Greece: Project Finance Comparative Guide

1 Legal framework

1.1 Beyond general commercial and contract laws, what other specific laws and regulations govern project finance transactions in your jurisdiction?

Project finance transactions are governed by a multitude of laws. Aside from the Greek Civil Code, the Law on Sociétés Anonymes (L4548/2018) is one of the main legal instruments, as the vehicle for project finance transactions is normally a société anonyme. This is also the case for:

• Law 4706/2020, which regulates the corporate governance of sociétés anonymes; and
• Legislative Decree 17.7/1923 on special provisions on sociétés anonymes, which sets out a special legal framework for the realisation of collateral.

Critical provisions for project finance transactions are also included in other laws, such as:

• Article 14 of Law 3156/2003, concerning tax aspects of bond loans;
• Law 4308/2014 – particularly Articles 32 and following governing issues between parent and subsidiary undertakings;
• Law 2844/2000, which regulates matters of pledge and other procedural actions;
• Law 3301/2004 on financial collateral, which transposes into Greek law Directive 2002/47/EC of the European Parliament and of the Council of 6 June 2002 on financial collateral arrangements, and which sets out a special framework on the realisation of collateral; and
• Law 3389/2005, governing issues of financing projects through public-private partnerships.

Special laws and regulations are key additional tools, depending on the project type. For example, a major instrument governing energy projects is Law 4001/2011 on the Operation of Electricity and Natural Gas Energy Markets for Exploration, Production and Hydrocarbon Transmission Networks and Other Arrangements.

1.2 Do any bilateral and/or multilateral international instruments have particular relevance for project finance transactions in your jurisdiction?

As an EU member state, Greece is aligned with the regulations and directives of the European Union. European law influences finance projects in various areas, such as:

• European subsidies;
• environmental protection;
• green energy; and
• competition law.

Correspondingly, Greece complies with the regulations and directives of the European Central Bank, which are binding on Greek financial institutions. Special mention should also be made of Greece's participation in the Agreement establishing the Energy Community, aimed at the creation of a single energy market in Southeast Europe. Double tax agreements with third countries further ensure that income will not be subject to double taxation when both contracting states have the right to tax it.

1.3 Beyond normal governmental institutions, are there regulatory bodies that play a particular role in project finance in your jurisdiction? What powers do they have?

Energy projects: These are governed by:

• the Regulatory Authority for Energy, Waste and Water (RAEWW); and
• the Renewable Energy Sources Operator & Guarantees of Origin (DAPEEP SA).

RAEWW and DAPEEP are the competent authorities for:

• issuing licences;
• setting tariff rates; and
• supervising compliance with environmental and safety standards for energy projects.

Authorities of particular importance for the timely completion of real estate projects include:

• the Urban Planning Authority;
• the Archaeological Committee;
• the Committee for Historically Listed Buildings; and
• the Forestry Committee.

If a project involves banking services or products, the respective regulator may play a pivotal role.

Finally, where public concessions and works are involved, authorities such as the Hellenic Competition Commission, the Directorate General of Competition and the Greek Parliament are decisive in the prompt completion of the respective projects.

1.4 What is the government's general approach to project finance in your jurisdiction? Is PFI/PPP a preferred model in your jurisdiction?

The attraction of investment and the development of projects and infrastructure through public-private partnerships (PPPs) are key focuses in the Greek market, especially for large and technically complex projects such as airports, waste management and energy-related projects. Private finance initiative projects are equally important for large constructions and private projects. In general, PPPs are used where this is necessary due to the nature of the project and its relation to public interest.

2 Project finance market

2.1 How mature is the project finance market in your jurisdiction?

The Greek project finance market is mature in all major sectors and is now being expanded into other areas such as mining. A well-established legal and regulatory framework provides clarity and certainty for project transactions, facilitating effective contract enforcement and dispute resolution. As a result, projects have been successfully implemented in diverse sectors. Experienced financial institutions – including banks, investment funds and other financing entities – are active participants, contributing to the market's maturity. Diverse financing structures, such as public-private partnerships (PPPs) and various innovative models, are readily available. This maturity is reflected in a high level of investor confidence, both domestically and internationally.

