Joint venture (“koinopraxia”) according to Greek law
According to Greek law, a joint venture is a joint partnership of several natural or legal persons who aim to achieve a certain common purpose (usually of a profitable nature). The persons participating in the joint venture (whether natural or legal) each retain their autonomy and legal personality. Furthermore, in the pursuit of the common purpose, the members of the joint venture, through the coordination of their actions, aim at achieving a better economic result. In many cases, the creation of a joint venture is dictated by the size of the project, particularly when it is too large and too difficult to be undertaken by a single entity. This phenomenon is particularly common when large public works are undertaken and executed.
The personnel of the joint venture may consist either of employees hired, paid, and insured by the joint venture or of employees who are employed by a member of the joint venture. In order to satisfy the claims arising from the employment contract, the former may bring proceedings against the joint venture, but the latter may bring proceedings only against the member of the joint venture which is at the same time their employer (Court of Appeal of Athens No. 3849/89).
Since it is not directly regulated by the law, an “incomplete” attempt of legislative delineation of the joint venture is the provisions of article 293 of Law 4072/2012, the explanatory memorandum of which distinguishes the joint venture into “genuine” and “non-genuine”. In particular, a ‘genuine’ joint venture is an association of independent undertakings that have joined together to carry out a project. It does not carry out its own activity, independent of that of its members, but its role is limited to the coordination, organisation, and management of the economic or commercial activity of its members. The provisions applicable to a Civil Company apply mutatis mutandis to a ‘genuine’ joint venture. However, the parties have the possibility, by derogating from the principle of Article 759 of the Civil Code (joint and several liability of the partners), to establish “joint and several liability” (Article 293(2) of Law 4072/2012). On the contrary, the ‘non-genuine joint venture’ carries out a commercial activity, is compulsorily registered with the General Commercial Registry (GEMI, therefore the registration has a constitutive character) and the provisions applicable to the general partnership apply to it accordingly (Art. 293(3)).
A common characteristic of both “genuine” and “non-genuine” joint ventures is their inclusion in the general concept of a company under the Civil Code and their lack of legal personality (Art.293 (1)). However, in order to facilitate transactions, both of these forms of joint ventures have been granted the capacity of a party and bankruptcy capacity, as has also been accepted in the judgment of the Supreme Court in Case No. 14/2007 of the Plenary of the Supreme Court (Article 293(1)(2)).
The procedure for the establishment of a joint venture is similar to that of a partnership, as the founding document (Articles of Association) of the joint venture (joint venture deed), which can be either a notarial or public document, is similar to the articles of association of partnerships and is submitted to the competent Tax Office of the joint venture’s headquarters. This action notifies the tax authority of the existence of the joint venture and entails the opening of a file for obtaining a tax identification number. If the Articles of Association of the joint venture indicate a certain amount as deposited capital, in the past a 1% “Tax on the accumulation of capital” was due (article 17 of Law 1676/86), which is no longer applicable as of 7/4/2014 (article 1, subsection F 22 of Law 4254/14). The joint venture, which carries out business activity, is compulsorily registered in the General Commercial Registry (GEMI) according to No.223/2017 Opinion of the Legal Council of the State.
Regarding subsequent amendments to the original joint venture agreement, although they are not in principle permitted, the right to make clarifying or corrective subsequent amendments to minor points cannot be excluded. Any amendments to the joint venture agreement must be made in writing and submitted to the competent tax office. No other form of publicity is mandatory (Tax Court of first Instance of Piraeus, decision No. 556/72).
In some cases, after the formation of the joint venture, for mainly technical reasons (such as the performance of certain work by specialized personnel), a new member may be required to join the joint venture. In this case, the new written agreement must be filed with the competent head of the tax office (Circular Th. 2964/233/8.10.1970.) In support of the above, it is accepted that the withdrawal of a member of the joint venture is permissible, provided that in this case, a new written agreement is filed with the competent head of the tax office and the remaining members of the joint venture are more than one. A contrary position (no possibility of withdrawal of a member) is equivalent to a restriction of economic freedom and constitutes a barrier to the economic activity of individuals (Circular Th. 1118148/3/93 Ministry of Economic Affairs, par. 2.2.2.).
It should be noted that joint ventures are required to submit a statement of profit & loss accounts to the competent tax office (article 64 of Law 2238/94) by the last day of the sixth month after the end of the tax year (article 68(2) of Law 4172/13). This statement is submitted after the close of the financial year and includes the results (profits or losses) of the financial year, distributed to the members of the joint venture in the proportion specified in the joint venture agreement. Together with the statement of profit & loss accounts, a form with additional information concerning the joint venture and the closed financial year is submitted.
The profits of the joint venture are deemed to have been earned by its members (article 8(4) of Law 4172/2013) at the time the beneficiary acquired the right to receive the share to which he/she is entitled.
With regard to the liability of the members of the joint venture, according to article 4(10) of Law No. 1882/90, any tax debt, irrespective of the cause, which concerns the joint venture, is established in the name of the joint venture, but the responsibility for its payment is borne jointly and severally by each of the members of the joint venture.
Also, the joint venture – like any other “business person” – is obliged to keep the books and data provided by the provisions of the Code of Taxation depending on the amount of its annual gross income during the previous financial period (Art.1 par.1, Art.4 of the new Code of Taxation).
Finally, when the foreign company does not have its own business in Greece, it is not a “business person” and therefore cannot establish or participate in a joint venture in Greece (Circular Th. 2425/1983, Ministry of Economic Affairs).
* The information is accurate to the best of our knowledge as at the time of writing. We have no obligation to update it. We accept no responsibility against any third party who is not a client of the firm and has not signed the terms of our engagement.