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Spyros Kaminaris
Business Tax Services
Georgia Stamatelou
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+30 (210) 288-6836
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Georgia Stamatelou
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Christos Kourouniotis
Christos Bourkoulas
Elina Chronopoulou
Business Tax Advisory
Spyros Kaminaris
Georgia Stamatelou
Mary Michalopoulou
Stella Saritzoglou
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Stefanos Mitsios
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Global Compliance and Reporting
Nikos Evangelopoulos
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Efrosini Papadopoulou
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International Tax and Transaction Services – Transaction Tax Advisory
Spyros Kaminaris
Stefanos Mitsios
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Stefanos Mitsios
Spyros Kaminaris
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Tassos Anastassiadis
Nikoleta Merkouri
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Eirinikos Platis
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Maria Rigaki
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+30 (210) 288-6363
Mobile: +30 (694) 424-2295
Email: stefanos.mitsios@gr.ey.com
+30 (210) 288-6369
Mobile: +30 (697) 334-0973
Email: spyros.kaminaris@gr.ey.com
+30 (210) 288-6367
Mobile: +30 (697) 277-7797
Email: tassos.anastassiadis@gr.ey.com
+30 (210) 288-6572
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At the time of writing, changes to the tax law were expected. Because of these expected changes, readers should obtain updated information before engaging in transactions.
A. At a glance
or AEs, Greek EPEs and branches of foreign companies must file an annual corporate income tax return by the end of the sixth month following the end of their fiscal year.
In general, on filing their annual corporate income tax return, legal entities must make an advance payment against the next year’s income tax liability. Law 4799/18.5.2021 provides the following:
• The rate of income tax prepayment for legal persons and legal entities is reduced to 80% (from 100%), and this reduced rate applies on the prepayment assessed with the income tax return for the 2021 tax year and onward.
• Exceptionally, income tax prepayment for Greek banking institutions and branches of foreign banks operating in Greece remains at 100% for the 2020 tax year and onward.
The final payment of tax is calculated by subtracting the advance payment made in the preceding year and other prepayments of tax (including taxes withheld at source) and foreign taxes paid on foreign-source income from the amount of tax due. The foreign tax credit cannot exceed the amount of Greek tax otherwise payable on the foreign-source income.
A description of the penalties is provided below; if more than one penalty applies to the same tax offense, only the provision providing for the largest penalty applies.
Further administrative guidelines on the application of the below are to be expected, especially after the introduction of the most recent Tax Procedure Code (Law 5104/19.04.2024). In principle, a failure to file a corporate income tax return or a failure to file on time a corporate income tax return results in the imposition of an administrative penalty up to EUR500 on certain conditions.
A failure to pay corporate income tax as a result of filing an inaccurate corporate income tax return results in the imposition of the following penalties:
• If the filing of an inaccurate corporate income tax return results in a difference of corporate income tax of 5% to 20%, the penalty equals 10% of the amount of the difference between the tax assessed on the basis of the tax return and the corrective tax assessment.
• If the filing of inaccurate corporate income tax return results in a difference of corporate income tax exceeding 20% but not exceeding 50%, the penalty equals 25% of the amount of the difference.
• If the filing of inaccurate corporate income tax return results in a difference of corporate income tax exceeding 50%, the penalty equals 50% of the amount of the difference.
In addition to the above, interest in arrears for the late payment of corporate tax is assessed; the current rate is 0.73% per month.
The filing of an inaccurate withholding tax return or the failure to pay withholding taxes on time results in the imposition of a penalty equal to 50% of the amount of the unpaid tax.
Dividends. A 5% withholding tax is imposed on dividends and interim dividends distributed to Greek or foreign beneficiaries by Greek SAs and profits distributed by Greek EPEs, unless an applicable double tax treaty provides otherwise (see Section F) or
unless tax relief is available under the EU Parent-Subsidiary Directive (90/435/EEC), as amended by Directive 2011/96/EC). For details regarding the rules in this directive, please see below. This tax represents the final tax liability of the recipient with respect to the dividends received if the recipient is a legal entity that does not have tax residency in Greece and does not maintain a permanent establishment in Greece.
A Greek subsidiary is not required to withhold the 5% withholding tax from dividends and interim dividends distributed to their EU parent companies if all of the following conditions are satisfied:
• The EU parent company holds a minimum 10% participation in the Greek subsidiary.
• The EU parent company holds the above participation in the Greek subsidiary for at least two consecutive years.
• The recipient EU parent company satisfies all of the following additional conditions:
— It has one of the legal types listed in Annex I of EU Directive 2011/96/EC.