2.2 On what types of project and in which industries is project finance typically utilised?

Key sectors in which project finance is extensively utilised in Greece include the following:

• Energy and infrastructure: Large-scale energy projects (eg, power plants, wind and solar farms) and infrastructure developments (eg, toll roads, bridges, ports).
• Tourism: Large-scale tourism projects, such as luxurious hotel resorts, theme parks and malls.
• Real estate and property development: Major real estate projects, including commercial complexes, residential buildings and mixed-use developments.
• PPPs: Collaborative projects between the public and private sectors, including hospitals, airports, waste management initiatives, schools and municipal utilities.

2.3 What significant project financings have commenced or concluded in your jurisdiction over the last 12 months?

Many projects were signed in 2023 which are expected to significantly contribute to the nation's development. They include the following, among others:

• A €680 million project financing facility for the development of the Skouries Project in Northern Greece: This facility will provide 80% of the expected future funding required to complete this huge mining project in Northern Greece, which is now approximately half-built.
• Hersonissos-Naples section: The Hersonissos-Naples project, with a budget of €359 million, follows the PPP model and has a 30-year timeline, encompassing a four-year construction phase. The primary objective is the implementation of the Northern Road Axis of Crete through the study, construction, financing, operation and maintenance of the Hersonissos-Naples section.
• Riviera Tower: The Riviera Tower is the nation's most extensive construction venture to date. The first environmentally friendly skyscraper in the Southeast Mediterranean, it is a key element in the Ellinikon investment portfolio.
• New Panathinaikos stadium: The agreement for the construction of the new Panathinaikos stadium was formalised on 19 May 2023. This project has a budget of €123 million, making it one of the most significant sports infrastructure investments in the country. The anticipated completion date is Summer 2026. The stadium's capacity is 40,000.

3 Finance structures

3.1 What project financing structures are most commonly used in your jurisdiction?

Common financing structures involve or combine the following features:

• Special purpose vehicles (SPVs): An SPV is a dedicated legal entity used for projects, isolating risks and optimising funding structures for enhanced financial flexibility.
• Public-private partnership (PPPs): PPPs foster collaboration between the public and private sectors, mitigating financial risks, attracting private investment and promoting innovative solutions for public infrastructure projects.
• Joint ventures (JVs): JVs enable shared resources, distribute financial risks and provide access to new markets, fostering collaborative growth and success.
• Bond loans: Bond loans offer a cost-effective way to raise capital through flexible repayment terms, enhancing creditworthiness and attracting diverse investors to a liquid market.

The Greek financing market is characterised by innovation and flexibility, and diverse financing structures are available with the aim of ensuring both the satisfaction of lenders and the maximum possible return for investors.

3.2 What are the advantages and disadvantages of these different types of structures?

• SPVs offer the advantage of risk isolation, as a special legal entity protects the sponsoring company or other projects from potential risks. This structure enables optimised financing through tailored capital structures, improved financing efficiency and risk allocation for specific ventures. However:
• • managing multiple SPVs for different projects can result in administrative complexities and increased overheads; and
  • their utility is often limited to the specific projects for which they are designed.
• PPPs spread costs and risks between public and private actors, promoting efficient project delivery and cost sharing. A PPP promotes innovative solutions by bringing together the needs of the public sector and the expertise of the private sector. However:
• • negotiating terms and aligning interests between public and private entities can be time consuming and complex; and
  • PPPs may face scrutiny in the public sector and political changes can affect deals, introducing an element of political sensitivity.
• JVs provide advantages such as shared resources and risk sharing, allowing partners to pool their expertise and capabilities for more robust project execution. However, decision-making challenges may arise due to differing priorities between partners; and conflicts of interest may arise if partners have conflicting goals or values. Despite these potential drawbacks, JVs promote collaborative growth and success through shared responsibilities.
• Bond loans: Bond loans offer advantages such as cost-effective financing with considerable tax benefits and increased flexibility. However, bond loans can only be issued by sociétés anonymes.

