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Greek capital controls – Survival Guide for businesses

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Greek capital controls – Survival Guide for businesses

Following the capital controls imposed on the Greek banking system, it is useful to address certain lawful alternatives for businesses to carry out transactions with their clients and suppliers and to pay their staff.

A. The restrictions imposed through the bank holiday (Capital Controls)

In accordance with Legislative Act dated 28.06.2015, as currently in force, the period between June 28 and July 6, 2015 is declared to be a bank holiday during which all credit institutions operating in Greece under any form whatsoever, including any branches of foreign credit institutions, shall be closed for business. This time period may be extended by decision of the Minister of Finance.

In particular, during the bank holiday, the following transactions may be carried out:

1. cash withdrawals from ATMs, subject to the daily limit of sixty (60) Euros per card (which may be amended by decision of the Minister of Finance),

2. cash withdrawals from ATMs with cards that have been issued abroad,

3. unlimited transactions with credit and debit cards for payments within Greece (i.e. for crediting a bank account kept in Greece),

4. payments with prepaid cards up to the amount of the available balance on the start of the bank holiday,

5. remote transactions (such as web banking or phone banking) similarly only for payments within Greece (i.e. for crediting a bank account kept in Greece),

6. acceptance of deposits at ATMs, and in general acceptance of deposits by credit institutions,

7. issue of new credit and debit cards by credit institutions,

8. payments on deposit accounts within Greece by centralized non electronic order (including, but not limited to payroll) at the relevant service of credit institutions,

9. cross-border payment orders relating exclusively to crediting an account kept with a credit institution operating in Greece.

B. Obligation of payment using bank payment means – The case of payroll 
In accordance with Article 23(b) of Law 4172/2013, any kind of expense relating to the purchase of goods or the procurement of services for an amount exceeding five hundred (500) Euros shall not be deducted from gross income, if payment, in whole or in part, has not been effected using bank payment means.  Bank payment means shall mean:

– Deposit on the supplier’s bank account of cash or wire transfer between accounts,

– Use of credit or debit cards of the company making the payment,

– Issue of company checks or assignment of third party checks,

– Use of bills of exchange paid through banks,

– Use of postal check

– Hellenic Post Quick Payment or deposit on a Hellenic Post payment account.

However, decision ΠΟΛ. 1216/2014 specifies that payment using bank payment means is not required for salaries, wages, remuneration of managers or directors of companies, or any other legal person or legal entity, extraordinary staff payments, remuneration paid to staff in addition to contractual or statutory remuneration, fixed monthly compensation representing a covered salary increase, granted by employers to employees, since the above expenses do not relate to the procurement of services but to the provision of work as part of an employment relationship.

Decision ΠΟΛ. 1216/2014 also specified that, where the contracting parties are at the same time suppliers and clients, they may proceed to mutual off-setting, provided this is not contrary to the provisions of other laws. Where the difference remaining after off-setting exceeds 500 Euros, recognition of the total purchase requires payment using bank payment means. The same applies in the case of sale of goods between persons liable to report transactions involving an “exchange”.

It may be deduced from the above that:

(a) expenses for purchase of goods or procurement of services for an amount exceeding 500 Euros should be paid through a bank, but not necessarily a Greek bank; and

 (b) in particular, where such expenses relate to salaries, as detailed above, irrespective of the amount, the above restriction on payment through a (Greek or foreign) bank does not apply and, therefore, payment may be effected in any manner whatsoever (cash, deposit in a bank account kept in Greece or abroad, etc.).

C. Movement of cash – Free movement of capital within the EU

In accordance with Article 63 of the Treaty on the Functioning of the European Union (TFEU, 2012/C 326/01), all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited together with all restrictions on payments between Member States and between Member States and third countries.

However, in accordance with Article 65 TFEU, Member States may adopt and apply justified restrictions on capital movements within the European Union as follows:

(a) measures to prevent infringements of national law and regulations, in particular in the field of taxation and the prudential supervision of financial institutions,

(b) procedures for the declaration of capital movements for purposes of administrative or statistical information, and

(c) measures which are justified on grounds of public policy or public security. The above provisions are supplemented by Article 75 TFEU, providing for the possibility if imposing financial sanctions upon natural or legal persons, groups or non-State entities to prevent and combat terrorism and related activities.

Furthermore, in accordance with Regulation (EC) No 1889/2005 of the European Parliament and of the Council (L 309/9/25.11.2005), any natural person entering or leaving the European Union and carrying cash of a value of EUR 10 000 or more shall declare that sum to the custom authorities or other competent authorities of the Member State through which he is entering or leaving the European Union.

«Cash» means, inter alia, currency (banknotes and coins that are in circulation as a medium of exchange).

Information shall be provided in writing, orally or electronically, to be determined by the Member State and it should be correct and include specific data (such as, details of the person making the declaration, the owner and the intended recipient of the cash, the amount and nature thereof, the provenance and intended use thereof, the transport route, and the means of transport).

Member States impose sanctions upon natural persons who fail to comply with the above obligation to declare which include the possibility that cash may be detained by administrative decision.

In accordance with Decision No. Ε23/2008 of the Ministry of Finance, as subsequently amended and in currently in force, and in accordance with the “Guide for Non-Residents in Tax and Customs Matters” issued by the Secretariat General for Government Revenue (GGDE) of the Ministry of Finance, dating from April 2015, control of the movement of cash in Greece, when a natural person is entering or leaving the EU, has been assigned to customs authorities.

Information shall be provided in writing and the form to be used is the common declaration template to be determined from time to time by EU provisions, provided by the competent authorities at the entry or exit points in the EU and, subsequently, submitted signed by the natural person, who may request a certified copy thereof.

In the event of failure to comply, or of incorrect or incomplete declaration, in accordance with Article 147(8) of the National Customs Code (Law 2960/2001), as currently in force, an administrative fine shall be imposed, immediately payable, amounting to 25% of the amount of the non-declared cash. Furthermore, custom authorities may detain the cash in order to conduct further enquiries to establish whether it originated from money laundering activities.

It should be noted that, where a natural person travels from an EU country to Greece or leaves Greece for another EU country, there is no obligation for declaring cash to the Greek customs authorities (irrespective of the amount), although restrictions may apply in individual EU Member States.

D. Conclusions

A business may:

– pay its staff with cash both within and outside Greece,

– receive monies from its clients on any account kept with any bank outside Greece, even outside the European Union, including for its invoices relating to the sale of goods or the provision of services within Greece,

– pay its suppliers, including for transactions exceeding the amount of 500 EUR, through bank payment means outside Greece (from foreign bank to foreign bank),- off-set its invoice with invoices issued by its suppliers,

– import an unlimited amount of cash from any country within the European Union,

– pay salaries, etc. to its staff from any bank account kept in any country in the world to any bank account kept by its staff in any other country in the world.

Furthermore, the Legislative Act does not contain any prohibition on carrying cash outside Greece, either by individuals or by undertakings; therefore, the only applicable restrictions are those referred to above.

Evidently, before making any such moves, any undertaking should seek its legal and fiscal counsel’s advice.

Publication date:3/7/2015