— It is tax resident in one of the EU Member States (and is not considered tax resident in any non-EU country).
— It is subject to one of the taxes listed in Annex I of Section B of EU Directive 2011/96/EC, with no option for a tax exemption.
If a Greek tax resident legal person distributes dividends to its parent company and if the parent company has not completed the two-year holding period for a 10% participation but meets the rest of the exemption requirements (see above), the distribution can be exempt from withholding tax, provided that the local Greek tax resident legal person deposits a bank guarantee in an amount based on a specific calculation. This amount is almost equal to the amount of the dividend withholding tax due.
Foreign tax credit. Foreign-source income is usually taxable with a credit for foreign income taxes paid, up to the amount of Greek tax corresponding to the foreign-source income. The credit cannot exceed the amount of Greek tax payable on the same amount.
C. Determination of trading income
General. Taxable income for all legal entities consists of annual gross income, less allowable deductions. In principle, expenses may be deducted only from gross income for the fiscal year in which they are incurred.
In general, all ordinary business expenses and specific items mentioned in the tax law may be deducted for tax purposes (with the exception of certain expenses that the law explicitly indicates are not deductible for tax purposes) only if the following conditions are satisfied:
• They are made in the interest of the business or in the ordinary course of its business transactions.
• They reflect an actual transaction that has a value not considered lower or higher than the actual value, based on indirect audit methods (cross-checks).
• They are recorded in the accounting books for the period in which they are incurred and are supported by proper documentation.
An option exists for one-off depreciation of fixed assets valued up to EUR1,500 in the year in which the assets are acquired and placed in service. Newly established companies are eligible to claim depreciation for all of their fixed assets at a 0% rate for their first three years.
Under Law 4710/23.7.2020 enterprises may deduct from their gross revenue the depreciation cost of a zero-emission company car with a maximum retail price before taxes up to EUR40,000 increased by 50% (and by 25% for any excess amount). The corresponding percentages for low-emission cars (that is, up to 50g CO2/km) are 30% and 15%, respectively.
Relief for losses. Tax losses may be carried forward to offset business profits in the following five consecutive tax years from the tax year in which they are incurred. The right to carry forward tax losses ceases to apply if both of the following events occur:
• More than 33% of the direct or indirect shareholding participation or voting rights in a legal person or entity changes in a tax year.
• In the same and/or in the subsequent tax year. the business activity of the legal person or entity changes in excess of 50% in terms of its turnover, in relation to the tax year immediately preceding the tax year of the change described in the bullet above.
Offsetting of losses incurred abroad against business profits derived domestically is not allowed, with the exception of income arising in other EU or EEA Member States that is not exempted based on an applicable double tax treaty. Losses may not be carried back.
Groups of companies. Each company forming part of a group must file a separate return. The law does not provide for consolidated tax returns or other group relief.
D. Other significant taxes
The following table summarizes other significant taxes.
Stamp duty on private loan agreements
(Stamp duty will be replaced by the digital transaction fee [in principle as of 1 December 2024; clarifications on the effective date were expected at the time of writing].)
Annual real estate tax; imposed on the value of real estate owned by legal entities; the rate depends on the zone of the real estate, its surface, year built, whether the property faces a national road and other factors Various Special property tax; imposed on the “objective” value of real estate property; the tax does not apply if the company has listed shares or if it discloses its corporate structure and the ultimate individual shareholders or
E. Miscellaneous matters
Transfer pricing. Greek tax law includes a transfer-pricing clause (Articles 25 and 26 of the Code of Fiscal Procedure) that is aligned with international standards. In addition, the transferpricing legislation requires that an enterprise maintain documentation files.
Effective from of 1 January 2014, a new definition of “associated/ affiliate enterprises” is introduced. The new law defines the term “associated person,” which extends to legal entities, individuals and any other body of persons. The term encompasses two persons if any of the following circumstances exists:
• One of them holds directly or indirectly shares, parts or quotas in the other of at least 33%, estimated on the basis of total value or number, or equivalent profit participation rights or voting rights.
• Another third person participates directly or indirectly in the other two in any of the aforementioned ways.
transfer that took place, the transfer-package provisions do not apply.
