Recent developments in Greek taxation and corporate compliance issues
1. Greece has adopted the EU anti- tax avoidance Directive (ATAD) through a new law, which is in force from 1.1.2019 onwards. The rules transposed in domestic law amended the following provisions:
1.a. The Greek thin capitalization rules (article 49 Greek Income tax code) were reformulated in order to fully comply with the Directive. However, no significant changes were made in relation to the previous provisions system, which complied with the Directive to a great extent. Specifically, excess borrowing costs are deducted in the tax year in which they are occurred only up to 30% of the company’s earnings before taxes, interest and depreciation (EBITDA). The full interest deduction limit remains at EUR 3,000,000. It should be noted, our domestic legislation does not provide special group tax treatment; therefore, there has not a fixed rate (fixed ratio) incorporated based on EBITDA at group (group ratio).
1.b. the new provisions of Controlled Foreign Companies (CFC- article 66 Greek income tax code) implement the results of the BEPS (Final Report – Action 3). The new provisions foresee that CFC may also consider the permanent establishments abroad, whose profits are not taxed or exempt from taxation in Greece. One of the amended conditions to be met so that a company would be considered as CFC is that the Greek shareholder by itself or together with its associated enterprises holds directly or indirectly more than 50% rights in capital of CFC. Furthermore, the existing exemption with respect to listed companies is abolished under the new provisions. An important change concerning passive income includes also leasing income and income from invoicing companies that earn sales and services income from goods and services purchased from and sold to associated enterprises adding economic value (no or little). Instead, real estate income is exempt from the passive income of this provision.
1.c. the General anti- avoidance rule (article 38 Law 4174/2013); the revised rule foresees that tax authorities could ignore an arrangement or a series of arrangements which are not genuine and have been into place for the mere purpose of obtaining a tax benefit. The new article includes also an enumeration of circumstances which defines an arrangement as genuine or non-genuine. The above rule applies to both domestic and cross border transactions (between Greece and EU/ third countries). A relevant Decision by the Governor of Independent authority for public revenue has recently been issued, which determines the implementation of the rule (Circular No 2167/13.9.2019).
- Shipping companies
Amendments to the provisions related to the annual contribution (article 43 of L.4113/2013) imposed on the shipping companies of article 25 of L.27/1975:
- The annual contribution still applies for the years 2019 onwards for the imported and converted into euro foreign exchange and the imported amount of euro of offices or branches of foreign companies established in Greece which are engaged in activities related to chartering, insurance average settlements or purchase of ships under Greek or foreign flag of total tonnage over 500 shipping tones
- Its imposition is expanded to the imported and converted into euro foreign exchange and the imported amount of euro of the legal entities which are established in Greece according to article 25 of L.27/1975 and they are engaged in the same activities as described above.
- The relevant contribution scales remain the same, but the calculation method of the minimum annual contribution changed as follows:
|
Applicable Year |
Minimum annual contribution |
| 2018 | 2.500 USD |
| 2019-2020 | 5.000 USD |
| 2021 onwards | 6.000 USD |
- The offices or branches of foreign or Greek companies which are established in Greece according to L.25/1975 and they are engaged in management and operation of ships under Greek or foreign flag together with other operations are exempted from the annual contribution.
- Dividend tax is expanded to the Greek shipping companies. Tax of 10% is imposed from 2019 onwards on the dividends paid to Greek tax residents by Greek shipping companies established in Greece according to L.27/1975.
- Bonus payments to all BoD members, directors and any other employee of the above Greek companies is also taxed at the rate of 10%.
- The Supreme Court of Greece cancelled the Circular of Minister of Finance (No POL.1113 / 2018), in the part in which it sets the starting values of the real estate objective value systemin twelve zones of Greece (in different regions of the country). The annulment effect was set from the date of publication of the above court ruling, namely October 2nd, 2019.
- Central Ultimate Beneficial Owner Register (UBO register)
Pursuant to new provisions, which implement the Directive 2015/849/EU (anti laundering Directive); each legal entity which has a registered office in Greece or conducting any business activity that is taxable in Greece (such as Greek branch or a foreign company) is subject to the obligation of collecting and keeping adequate, accurate and up to date information on their UBOs (natural person) in a special register kept at their registered office.
Listed companies are exempt from the requirement to keep a special register since such companies are in any case required to keep a notifications’ record in accordance with Law 3556/2007. Listed companies are registered automatically with the Central UBO register through an interface between the Central securities depository and the GSIS platform. On the contrary, the requirement to keep a special register applies to subsidiaries and any branches of domestic or foreign companies whose ultimate parents are listed companies in Greece or abroad.