This country-specific Q&A provides an overview to tax laws and regulations that may occur in the Greece.
It will cover witholding tax, transfer pricing, the OECD model, GAAR, tax disputes and an overview of the jurisdictional regulatory authorities.
This Q&A is part of the global guide to Tax. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/tax-4th-edition/
How often is tax law amended and what are the processes for such amendments?
Tax law is amended at least two or three times per year through tax bills proposed by the Government and voted by the Parliament and much more frequently through amending provisions, contained in laws regulating other, non-tax related matters. Bills are accompanied by explanatory memorandums which explain the purpose of the law and can be used for interpretation. The tax authorities issue circulars and guidelines for the interpretation of the tax law, with circulars being binding on the tax authorities.
What are the principal procedural obligations of a taxpayer, that is, the maintenance of records over what period and how regularly must it file a return or accounts?
In principle, all taxpayers must electronically file annual income tax returns whereas business taxpayers also file annually or in shorter periods a number of returns related to other taxes such as VAT, withholding taxes, payroll withholding tax etc. Corporations must in principle file their annual income tax returns within 6 months as of the end of their fiscal year. Specific taxable transactions may require the filing of one-time returns, such as in relation to stamp tax or capital concentration tax. Additional compliance obligations, such as in relation to automatic exchange of information between tax authorities at EU level have been introduced in more recent years.
In general books and records should be maintained for a period of 5 years, starting from the end of the fiscal year within which the tax return pertaining to the relevant year was due to be filed, which is when the right of the State to assess taxes is in principle time-barred. There are however instances where the right of the State to assess taxes is extended such as when exchange of information with foreign tax authorities is pending or where there is pending litigation or where the taxpayer has committed tax evasion. In the latter case the right of the State is extended to twenty years. In this respect, it is generally recommended to maintain books and records until the time that the State’s right to assess taxes is time barred.
Who are the key regulatory authorities? How easy is it to deal with them and how long does it take to resolve standard issues?
The tax regulatory authority in Greece is the Independent Authority for Public Revenue (IAPR) which is responsible for the determination, assessment and collection of taxes, customs revenues and certain other public revenues.
Part of the IAPR are the Local Tax Offices or more centralized authorities such as the Audit Center for Taxpayers of Great Wealth and the Audit Center for Large Enterprises, which are competent for dealing with the tax matters of those taxpayers who are assigned to each such authority, ranging from standard administrative tasks such as tax registrations to tax audits and additional assessments.
Standard issues which require the physical presence of a taxpayer at a Local Tax Office level and cannot be dealt with electronically may sometimes be delayed due to lack of sufficient resources or a formalistic approach. More complex issues can be addressed conceptually at the various Directories which come under the IAPR depending on the type of each matter.
Are tax disputes capable of adjudication by a court, tribunal or body independent of the tax authority, and how long should a taxpayer expect such proceedings to take?
Tax disputes usually emerge from tax audits on taxpayers where tax authorities seek to assess additional taxes or following filing by taxpayers of tax refund claims. Tax assessments or tax refund rejections respectively are initially challenged through the filing by taxpayers of administrative appeals with the Dispute Resolution Unit. Administrative appeals are mandatory prior to the initiation of any litigation before administrative courts. This, fairly recently, established process was aimed at decongesting administrative courts from cases that could promptly be resolved at the level of the tax administration. The Dispute Resolution Unit is obliged to issue decisions on administrative appeals within four months. Disputes, especially those concerning simple matters or matters in respect of which the tax authorities have issued guidelines are in fact often resolved at administrative level. If not, taxpayers can file appeals before administrative courts. Judgements at first instance may take up to five years to be issued. More delays can be expected where the competent courts are the courts of Athens where the majority of the cases are concentrated. A decision in case of a second instance appeal can take up to three years to be issued as from filing of the appeal. In case any of the parties brings a matter before the Council of State which is the supreme court, the decision can take up to six years to be issued. Overall, tax related court proceedings can take as long as 15 years to be brought to an end.
Are there set dates for payment of tax, provisionally or in arrears, and what happens with amounts of tax in dispute with the regulatory authority?
