Setting up a branch of a foreign company in Greece
Foreign direct investment has become a common practice and setting up a branch is a common way of doing business in Greece for foreign business entities. The establishment of branches of foreign companies in Greece is governed by the provisions of Greek Law 4919/2022 (articles 36-45).
According to the above provisions, the types that can establish a branch in Greece (article 16 of L 4919/2022) are: A) foreign companies with registered offices in a member state of the European Union (EU) in the form of a company limited by shares S.A., a limited liability company and a limited partnership with limited shares B) foreign companies with registered offices in a third country with a legal form similar to the ones based in a member state of the European Union (EU) and C) natural or legal persons or associations of persons carrying out commercial operations who have their main place of business or their registered office in a foreign country and not falling under any of the previous referred legal forms, can establish branches or agencies in the Greek territory. The branches of the above legal entities, either newly established or already existing in the Greek territory, are obliged to be registered in the General Commercial Registry (GEMI).
A branch bears the same tax and accounting obligations to a greek company and profits are taxed based on the same tax rates applied to Greek companies.
The establishment of a branch is completed through its registration to the General Commercial Registry (GEMI). The article 39 of Law 4919/2022 specifies the information (submitted to GEMI) pertaining to the branches of companies domiciled in the EU, and article 43 specifies the information pertaining to the branches of third-country companies. By the combination of these provisions, it is evident that the information/documentation that must be submitted to GEMI for the registration of foreign company branches includes:
- A resolution by the foreign company for the establishment of a branch in Greece, specifying: the activities of the branch; the registered seat (postal, or other, address);the registered name of the branch (in case it is not the same with the registered name of the company); and the personal information (as specified in par. 2, art.33, L. 4919/2022) of the legal representative of the branch, with an indication of the extent of their powers, who may also be appointed by notarial or Consular Deed (signed by the legal representative of the foreign company).
The legal representative, who will be appointed must be the holder of a Greek Tax Registration Number, and will have to submit: a) In the case of a EU nationals: exact copy of Identity Card or Passport and b) In the case of non-EU nationals: provided they have their ordinary place of residence in Greece, they must submit a Residence and work permit, if needed(in accordance with ministerial decisions Κ1-884/2012 & Κ2-4900/2014)or a receipt for the submission of supporting documents for the issuance of a Residence and Work Permit for self-employed economic activities or as legal representative of companies, provided they have their ordinary place of residence in Greece.
- The memorandum and articles of association of the foreign parent company, if they are contained in a separate instrument, together with amendments to those documents as in effect at the time of the application.
- Certification by the Register in which the company has been registered (Certificate of Good Standing by the competent authority or the Commercial Register of the country of origin), showing the legal status, registered seat, capital, and management/representation of the company in its domicile.
- Pre-approval of the Registered Name and/or Brand Name of the branch (valid for 2 months).
- Application signed by the applicant before the Department of the General Commercial Register upon submission of the supporting documents.
In particular, for EU based companies it is supplementary registered at the GEMI records the European Unique Identifier (EUID) (article 39 L 4919/2022), and for the third-country based companies the law of the country governing the company, its registration number in that register (if it is provided by the applicable law), and the form, registered office and objects of the company and, at least once a year, the amount of capital covered, if this information is not contained in the instrument of incorporation or the articles of association (article 43 L 4919/2022).
Further deeds to be registered at the GEMI include 1. the dissolution of the company, 2. the appointment, the individual identities and powers of the liquidators, the termination of the liquidation, as well as the bankruptcy, composition or other similar proceedings to which the company is subject, company, drawn up, audited and published in accordance with the law of the State to which the company is subject, 3. where the law of the State does not provide for the preparation of accounting documents in a manner equivalent to Greek and Union law, accounting documents, such as financial statements, of the branch’s activities are required 4. the closure of the branch.
The aforementioned supporting documents for the registration of the branch, which are issued abroad must bear an APOSTILLE stamp or certification by a consulate, and must be officially translated in Greek, with the exception of Public Documents originating in the Republic of Cyprus, in accordance with Law 1497/27-11-1984 “Ratification of the Convention on the elimination of the requirement of validation of foreign public documents” and Law 1548 17/23-05-1985 “Ratification of the collaboration between the Hellenic Republic and the Republic of Cyprus on issues pertaining to Civil, Family, Commercial, and Penal Law”.
A branch of a foreign company does not have an independent or separate legal personality from its parent company. From a legal and organisational point of view, it is part of the parent company and is therefore subject to the laws governing its operation. Consequently, its legal form will be the same as that of the parent company. The foreign branch has no equity capital because it does not have an autonomous status but is financed directly by the head office of the parent company. This gives more flexibility for internal borrowing, as financial transactions between the head office and the branch are not subject to stamp duty because they do not constitute a loan agreement. Furthermore, the establishment of a branch of a foreign company in Greece is considered a permanent establishment from a tax point of view, according to Law 4172/2013, under the provisions of which foreign branches are taxed on their profits. The branch of a foreign company does not distribute dividends but transfers to the parent foreign company all taxable profits, without withholding tax on the transfer of profits of a foreign company branch to the parent.
For the transactions of the branch, it is necessary to issue a Greek Tax Identification Number through the procedure set out in the Greek Tax Code. 1006/2013 by submitting the relevant documents to the Registry Department of the competent Tax Office of the branch’s headquarters.
The main differences between a subsidiary and a branch of a foreign company
* 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.