3.3 What other factors should parties bear in mind when deciding on a project financing structure?

Parties should consider several factors specific to the Greek economic and regulatory environment. The regulatory landscape – including permitting processes and compliance with environmental regulations – requires careful navigation. Understanding and aligning with government policies and initiatives – especially in sectors such as renewable energy, where Greece is making substantial investments – is crucial. Given the Greek tax framework, parties should assess the tax implications of different financing structures, considering any incentives or deductions provided by the government. Additionally, as Greece is part of the Eurozone, parties should factor in currency risks, interest rates and overall economic conditions when selecting a financing structure. Stakeholder alignment is vital in the Greek context, considering the importance of collaboration with government entities and local communities.

4 Industry players and ownership requirements

4.1 Who are the key players in project financings in your jurisdiction? Do any restrictions apply in this regard (eg, foreign ownership)?

Key participants include both domestic and foreign entities. In particular, domestic banks play a pivotal role as lenders, providing critical financial support and expertise for various projects. Government institutions often collaborate, particularly in areas such as infrastructure and public services – especially where a public financing dimension is involved (eg, PPPs). Investment funds – domestic and foreign – contribute capital; while project sponsors – usually companies or JVs – lead initiatives and work closely with funding agencies. Construction and engineering companies, an integral part of project execution, often form strategic partnerships with financial institutions. Legal and financial advisers – including law firms and consulting entities – play a key role in structuring and facilitating project financing, providing necessary legal and financial expertise.

In terms of restrictions, Greece generally embraces foreign investment without explicit restrictions. However, industry regulations and approvals may apply. Foreign investors must carefully navigate the regulatory landscape, ensuring compliance with industry-specific rules and obtaining necessary approvals.

4.2 What role does the state play in project financings in your jurisdiction?

In Greece, the state plays a substantive role in financing projects, particularly in sectors that are integral to energy, tourism and infrastructure which contribute significantly to social prosperity. PPPs stand out as a prominent route through which the government collaborates with private entities, leveraging their expertise and capital to address the country's infrastructure needs. The state establishes and oversees the regulatory framework – which includes licensing procedures, environmental regulations and compliance standards – providing the necessary legal basis for the development of each project. The support provided by the state for the development of entrepreneurial projects through various incentives, such as subsidies or financial support from European funds dedicated to these purposes, is significant. This attracts significant private investment. Additionally, the state plays a vital role in mitigating the risks associated with project financing by providing guarantees or assurances to lenders and investors, thus creating a favourable environment and an additional incentive for private sector participation in various investments.

4.3 Does your jurisdiction have nationalisation or expropriation laws in place? If so, what are the implications in the project finance context?

Greece has enacted laws on nationalisation or expropriation that help to attract investments, as they are designed to safeguard the public interest. Numerous examples demonstrate that expropriation (although often time consuming) has served as a solution to mitigate the risk of sacrificing a significant investment. Noteworthy instances include investments in projects involving:

• the construction and/or modernisation of road networks; and
• the redevelopment of areas with natural or commercial parks.

These investments were preserved precisely because laws on nationalisation or expropriation were in place.

5 Regulatory and documentary requirements

5.1 What regulatory approvals are typically required for project financings in your jurisdiction? How are these typically obtained and what fees are payable?

Projects typically require various regulatory approvals for their development and exploitation, depending on the nature of the project. The most common approvals include:

• environmental permits;
• construction permits; and
• approvals from specialised regulatory authorities.

For example, for an energy project, an environmental terms approval decision and a decision from the relevant environmental authorities (eg, the Forestry Committee) will be required.

These permits are issued upon request by the interested party. The competent authority will examine the request along with the accompanying documentation. The fees for these permits and approvals vary and are generally assessed based on factors such as:

• the nature of the project;
• the amount of financing; and
• the financing model.

Fees and various types of charges are integral parts of the process that should not be overlooked. Therefore, prospective investors should always assess these costs with the assistance of experienced legal and financial advisers.

5.2 What licences are typically required for project financings in your jurisdiction? How are these typically obtained and what fees are payable?

Project financing in Greece requires approvals commensurate with the nature of the project. In some sectors (eg, energy) specialised licences or approvals may be required from the relevant authorities. Otherwise, the Greek regulatory framework and the applicable fees are similar to those in other EU countries.

In relation to real estate projects, authorities of particular importance for the timely completion of project finance include:

• the Urban Planning Authority;
• the Archaeological Committee;
• the Committee for Historically Listed Buildings; and
• the Forestry Committee.