The dates for payment of tax and advance tax are set. Individuals pay income tax in three equal bi-monthly installments. Legal persons and entities pay income tax at maximum in six monthly equal installments whereas they also prepay 100% of their tax as an advance payment of the subsequent year’s tax. The dates for withholding tax as well as paying other taxes such as VAT are also set, whereas the time of payment of one-off taxes is usually set by reference to the specific transaction triggering the relevant tax obligation. When a tax becomes overdue, it bears interest for each month the payment is delayed. When a tax assessment is challenged before the Dispute Resolution Unit, 50% of the assessed amount can be suspended until a final court judgement is issued, provided that the taxpayer pays the remaining 50%. However, in case the taxpayer loses the case at court, the suspended 50% of the assessed amount should be paid together with interest which is calculated from the date of the assessment.
Is taxpayer data recognised as highly confidential and adequately safeguarded against disclosure to third parties, including other parts of the Government? Is it a signatory (or does it propose to become a signatory) to the Common Reporting Standard? And/or does it maintain (or intend to maintain) a public register of beneficial ownership?
The Greek Code of Tax Procedures specifically provides that taxpayer data is highly confidential. In specific, employees of the Ministry of Finance and the Tax Administration are obliged to keep confidential all taxpayer data that comes to their knowledge while exercising their duties. Nevertheless, such data can in certain exceptional cases be disclosed to third parties such as other employees of the Tax Administration, lawyers of the State, prosecution authorities, judges or foreign tax authorities.
Greece is a signatory to the OECD Multilateral Competent Authority Agreement for the automatic exchange of information in accordance with the CRS and has also transposed into Greek law Council Directive 2014/107/EU of 9 December 2014 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation. Greece has also enacted legislation implementing the 4th EU Anti-Money Laundering Directive and is about to implement in the fourth quarter of 2019 a public Register of beneficial ownership.
What are the tests for residence of the main business structures (including transparent entities)?
Legal persons and entities are deemed to be resident in Greece if formed in accordance with Greek law or if their registered seat or place of effective management is in Greece. In determining the place of effective management, all facts and circumstances shall be examined, with material factors being the place of exercise of the day-to-day business and strategic decision-making, the place where the annual shareholders’ meetings and meetings of executive bodies are held, the place where books and records are kept and the directors’ place of residence. The state of residence of the majority shareholders may be taken into account along with the other factors. The rules on residence do not apply to certain companies operating under special shipping regimes.
Have you found the policing of cross border transactions within an international group to be a target of the tax authorities’ attention and in what ways?
In the past, areas in which tax authorities traditionally focused were among others the deductibility of management fees and other cross border intra-group payments as well as withholding tax in respect of cross-border payments challenged as being royalties. Mostly since January 2014, when the currently applicable Income Tax Code (ITC) and Code of Tax Procedure (CTP) came into force, transfer pricing has become an area of primary focus for the tax authorities. Disputes have shifted towards matters concerning the reliability of comparable data, the reasonableness of comparability adjustments and lately the appropriateness of selected transfer pricing methods.
Also, in the past, in the absence of domestic anti-abuse provisions, tax avoidance was not targeted by Greek tax authorities in a tax audit. This is anticipated to change, as Greece has relatively recently enacted a number of rules that aim to effectively combat artificial arrangements aiming at tax avoidance.
Is there a CFC or Thin Cap regime? Is there a transfer pricing regime and is it possible to obtain an advance pricing agreement?
Domestic CFC and interest barrier rules were first introduced as of 1 January 2014 and amended in April 2019, in light of the EU Anti-Tax Avoidance Directive (“ATAD”). The amended rules are set to apply for tax years starting from 1 January 2019.
The new CFC rule explicitly applies to Greek tax resident private individuals and legal entities and uses as a criterion the actual tax paid by the CFC in the state of tax residence. Greece opted to apply the “passive income” approach, by explicitly providing that CFC rules do not apply to companies or permanent establishments resident in EU/EEA Member States to the extent that such entities carry on a substantive economic activity supported by staff, equipment, assets and premises, as evidenced by relevant facts and circumstances.
As far as the new interest barrier rule is concerned, a company’s “exceeding borrowing costs” are tax deductible in the tax period in which they are incurred only up to 30% of the company's EBITDA. The 30% limitation does not apply to exceeding borrowing costs up to the amount of Euro 3M. “Exceeding” borrowing costs are defined as the amount by which the deductible borrowing costs of a company exceed taxable interest revenues and other economically equivalent taxable revenues.
