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Greek income tax implications of a sale of a commercial pleasure yacht owned by a Greek NEPA

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Greek income tax implications of a sale of a commercial pleasure yacht owned by a Greek NEPA

The legislative framework for NEPAs was up to recently regulated by L. 3182/2003, which was replaced by new Law 4926/2022, effective as of 20.4.2022. In specific, Part A of the new Law replaces the previously applicable regulatory framework on pleasure boats which was regulated by L. 4256/2014, while Part B includes, among others, the legislative framework for NEPAs.

  • Law 4926/2022

According to article 65 par. 1 of L. 4926/2022, it is explicitly provided that articles 1 and 2 of Law 27/1975 also apply to a NEPA, provided it is a shipowner, as well as to its shareholders. Effectively, this provision extends the tonnage tax regime as well as its applicable tax exemptions to ship owning NEPAs and their shareholders.

Moreover, according to article 65 par. 2 of L. 4926/2022, the following are exempt from any tax, duty and any other charge in favor of the State or third parties, except for stamp duty and capital contribution tax:

  1. the distribution of profits and the net product of liquidation, except for fees of the BoD members, which are subject to income tax according to article 12 par. 2 (d) of L. 4172/2013 (Greek Income Tax Code – ITC),
  2. the withdrawal of capital and the relevant payment receipts,
  3. the entries in the accounting records kept by the company, the supporting documents and other documents received in Greece regarding the company’s operations abroad,
  4. the shareholders’ deposits and loans to the company. The exemption does not cover the income tax on the company’s deposit interest and the interest arising from loans granted by the shareholders to the company,
  5. the capitalization of profits, and
  6. the non-receipt of the profits by the shareholders.

The abovementioned paragraph 2 does not apply for NEPAs which manage or operate commercial pleasure vessels, according to Part A’ of the Law, which belong to third parties with reference to their income tax obligations.

Moreover, according to article 1 case (c) of L. 4926/2022, “commercial pleasure vessel” is the pleasure vessel, which is characterized as commercial, according to the law of the flag state, for the exploitation of which a full charter contract is concluded, without prejudice to the provisions οf paragraph 6 of article 3 (i.e. regarding lease of detained vessels). The commercial pleasure vessel is capable of carrying up to forty-nine (49) passengers and has adequate and suitable accommodation facilities, especially for passengers.

Furthermore, according to article 2 of L. 4926/2022, the pleasure vessels under Greek flag that are to be classified as commercial and operate accordingly must register with the “e-Register of ships” all their data that are required for tax, customs and other audit purposes.

  • Law 27/1975

As noted above, articles 1 and 2 of L. 27/1975 apply to NEPAs. Based on article 1 of L. 27/1975 a tax and levy is imposed on Greek-flagged ships. For the purposes of this law, ships are considered to be under the Greek flag from their registration in a Greek port or their registration in the registers kept in the Consular Port Authorities or the issuance of a temporary document of their Greek nationality, until the time of the event that triggers their de-registration from the register.

According to article 2 of L. 27/1975, the tax so imposed exhausts all liability of the shipowner, as well as the shareholder or partner of a domestic or foreign company of any type from income tax, as regards the profits, which arise from the exploitation of ships. By explicit provision of this article, exempt income also includes any capital gains realized from the sale of the ship, from the collection of insurance compensation or from any other reason. In the event that a domestic or foreign company that owns ships under Greek flag carries out other business activities in addition to the operation of the ship, the tax-exempt amount of the net profits or dividends is equal to the ratio of the gross income deriving from the operation of the ship to the total gross income of the company.

  • 4172/2014 (Greek ITC)

According to article 72 par. 14 of the Greek ITC, the legislative provisions that regulate the taxation of shipping companies and of the related individuals regarding exclusively the income arising from said shipping companies, are not affected by the provisions of the Greek ITC.

Based on the combination of the abovementioned provisions, it derives that a Greek NEPA that owns a commercial pleasure vessel is subject to the tonnage tax regime and the relevant applicable exemptions of article 2 of L. 27/1975 at both the level of the company as well as of its shareholders, provided that the vessel concerned has an appropriate commercial license in effect and is therefore duly registered with the “e-Register for ships” as per the regulatory provisions of L. 4926/2022 (previously L. 4256/2014).

Therefore, any capital gains that may derive at the level of the NEPA from the sale of this yacht will be exempt from Greek income tax. Moreover, any dividends arising therefrom that may be further on distributed to the shareholder of the NEPA will also be exempt from any Greek withholding tax.

As far as the imposition of any foreign tax on the dividends, the relevant provisions of the applicable Double Tax Treaty (DTT) between Greece and the concerned country would in principle apply.


*             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.

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