General anti-avoidance rule. The Tax Procedure Code introduces a general anti-avoidance rule that was updated after the local implementation of the EU ATAD through the enactment of Law 4607/2019. The new provisions introduced the term “principal purpose” of an arrangement (principal purpose test) as a determining factor for whether such an arrangement is considered genuine and, consequently, considered by the tax authorities. If an arrangement is considered to be non-genuine, the relevant tax liability is calculated based on the provisions that would have been applicable if such arrangement were not in place. For the purposes of tax determination, the tax administration ignores an arrangement or a series of arrangements put into place if the main purpose, or one of the main purposes, is the obtaining of a tax advantage that defeats the objective or purpose of the applicable tax law. For the purposes of determining whether such arrangements are genuine, not all relevant data and circumstances of each case are considered, while the extent as to which the arrangement in question is being implemented for valid commercial reasons that reflect the economic reality is used as a criterion for this determination. In this context, the tax administration examines whether each arrangement falls within certain circumstances (for example, the arrangement is applied in a manner that is not consistent with usual business conduct or it leads to a significant tax advantage that does not reflect the business risk assumed by the taxpayer). The abovementioned provisions of Law 4607/2019 are applicable to income received and expenses incurred during tax years commencing beginning on or after 1 January 2019.
Exit taxation and hybrid mismatches. Law 4714/29.7.2020 implemented into Greek tax legislation the provisions of Directive 2016/1164/EU, as amended by Directive 2017/952/EU, regarding exit taxation and hybrid mismatches.
Exit taxation. Under the newly introduced rules, once a taxpayer (Greek tax resident legal person/entity or a Greek permanent establishment) transfers assets, the business carried on by its permanent establishment or its tax residence out of Greece, Greece taxes the capital gain created in Greece (even if that gain has not yet been realized at the time of the exit). At the time of the exit, the taxpayer is subject to Greek corporate income tax.
Hybrid mismatches Under the newly introduced rules, hybrid mismatches arise from differences in the legal characterization of payments or entities among two different jurisdictions. A hybrid mismatch arises between associated persons (for example, associated entities, taxpayer and associated entity, and head office and permanent establishment) or under a structured arrangement. Mismatches are dealt with by primary and secondary correction rules, as the case may be (for example, correction rules for double deduction, for deduction without inclusion, for imported mismatches, for mismatches involving permanent establishments, for hybrid transfers and for tax residence mismatches). The new provisions apply as of 1 January 2020.
Law 89/1967 regime. Enterprises licensed to operate under the Law 89/1967 regime may enter into a favorable APA with the tax authorities. A license may be granted to enterprises under this regime if certain conditions are met. The principal condition is that the company must be exclusively engaged in the provision of specific services to foreign associated companies, the foreign head office or foreign branches. The Ministry of Economy and Finance grants the license after reviewing and approving the applicant’s transfer-pricing study (based on the cost-plus method).
F. Treaty withholding tax rates
Under most double tax treaties, the rates in the table below apply to the extent that the amount of interest or royalties is at arm’s length. The domestic withholding tax rates apply to any excess amounts. In addition, certain recent double tax treaties include an anti-abuse clause.
Greece has implemented EU Directive 2003/49/EC. Under this directive, withholding tax on interest and royalties paid between associated companies of different EU Member States was abolished, effective from 1 July 2013.
The following table provides treaty withholding tax rates for dividends, interest and royalties.
(m)(n)
(m)(n) 0/10 (l)(o) 0/5 (o)
(n)
(m)
(o)
Mainland 5 (m) 0/10 (l) 10
(o)
Croatia 0/5 (m)(n) 10 0/10 (o)
Cyprus 0 (n) 0/10 (o) 0 (e)
Czechoslovakia (i) 0 (n) 0/10 (o) 0/10 (o)
Denmark 0 (n) 0/8 (o) 0/5 (o)
Egypt 5 15 15
Estonia 0/5 (m)(n) 0/10 (o) 0/10 (a)(o)
Finland 0 (n) 0/10 (o) 0/10 (k)(o)
France (s) 0/5 (n)(w) 0/5 (x) 0/5
Georgia 5 8 5
Germany 0 (n) 0/10 (o) 0
Hungary 0 (n) 0/10 (o) 0/10 (o) Iceland 5 (m) 8 10
India 5 15 20
Ireland 0/5 (m)(n) 5 0/5 (o) Israel 5 10 10
Italy 0/5 (n) 0/10 (j)(o) 5 (a)(g)(o)
Korea (South) 5 (m) 8 10
Kuwait 0/5 (p) 0/5 (p) 15
Latvia 0/5 (m)(n) 0/10 (o) 0/10 (a)(o)
Lithuania 0/5 (m)(n) 0/10 (o) 0/10 (a)(o)
Luxembourg 0/5 (n) 0/8 (o) 0/7 (h)(o)