Transfer pricing provisions, initially introduced in a simplified form in 1980, have been subject to regular revisions, gradually extending their scope of application and aligning them with international taxation trends. The currently applicable backbone transfer pricing provisions (Articles 50 and 51 ITC) fully endorse the arm’s-length principle, as defined in Article 9 of the OECD Model Tax Convention and interpreted by the OECD Transfer Pricing Guidelines, following the revisions introduced as a result of Actions 8–10 of the BEPS project.
Taxpayers may apply for a unilateral, bilateral or multilateral APA on the appropriate set of criteria for the determination of transfer prices over a fixed period of time that may not exceed four years (Article 23 CTP). Rollback of the APA is not allowed.
Is there a general anti-avoidance rule (GAAR) and, if so, in your experience, how would you describe its application by the tax authority? Eg is the enforcement of the GAAR commonly litigated, is it raised by tax authorities in negotiations only etc?
A GAAR was first introduced in Greece as of 1 January 2014, as part of wider measures to combat tax avoidance. Following some recent Supreme Court decisions limiting the State’s right to extend the applicable statutes of limitation for assessing tax, the Greek tax authorities only recently shifted their focus on auditing fiscal years 2014 onwards, and therefore the enforcement of the GAAR has not yet been raised or disputed.
In transposing the ATAD, Greece adopted the main purpose test, instead of the essential purpose test adopted by the previously applicable provision. Looking forward, Greek tax authorities and national courts are anticipated to apply the revised rule, taking into account jurisprudence of the CJEU, which has jurisdiction to interpret domestic legislation transposing EU Directive rules including in relation to purely internal situations.
Have any of the OECD BEPS recommendations been implemented or are any planned to be implemented and if so, which ones?
Greece is largely compliant with the principles devel¬oped and the measures recommended by the OECD/G20 BEPS action plan. In addition, being an EU Member State, Greece was bound to transpose into domestic law the EU Directives that implement OECD/G20 BEPS conclusions at EU level. In specific:
- Existing CFC rules and interest deduction limita¬tions have recently been revised in light of the EU ATAD.
- In relation to hybrid instruments, Greece has transposed the amendments made to the EU Parent-Subsidiary Directive in accordance to which dividends paid by EU-based qualifying subsidiaries are not taxed to the extent that such profits are not deductible by the subsidiary. Furthermore, it is anticipat¬ed that Greece will transpose the relevant rules on hybrid mismatches provided under the EU ATAD 2, addressing hybrid mismatches with third countries.
- Greece has also transposed the EU Directives providing for automatic exchange of information on cross-border tax rulings and advance pricing agreements between EU member states.
- In 2016-2017, Greece updated its domestic legal framework regarding the mutual agreement procedure (MAP) and is considered to have met the majority of the elements of the Action 14 Minimum Standard as per the report on Stage 1 of the MAP peer review.
- Also, the transfer pricing legal framework fully endorses the arm’s-length principle, as interpreted by the OECD Transfer Pricing Guidelines, following the revisions introduced as a result of Actions 8–10. As regards Action 13, Greece has also introduced the automatic exchange of CbC reports into domestic legislation.
- Greece has signed, but not yet ratified, the OECD Multilateral Instrument (MLI), intended to amend the existing bilateral tax treaties for implementing the BEPS minimum standards with respect to tax treaty-related measures. It has also opted in provisions related to binding arbitration in mutual agreement procedures.
In your view, how has BEPS impacted on the government’s tax policies?
During the last five years, Greece has implemented several measures targeting BEPS, also in an effort to being aligned with international developments. Application and interpretation of BEPS-inspired rules has not however been observed in practice, due to the focus of tax authorities in auditing years prior to 2014, when most of these rules were not in force. That being said, transfer pricing has been a key point for scrutiny in recent years. Also, the IAPR has engaged more personnel to deal with transfer pricing, dispute resolution and APA matters and is expected to follow international paradigms when applying BEPS-inspired rules.
