Summary of changes on transfer pricing legislation by virtue of Law 4110/2013
By virtue of article 11 of law 4110/2013 the legal provisions relating to transfer pricing that were contained in article 39 & 39A of the Income Tax Code and the provisions of article 26 of Law 3728/2008 were merged. The latter provision is abolished and now the rules are all part of the Income Tax Code, and more specifically articles 39, 39A, 39B and 39C.
The changes are (in summary) the following:
– Introduction of the concept of thin capitalization in Greek Tax Law, as far as loans between affiliated entities are concerned.
– It is now obligatory that companies maintain a file with justification of its intra-group transactions. Certain exceptions from the obligation are also provided.
– New article 39B provides in which cases the justification of intra-group pricing is not sufficient; penalties and other consequences are defined for the non-justification or the insufficient justification.
– New article 39C is introduced, by which for the first time it is possible under Greek law to pre-approve the method of justification. The pre-approval is subject to an application by the company and a decision of the ministry of finance is issued which accepts or rejects the application.