If a project involves banking services or products, the respective regulator may play a pivotal role. Finally, where public concessions and works are involved, authorities such as the Hellenic Competition Commission, the Directorate General of Competition and the Greek Parliament are decisive in the prompt completion of the respective projects.

5.3 What documentation is typically involved in a project financing in your jurisdiction?

Project financing requires a thorough set of documentation aimed at establishing the legal and financial framework for the transaction. Typically, this comprehensive suite of documents includes:

• a loan agreement outlining the terms and conditions of the loan provided by lenders;
• security documents such as mortgages, pledges, liens or any kind of charges which secure the lenders' interests;
• direct agreements with project stakeholders;
• legal opinions and due diligence reports from attorneys specialised in banking and project finance, confirming compliance with Greek laws and regulations; and
• environmental and permitting documents, including an environmental terms approval decision which confirms the project's alignment with environmental standards and regulatory requirements.

In the case of public-private partnerships, concession agreements establish the terms of the concession granted by the state to the private entity.

5.4 What registration or filing requirements apply for project financing documents to be valid and enforceable?

To ensure the validity and enforceability of project financing documents, strict adherence to specific registration and filing requirements is imperative. Security documents – encompassing liens, charges, mortgages or pledges over project assets – are normally registered with the Land Registry (or Pledge Registry). In the case of project entities which are companies, compliance necessitates the filing of documents such as resolutions with the General Commercial Registry for. The notarisation of certain documents is also a prerequisite for enhanced legal validity. The precise procedures and requirements are contingent on:

• the nature of the document; and
• the specific details of the project.

Meticulous attention should be paid to regulatory nuances and project intricacies.

5.5 Is force majeure understood as a legal concept in your jurisdiction?

Force majeure is recognised as a legal concept in Greece. 'Force majeure' refers to unforeseeable circumstances or events beyond the control of the parties involved in a contract that make it impossible to fulfil their contractual obligations.

In the context of project financing, force majeure clauses are always included in contracts to address unforeseen events that could jeopardise the project and the interests of the parties. Under strict conditions, the force majeure clause may exempt the parties, in whole or in part, from fulfilling their contractual obligations. However, the Greek courts are particularly cautious in accepting events (usually difficult to prove) that constitute force majeure. As a result, it is rare for them to agree on a total or partial exemption of the parties from their contractual obligations.

6 Security/guarantees

6.1 What types of security interests and guarantees are available in your jurisdiction? Which are most commonly used and which are recommended (if different)? In particular, is the concept of a security trustee recognised (and if not, how are guarantees or security taken for multiple lenders)?

In Greece, the choice of security interests and guarantees for project financings varies based on:

• the nature of the project; and
• the specific requirements of the lender.

The preference depends on whether the lender aims to secure its interest against the borrower's real property, movable assets, claims and rights or a combination of these. Frequently utilised security interests include:

• mortgages over real property;
• pledges over movable assets;
• pledges over rights; and
• assignments of receivables.

Additionally, guarantees – including personal/corporate guarantees – are more rarely employed to enhance overall security measures.

The selection of these instruments is tailored to the unique characteristics and needs of each financing project, ensuring a comprehensive and effective approach to risk mitigation and asset protection.

6.2 What are the formal, documentary and procedural requirements for perfecting these different types of security interests?

Perfecting security interests in Greece involves specific formalities tailored to each type of security. The pre-notation of real estate mortgages, for instance, requires the submission of a file to the court with various supporting documents (eg, extracts from the cadastral map, tax certificates). Once the court decision has been issued, an immediate registration in the Land Registry follows, ensuring protection for third parties and completing the process.

Pledges on movable assets require:

• a date-qualified pledge agreement;
• a detailed description of the assets; and
• registration with pertinent registries, such as the Pledge Registry.

The assignment of claims involves similar technicalities, as well as a notice of assignment to the third party (debtor). These procedural and documentary requirements are essential to ensure the clarity, enforceability and priority of security interests, establishing a robust framework for the protection of stakeholders involved in project financings. Perfection of security over shares and bonds requires:

• registration with the respective registries; and
• annotation of the respective titles (if they are not dematerialised).

