required to pay from their personal assets. Here, the limited liability of the IKE does not protect them.
• Civil liability: for actions that harm the company or its partners, or to third parties in cases of fraud or negligence.
• Criminal liability: for non-remittance of VAT and withholding taxes, for inaccurate declarations, for non-compliance with personnel social security obligations.

If the company hires personnel, the manager is the one who signs and is responsible for payroll, dismissals, contributions, and compliance with labor law.

Total Annual Cost of Maintaining an IKE

Let's put the numbers together for a small, single-member IKE with no employees:

• Accountant: 1,000 to 1,500 euros per year.
• EFKA manager (minimum category): approximately 2,900 euros per year.
• 22% tax on profits plus 5% on dividends.
• GEMI, fees, publications: 100 to 200 euros per year.

So, even before you make a profit, the IKE costs 4,000 to 4,700 euros per year in fixed expenses. And for every euro of profit you make, approximately 26% goes to taxes.

For Which Categories is an IKE Ideal?

The IKE is not a bad choice; it's the right choice for specific profiles:

• Businesses with a physical presence in Greece: stores, restaurants, manufacturing, trade with a warehouse here.
• Those who primarily collaborate with Greek businesses that want a Greek invoice and a Greek corporate entity.
• Hiring personnel in Greece: the IKE is the natural vehicle for employment within the Greek system.
• Projects and contracts with the Greek State or with European programs that require a domestic legal entity.
• Family businesses that want to separate personal and corporate assets with reasonable initial costs.

Conversely, if your activity is purely digital, if your clients are abroad, if you don't need a Greek invoice for your transactions, then the fixed costs of an IKE (EFKA manager, double taxation, third-category accounting books) become a pure burden without benefit. In these cases, it's worth considering forming a company in America or, more generally, forming a company abroad.

IKE vs. LLC: The Comparison in Two Lines

An IKE gives you limited liability but burdens you with EFKA manager contributions, double taxation of 22% plus 5%, double-entry accounting books, and a permanent accountant, totaling 4,000 to 5,000 euros in annual fixed costs before taxes. An LLC in Wyoming can be formed in 24 to 72 hours, maintained for approximately 1,200 euros per year with everything included (accounting, taxes, license), and its owner pays no social security contributions anywhere. We analyze this comparison step-by-step in the article Bulgaria vs. Wyoming LLC, where the logic is exactly the same as that of an IKE.

Frequently Asked Questions

How much capital do I need to open an IKE? Legally, 1 euro is sufficient. In practice, most IKEs start with 1,000 to 5,000 euros to cover initial expenses, as the capital itself is not an obstacle.

Does an IKE partner pay EFKA? No, not if they are not the manager. Simple IKE members do not have mandatory EFKA insurance. Only the manager is mandatorily insured, under the non-salaried category.

How is an IKE taxed? With a 22% income tax on profits and an additional 5% tax on dividends when distributed to members. In total, the effective rate approaches 26%, not including the manager's EFKA contributions.

What accounting books does an IKE keep? Double-entry accounting books (third category), meaning full accounting records with a balance sheet and income statement, regardless of turnover. This makes a permanent accountant essential.

Is the manager personally liable? For company debts to the state (taxes, VAT, contributions), yes, personally and jointly and severally. For commercial debts to private individuals, liability is limited to the company, unless there is fraud or gross negligence.

When is an IKE not beneficial? When the activity is purely digital with clients outside Greece. In that case, its fixed costs (manager's EFKA contributions, double-entry bookkeeping, double taxation) are an expense without return, and an offshore company often turns out to be more economical and simpler.

The Conclusion

An IKE is the right tool when your business operates within Greece: a physical store, Greek customers, staff here. Then the annual cost of 4,000 to 5,000 euros and double taxation are the price of the Greek market.

However, if you work online, invoice abroad, and are not geographically constrained, an IKE charges you insurance contributions, category three books, and 26% total taxation for things you don't need. In this case, check the packages and delivery times on the formation form and compare them with your own numbers before deciding.

If you are considering other options outside Greece, see our guide on offshore company formation and our page on company formation in Dubai.