Does the tax system broadly follow the recognised OECD Model? Does it have taxation of; a) business profits, b) employment income and pensions, c) VAT (or other indirect tax), d) savings income and royalties, e) income from land, f) capital gains, g) stamp and/or capital duties? If so, what are the current rates and are they flat or graduated?
Overall, the main principles of the Greek tax system are not materially different to what can be found in the other OECD jurisdictions.
- Income tax applicable to legal persons and entities is imposed at a flat rate of 28%. This rate is currently set to be gradually reduced over the next three years to 25% (in respect of the fiscal year 2022 onwards), by one point per year whereas the newly elected government has announced a greater reduction.
- The gradual tax scale applicable to employment income and business income earned by individuals (salaries and pensions) is the following:
Income bracket (Euro)
Tax rate (%)
Up to 20,000
20,001 - 30,000
30,001 - 40,000
A special solidarity contribution is also imposed on the actual and imputed reported income of individuals. The relevant contribution is imposed on net salaries or any other type of income, pursuant to the following scale:
Income bracket (Euro)
Tax rate (%)
- VAT is set at a flat rate of 24%, although some goods or services are subject to a reduced rate.
- Individuals are taxed in respect of interest income at a flat rate of 15%, in respect of income from royalties at a flat rate of 20% and in respect of income from dividends at a flat rate of 10%.
Income from real estate property is taxable at a gradual scale as follows:
Tax rate (%)
Up to 12,000
12,001 to 35,000
35,001 and more
- Capital gains are taxable at a flat rate of 15% for individuals.
- Stamp duty is levied on specific documents and transactions, including loan agreements, at a 2.4% or 3.6% rate. Capital accumulation tax is imposed upon specific acts mainly relevant to share subscription at a 1.1% rate.
- Taxes in relation to the holding and transferring real estate are also applicable, namely real estate transfer tax, unified real estate tax and special tax on real estate.
Is the charge to business tax levied on, broadly, the revenue profits of a business as computed according to the principles of commercial accountancy?
Business profits are initially determined on the basis of the profit and loss statement prepared in accordance with the accounting principles prescribed under Greek law. However, the taxable base is finally determined on the basis of the provisions of the ITC, which apply to increase or reduce the income that is subject to taxation including on the basis of specified depreciation rates and rules on the deductibility of bad debt provisions applicable for income tax purposes.
Are different vehicles for carrying on business, such as companies, partnerships, trusts, etc, recognised as taxable entities? What entities are transparent for tax purposes and why are they used?
Corporations and partnerships alike are taxed as separate legal entities. Trusts cannot be established under Greek law however for tax purposes foreign trusts are considered as taxable entities.
In general, business entities are not transparent. Exceptions to this, such as Greek Venture Capital Mutual Funds (ΑΚΕΣ), are few in number.
Is liability to business taxation based upon a concept of fiscal residence or registration? If so what are the tests?
Greece taxes its residents on their worldwide income, whereas it taxes non-residents in respect of income sourced in Greece, such as for example business profits attributable to a permanent establishment in Greece. For establishing tax residence, as analysed under question 7, one may examine whether incorporation was performed in accordance with Greek law or whether the registered seat or place of effective management of a taxpayer is in Greece.
Are there any special taxation regimes, such as enterprise zones or favourable tax regimes for financial services or co-ordination centres, etc?
A tonnage tax regime applies in respect of ship-owning com¬panies. The tax is calculated on the basis of the capacity and age of the vessel. In relation to vessels under Greek flag, the tonnage tax exhausts any further income tax obligation of the ship-owning company and its shareholders with respect to income arising from the operation and exploitation of the vessel. Since 1 January 2015, vessels flying flags of EU or EEA member states can also be within this regime in respect of defined types of vessels. With respect to vessels under for¬eign flags, tonnage tax is imposed only in relation to those vessels that are managed in Greece by companies which have established offices in Greece for such management, under a specially regulated regime.
A Greek cost plus regime for shared services centers allows the licensee companies to determine their taxable gross revenues on a cost-plus basis, provided they are engaged exclusively in the provision of specified intra-group services, such as consulting, data processing, HR management, procurement etc while the relevant cost-plus percentage –which cannot be inferior to 5%- is ascertained by virtue of a governmental decision following a documented application by the taxpayer. Companies licensed under such regime can also obtain grants as an incentive for developing new activities in Greece and creating new jobs.