6.3 Can security be taken over property, plant and equipment in your jurisdiction? If so, how?

Security can be obtained over property, plant, and equipment. The most prevalent security mechanisms for such assets being mortgages, pledges and assignments. When it comes to immovable property, the establishment of a mortgage is facilitated through a notarial mortgage deed (or judicially through pre-notation of mortgage); and subsequent registration in the Land Registry guarantees its validity and priority. Movable assets – such as machinery, appliances and equipment – can be secured through pledges, involving:

• a pledge agreement specifying the assets; and
• registration in the Pledge Register.

These security rights provide lenders with a legal claim on assets in case of default, enabling foreclosure or sale to recover outstanding debts.

6.4 Can security be taken over cash (including bank accounts generally) and receivables in your jurisdiction? If so, how? In particular what types of notice and control (if any) are required?

In Greece, cash holdings, including bank accounts, and receivables can be effectively secured through the implementation of pledges and assignments. For cash and bank accounts, the establishment of security necessitates an agreement between the parties. This contractual arrangement enables lenders to directly access pledged sums of money or designated bank accounts in the occurrence of an event of default which conduct to a termination of the contractual relationship.

The extent of control over funds and accounts is always subject to negotiation between the parties. The pledge agreement over the borrower's account is pivotal, defining the specific circumstances under which the lender is empowered to exercise control over the designated lien account. This kind of security ensures transparency and clarity in the utilisation and enforcement of security interests, offering a structured framework for both borrowers and lenders. Law 3301/2004 on financial collateral, which transposed into Greek law Directive 2002/47/EC of the European Parliament and of the Council of 6 June 2002 on financial collateral arrangements, is particularly useful to this end and introduced effective procedures for the realisation of the collateral.

6.5 Is it possible to take security over major licences (particularly in the extractive industry sector)?

This is not a regular practice in Greece.

6.6 What charges, fees and taxes (including notary and similar fees) arise from the perfection of a security interest or the taking of a guarantee?

Perfecting a security interest or obtaining a guarantee in Greece involves a range of charges, fees and taxes, which vary depending on the specifics of the project. Fees and charges must be paid to relevant authorities – such as the Land Registry for mortgages or the Pledge Registry for pledges – which are typically calculated based on the value of the secured assets. Special treatment is accorded to security interests securing bond loans, where the pertinent fees are capped. Moreover, the total cost encompasses fees for the legal advisers who are responsible for negotiating the collateral terms and providing general legal guidance throughout the process.

Value-added tax is another factor that influences the total cost of the project. In essence, a comprehensive understanding of the financial implications is crucial for effective planning and budgeting in the context of securing interests and guarantees in Greece.

6.7 What are the respective obligations and liabilities of the parties under security documents?

Generally, the security interest documentation provides that until the occurrence of an event of default, the borrower has extensive discretion as to the treatment of the encumbered assets, as long as the rights of the respective lenders are not adversely affected or threatened. Specific provisions are negotiated, depending on the nature of the project and

the other security interests, regarding voting rights in shareholders' meetings.

The same applies to the disposal of movable assets.

6.8 In the event of default, what options are available to enforce a security interest or guarantee? Is self-help available in your jurisdiction in connection with the enforcement of security or must enforcement action be pursued through the courts?

In Greece, the enforcement of a security or guarantee in case of default usually involves legal proceedings requiring judicial intervention and specific procedural actions. As a defence mechanism in case of an event of default, it is possible to file a lawsuit for a judgment on the outstanding debt and permission to proceed with foreclosure (a time-consuming and costly process). More immediate procedures include:

• interim measures; and/or
• the issuance of a temporary restraining order by the court.

More efficient are the provisions of Law 3301/2004 on financial collateral that can be established over cash, financial instruments or receivables, whereby the creditor may be satisfied through the disposal or expropriation of the encumbered asset, provided that the method for its evaluation has been pre-agreed.

Similarly, Legislative Decree 17.7/1923 states that, subject to the terms of the financial collateral arrangement, the liquidation does not require:

• prior notification of the intention to liquidate;
• the terms of the liquidation to be approved by a court, public official or other person;
• the liquidation to be conducted by public auction or any other manner prescribed by law; or
• any additional period of time to have elapsed.

