Taxation of dividends and bonuses from shipbroking and related companies

Taxation of dividends and bonuses from shipbroking and related companies

Following the amendments introduced with Law 5036/2023 regarding the taxation of dividends from shipbroking companies and related businesses as well as of the bonuses paid to the directors and personnel of these companies and of ship-management companies in Greece, the Greek Independent Authority for Public Revenue (IAPR) has issued Decision A. 1175/2023 which amends the former Decision A. 1223/2019 for the content of the relevant tax return for such income.

In a nutshell:

Dividends

Dividends paid or credited, in accordance with the provisions of article 43 par. 5 of law, to an individual-Greek tax resident by:

• foreign companies of any type which have offices or branches in Greece under article 25 of law 27/1975 for the purpose of chartering, insurance, charter settlements, brokerage of purchases, shipbuilding, chartering or insuring of Greek or foreign flagged vessels with over 500 gross tonnage excluding passenger ferries and commercial ships operating on domestic voyages, and representing ship-owning companies, or
• domestic companies established under article 25 of law 27/1975 with the same purpose as above,

are taxed at a tax rate of 5% from tax year 2023 and onwards (as opposed to the previously applicable 10% rate). This tax exhausts any tax liability of the recipient Greek tax resident.

The above applies regardless of whether the dividends are paid/credited directly by the foreign company or by its Greek office/branch or by its holding company.

• The above provision is not applicable for dividends paid by companies which are also involved in the management of ships under Greek or foreign flag, according to their license of establishment in Greece.

It should be noted that the previously provided tax rate of 10% is applicable for:

• dividends paid or credited by foreign shipbroking companies and related businesses as per above point (1) for years 2012- 2022 and
• dividends paid or credited by Greek shipbroking companies and related businesses as per above point (2) for years 2019- 2022.

Note: Regarding the time period from 1.1.2023 until the publication of the present Decision, any liable, Greek tax resident individuals who have received dividends as per above and have paid dividend tax at 10%, may file an amending tax return and apply the 5% tax rate, so that the extra tax amount can be set-off or refunded.

Extraordinary remuneration and bonuses on top of the salary

As regards the taxation of extraordinary remuneration and bonuses paid on top of the salary the aforementioned companies, a 10% final tax is levied on relevant payments made:

• to members of the Board of Directors, directors and executives of foreign shipbroking companies and related companies, from 2012 onwards,
• to employees of foreign shipbroking companies and related companies, from 2019 onwards,
• to members of the Board of Directors, directors, executives and employees of Greek shipbroking and related companies, from 2019 onwards, and
• to members of the Board of Directors, directors, executives and employees of foreign ship management companies established in Greece under law 25/1975, from 2019 onwards.

Tax payment and submission of tax return:

The beneficiary of the dividend/bonus income has the following tax reporting and payment obligations:

• For dividends and bonuses received from 2020 onwards, tax (at 5% and 10% respectively) is payable one-off within 5 working days from the date of filing of the tax return, which must be submitted by the last working day of the month following the month of payment or credit of the relevant amounts in Greece or abroad, along with the required documentation.
• For dividends and bonuses received from 2012-2019, tax at 10% is payable one-off upon submission of the tax return, which must be made within the month following the month of payment or credit of the income in Greece or abroad.

The above tax returns are submitted by the beneficiary either through the digital portal “myAADE” or via post.

Upon receipt of the return, the tax is determined immediately and at the same time a payment slip is issued by the tax authorities. The dividend tax and the tax on extraordinary remuneration and bonuses on top of the salary are paid within 5 working days from the issuance of the above payment slip.

Liable persons for submission of tax returns

The following persons are liable for the submission of tax return, where applicable:

1. a) The persons liable to submit the tax return for dividends at a rate of 5% are the shareholders or partners who received dividends from foreign or domestic shipbroking and related companies (listed in cases (a) and (b) respectively of par. 5 of article 43 of law 4111/2013) for the years 2023 onwards.
2. b) The persons liable to submit the tax return for extraordinary remuneration and bonuses at a rate of 10% are the following:

• members of the Board of Directors, directors and executives of foreign shipbroking and related companies (i.e. the ones listed in case (a) of par. 5 of article 43 of law 4111/2013), from 2012 onwards,
• employees of foreign shipbroking and related companies (i.e. the ones listed in case (a) of par. 5 off article 43 of law 4111/2013), from 2019 onwards,
• members of the Board of Directors, directors and executives and employees of Greek shipbroking and related companies (i.e. the ones listed in case (b) of par. 5 of article 43 of law 4111/2013), from 2019 onwards, and
• members of the Board of Directors, directors, executives and employees of foreign ship management companies or undertakings established in Greece based on article 25 of law 27/1975, from 2019 onwards.

Supporting documentation submitted along with the tax returns

From tax year 2023 onwards, the individuals liable for the submission of the tax return of the above types of income, shall submit along with the tax return the following documents, accordingly:

1. A certificate by the domestic or foreign company or holding company that directly or indirectly holds shares of domestic companies that have been subject to article 25 of Law 27/1975 and foreign companies that have established offices/ branches in Greece based on article 25 of Law 27/1975, except for the ship-management companies, and which distributes the dividends and the extraordinary remuneration and bonuses; such certificate must include the personal details of the recipient Greek tax resident under his capacity as shareholder, partner, BoD member, director, executive or employee, the date of payment or credit, the amount and the currency, or
2. A certificate by the ship-management company or the company established in Greece under article 25 of Law 27/1975, which pays the extraordinary remuneration and bonuses on top of the salaries; such certificate must include the personal details of the recipient Greek tax resident under his capacity as BoD member, director, executive or employee, the date of payment or credit, the amount, and the currency.
3. A copy of the relevant license of establishment of the office or branch of the foreign company in Greece under article 25 of Law 27/1975.
4. Certificate by the tax authority which is competent for the established office or branch of the foreign company in Greece, as well as the domestic company subject to Article 25 of Law 27/1975, where it is stated that the companies have submitted the declaration/return for the contribution imposed  on imported foreign exchange (as per article 43 par. 1 of Law 4111/2013) and that any overdue instalments of this contribution have been paid. Said certificate is issued upon relevant request of the liable companies, before the amounts are paid to the beneficiaries.
5. Bank certificate, issued upon request of the beneficiary, for the announcement of the credit of dividends and extraordinary remunerations and bonuses on top of the salary, including the respective amounts, in case that the amounts paid abroad are imported in Greece through this bank and are credited to the beneficiary’s account. However, this certificate is not required if the aforementioned amounts are paid or credited abroad and remain abroad. In the event that the payments were made to a beneficiary’s account, which is kept in a different bank from the bank where the above amounts were deposited, the beneficiary must submit an extrait from the bank where the amounts were credited, and a relevant certificate by the company confirming the bank through which the above amounts have been imported.

 

 

* 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.