Are there any particular tax regimes applicable to intellectual property, such as patent box?
Subject to a governmental audit, a supertax deduction of an additional 30% of certain R&D expenses, including any depreciation of machinery and equipment used for R&D purposes, is available at the time such expenses are realized.
Profits derived by a business from the sale of assets produced by deploying its own patents, and from services provided with the use of its own patents, are exempt from corporate income tax for a period of three years starting from the year when the relevant revenues were first accrued. The relevant profits are taxed when distributed or capitalized.
Certain instruments and equipment used for R&D which are set by governmental decision, can be amortized at a 40% rate annually.
Is fiscal consolidation employed or a recognition of groups of corporates for tax purposes and are there any jurisdictional limitations on what can constitute a group for tax purposes? Is a group contribution system employed or how can losses be relieved across group companies otherwise?
There is no fiscal consolidation nor is there recognition of groups of corporates for tax purposes in Greece.
Are there any withholding taxes?
There is a system of withholding taxes in Greece, the most notable of which are briefly described below.
Interest, dividends and royalties are subject to 15%, 10% and 20% withholding tax respectively. The said rate on dividends in particular applies with respect to dividends declared as of the fiscal year 2019 onwards. These rates exhaust the tax liability of individuals and non-resident persons. Withholding tax rates on interest, dividends and royalties can be reduced or eliminated if payments are made to beneficiaries in double tax treaty jurisdictions. Profits, interest and royalties distributed to qualifying EU parent companies are exempt from any withholding tax, provided that the conditions of the Parent-Subsidiary Directive are met.
Service fees are subject to a 20% withholding tax when paid to permanent establishments established in Greece by companies established outside the EU. Payments to certain contractors are subject to 3% withholding tax.
Salaries and pensions are also subject to withholding tax based on the gradual scale applicable to individuals.
Are there any recognised environmental taxes payable by businesses?
Greece imposes special consumption taxes on fuels and electricity generation. Car circulation duties and registration fees are also applicable, as well as a number of other environment related duties and charges (such as a duty on plastic bags).
Is dividend income received from resident and/or non-resident companies exempt from tax? If not, how is it taxed?
Dividends from resident and non-resident subsidiaries are included in the tax base of Greek companies for income tax purposes. Profits received from subsidiaries established in the EU are exempt from corporate income tax in Greece, subject to specific requirements under the rules transposing the Parent-Subsidiary Directive. In such cases, however, apart from the generally applicable interest deductibility limitations, interest incurred for the purposes of financing the relevant participations is not deductible.
If profits are received by local corporations from EU subsidiaries but the relevant prerequisites of the Parent-Subsidiary Directive are not met, it is possible to obtain a foreign imputation tax credit.
The exemption from Greek income tax on dividends received by Greek companies from qualifying EU subsidiaries does not apply to the extent that such profits are not deductible by the subsidiary.
If you were advising an international group seeking to re-locate activities from the UK in anticipation of Brexit, what are the advantages and disadvantages offered?
As a member of the EU but also of the OECD, Greece offers a predictable legal environment in the field of taxation whereas it is also party to a wide network of double taxation treaties. The applicable corporate income tax rate is currently set to go down to 25% as of the fiscal year 2022 whereas the newly elected government has announced a greater reduction. In Greece there is an EU-compliant institutional frame¬work for the establishment of private investment aid schemes aiming at the country’s regional and economic development to which businesses can have access to as well as a number of tax incentives such as for the production of audiovisual content and software and the creation of new jobs. The Greek cost plus regime for shared services centers offers tax predictability for companies wishing to establish their coordination centers in Greece whereas grants for developing new activities in Greece and creating new jobs are also available to companies licensed under such regime. Greece offers a pleasant living environment and access to a workforce which is to a large degree university trained. As a holding jurisdiction, Greece still does not have a full participation regime given that capital gains from the disposal of participations in other companies are taxable. Frequent changes in tax legislation and delays in justice are presented as disadvantages. However, in recent years progress is being made in the tax field with implementation of steps such as the electronic filing of tax returns, the administrative appeal process to decongest courts, the publicity of the tax authorities’ guidelines and the shortening of the periods in respect of which businesses can be audited.