6.9 What other considerations should be borne in mind when perfecting a security interest or taking the benefit of a guarantee in your jurisdiction?

Perfecting a security interest or acquiring a guarantee in Greece requires a careful examination of various factors. Seeking legal advice from professionals who are knowledgeable of Greek law – especially lawyers who specialise in this type of transaction – is crucial to ensure compliance with the legal requirements and regulations governing the project financing.

Thorough due diligence on the assets secured by the security documents – including the examination of licences, notarial deeds, administrative decisions, financial statements and various corporate documents and assignability restrictions – is essential for every project financing. Attention should be paid to various legislative requirements, such as registering pledges in the Pledge Registry (according to Law 2844/2000). The tax regime – which changes constantly – should also be considered carefully to avoid unpleasant surprises during the project financing.

6.10 What other protections are available to a lender to safeguard its position in connection with security or guarantees?

All protections are comprehensively analysed above.

6.11 Are direct agreements with contractual counterparties well understood in your jurisdiction?

Direct agreements with the contractual counterparties are well understood in Greece and are commonly used in project finance transactions. Some of the most important projects that have been delivered in Greece might not have succeeded without fair direct agreements.

7 Bankruptcy

7.1 How (if at all) do bankruptcy proceedings impact on the enforcement of security by a creditor?

Bankruptcy proceedings can significantly impact the enforcement of security by a creditor. In the context of project finance, when a borrower undergoes bankruptcy, the creditor's ability to enforce security interests may be subject to the automatic stay provision, preventing actions against the debtor or its assets. The automatic stay terminates all collection efforts and legal proceedings, affording the debtor breathing space to reorganise its financial affairs.

Of particular importance is a change introduced by the new Greek insolvency framework (Law 4738/2020, as applicable), pursuant to which the suspension of individual proceedings upon bankruptcy will not apply to secured creditors in respect of the encumbered assets of the bankruptcy estate for a period of nine months from the declaration of bankruptcy, unless the encumbered asset is part of a group of assets that the court has resolved should be disposed.

7.2 In what circumstances can antecedent transactions be unwound for preference? What other similar measures apply in this regard?

Preferences typically occur when a debtor in financial distress transfers assets or makes payments to certain creditors in a way that favours them over others. Such transactions can be undone to ensure equitable distribution among creditors. Antecedent transactions can be unwound for preference in bankruptcy where:

• they occurred within a specified period before the filing for bankruptcy;
• the debtor is insolvent; and
• certain elements of preference exist.

Suits relating to the defrauding of creditors (which must involve deceit) and equitable subordination are similar measures addressing transfers made to favour specific creditors or hinder others.

8 Project contracts

8.1 Are project contracts in your jurisdiction typically governed by local law?

Not necessarily, but very often, depending on the nature of the project.

8.2 What remedies are available to a project company for breach of the project contract?

Depending on the importance of the project contract, breach of its terms may result from a mandatory pre-payment to an event of default (or both). Direct agreements may provide for specific cure measures in case of breach, where the project finance lenders may intervene to cure the breach.

8.3 Are liquidated damages provisions in project contracts enforceable?

Provisions allowing for excessive punitive damages or excessive penalties are not enforceable in Greece and the court may reduce the damage to what is appropriate to the actual amount of losses. Additionally, under Article 808 of the Civil Code, in case of default in performance, the debtor of a loan will in no case be obliged to pay any further compensation other than statutory or contractual interest. Any agreement to the contrary will be null and void.

8.4 Are there any public policy considerations which need to be taken into account when assessing the enforceability of project contracts?

Public policy issues are essential to the assessment of the enforceability of project contracts in Greece. While parties have the autonomy to shape their contractual relationships, agreements that violate the principles of public policy may be deemed unenforceable. Compliance with environmental standards is crucial for alignment with the goals of public policy. Special legislative provisions that may apply on a case-by-case basis should always be taken into account (eg, the acquisition of real estate by foreigners in border areas). Finally, every project document should consider terms that may run counter to the public interest and the broader common good.

9 Project risk

9.1 What risks typically arise in project financings in your jurisdiction and how are these best mitigated?

Various risks may arise that require particular attention. These risks are commonly associated with frequent changes to the applicable legislative framework based on new government policies. Comprehensive due diligence conducted by experienced legal and technical advisers of the contracting parties is thus essential. After many years of economic crisis, Greece has established solid foundations for a new chapter in investment, characterised by economic stability and a less volatile market. Environmental risks exist (as in most countries) but can be mitigated through assessments by technical and expert professionals who provide opinions on each project. For these reasons, it is crucial to adopt a holistic risk management approach, incorporating legal, financial and technical expertise, so that project stakeholders can engage with greater confidence, safeguarding their interests and mitigating any potential risks.

9.2 How significant is political risk in project financings in your jurisdiction? How is this best mitigated?

Political risk must always be taken into account in project financing, as changes to government policies, regulations or political stability can impact the sustainability of the project. However, in recent years (particularly after the economic crisis), Greece has been thriving economically and is thus a preferred destination for investment. This is aided, in particular, by the stability created by the current government, which favours the attraction of investments to the country. This is evident through various incentives provided to potential investors (eg, tax benefits, subsidies, state or European grants). Therefore, political risk for finance projects has been significantly reduced.

10 Insurance

10.1 What types of insurance arrangements are typically put in place for project financings in your jurisdiction?

Various insurance arrangements are typically implemented to mitigate risks and protect stakeholders. Liability insurance provides broad protection, safeguarding not only the interests of the parties involved but often also the interests of third parties (third-party liability insurance contracts). Additionally, insurance during the construction phase of the project is essential to cover potential claims against contractors, workers, engineers and similar involved in the project. Insurance for facilities, equipment, machinery and similar against natural disasters is also necessary. The provision of security through guarantees is also common in Greece, whereby a third party guarantees for specific circumstances against the lender, thus enhancing the project's creditworthiness even further.

10.2 If local insurance is required, can local insurers assign offshore reinsurance contracts in your jurisdiction?

N/A.

10.3 What other forms of insurance feature in the project finance market in your jurisdiction?

Several types of insurance can play a crucial role, depending on the specifics of the project. Initially, there are insurance contracts for the restoration of potential damage within the framework of business risks (eg, loss of income, loss of goods, performance guarantee). In rarer, insurance contracts can be concluded for the restoration of potential damage in the event of hostilities, political destabilisation, coups or similar.

11 Tax

11.1 What taxes, royalties and similar charges are levied in the project finance context in your jurisdiction?

Various taxes, special charges and other charges must always be taken into account when making business decisions in financing projects. Value-added tax (VAT) must always be considered; although for certain categories of investments, a special VAT restructuring arrangement is available.

Another significant tax is income tax, which is applied to the annual profits of all companies. In Greece, tax withholding is applied to companies and freelancers for payments received throughout the year; and at the end of the year, a calculation is made to determine whether additional tax should be paid or whether a tax refund is due based on the amount already withheld. Additionally, in project financings involving real estate, the property tax should always be calculated in the business plan, based on rates which vary depending on the location and value of the property. It is also essential to calculate the tax relating to various legal actions, indirectly paid to the state through notaries, lawyers and similar. Furthermore, social security contributions for employees working on the project are always part of the overall project costs.

11.2 Are any exemptions or incentives available to encourage project finance in your jurisdiction?

Greece – especially in recent years – has taken significant steps to attract potential investors. In this context, several exemptions from taxes and additional fees are available; as are a range of government incentives for investment in specific sectors, such as energy, technology and innovation.

Specifically, for investments involving property, reduced tax rates and/or more favourable terms apply in:

• special economic zones; and
• areas affected by natural disasters.

A special regime of tax relief, in combination with state and European subsidies, is available for green energy, such as energy generated through wind farms.

11.3 What strategies might parties consider to mitigate their tax liabilities in the project finance context?

Parties can implement various strategies to mitigate their tax liabilities. The choice of structure for the project company plays a crucial role and parties should carefully examine the tax implications of different structures. One widely used financing method involves:

• the establishment of a single-member société anonyme (project company); and
• the indirect financing of this company through a third party or ultimate beneficial owner.

This way, the project company is taxed at lower rates, while the liability of the indirectly financing company is limited.

The indirect financing of a project company through subordinated loans from its shareholders is another indirect form of financing that increases the company's creditworthiness and simultaneously secures its funding indirectly. In this context, the application of transfer pricing strategies for transactions with related parties significantly reduces the risk of tax fluctuations. Finally, under specific conditions, donations (indirect financing) are exempt from donation tax.

12 Governing law and jurisdiction

12.1 What law typically governs project finance agreements in your jurisdiction? Do any specific requirements apply in this regard?

Project financing agreements in Greece are usually governed by Greek law, save for agreements on the establishment of security interests, which are subject to specific rules regarding the applicable law vis-à-vis third parties depending on the encumbered asset/right/claim. Ancillary financing agreements, such as hedging agreement, may be governed by other laws – often English law. The choice of law generally depends on:

• the location of the project;
• the country of origin of the contracting parties; and
• specific requirements relating to the nature of each project.

12.2 Is a choice of foreign law or jurisdiction valid and enforceable? In the case of a choice of foreign law of jurisdiction, will any provisions of local law have mandatory application? Are submission to jurisdiction provisions that operate in favour of one party only enforceable?

In Greece, a choice of foreign law or jurisdiction in project financing agreements is generally recognised and enforceable, provided that it does not conflict with Greek public order or Greek rules of immediate application. There are also several circumstances in which enforceability depends on bilateral international treaties.

12.3 Are waivers of immunity enforceable in your jurisdiction?

See question 12.2.

12.4 Will foreign judgments or arbitral awards be enforced in your jurisdiction? If so, how?

According to the Code of Civil Procedure, and subject to specific requirements which may apply depending on the country of origin of the judgment and international agreements, a final foreign judgment issued by a foreign court can be enforced to the extent that it meets the following requirements:

• It is res judicata under the law of the place where it was issued;
• The issuing court was competent under Greek law;
• The losing party was not deprived of the right to be heard, unless this was in accordance with the law applicable to the nationals of the jurisdiction of the court which issued the judgment;
• The judgment is not contrary to a decision of a Greek court rendered on the same matter and is binding on the parties between whom it is the judgment of the foreign court; and
• The judgment is not contrary to contrary to public morals or public policy.

According to Article 45 of Law 5016/2023 and Legislative Decree 4220/1961, which ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, an arbitral award will be recognised as binding and declared enforceable following a written application to the competent court.

13 Foreign investment

13.1 What taxes and other charges are levied on foreign investors in the project finance context in your jurisdiction?

Potential foreign investors that wish to invest in Greece need not pay any specific, exclusive tax due to their origin. On the contrary, Greece actively encourages the attraction of investments through tax exemptions, state subsidies and so on (see questions 11.2 and 13.2).

13.2 Are any incentives available to encourage foreign investment in the project finance context?

The government actively encourages foreign investment through a series of incentives designed to promote economic development and attract international funds. Tax incentives include:

• reduced corporate income tax rates;
• tax deductions; and
• tax relief for eligible categories of investments.

Subsidies or grants are also available to support specific projects in various sectors such as green energy, innovation and digital technology. Public-private partnerships facilitate collaboration between the public and private sectors, allowing foreign investors to share risks and returns with the public sector. Moreover, Greece, as a member of the European Union, leverages resources from various European programmes, providing incentives for national and foreign investors on projects that align with EU priorities. In this context, there is an opportunity to obtain financing from funds available under the Recovery and Resilience Fund through the financial support of NextGenerationEU.

13.3 What restrictions and requirements apply with regard to the remission of foreign exchange? Are local companies permitted to maintain offshore bank accounts?

The foreign exchange market in Greece adheres to the EU rules on the free movement of capital. Controls are implemented primarily to facilitate the enforcement of legislation related to the legitimisation of income from illegal activities and the financing of terrorism. To ensure transparency and prevent financial misconduct, the Bank of Greece typically requires documentation supporting the legality of foreign exchange transactions. Transactions exceeding specified limits may be subject to more extensive inspection. Regarding offshore bank accounts, Greek companies are generally allowed to maintain such accounts. However, the opening and maintenance of offshore accounts are subject to regulatory inspection and compliance with anti-money laundering regulations. For this purpose, a list of offshore destinations has been compiled by the Financial Crime Unit; individuals opening offshore accounts in countries on this list are subject to corresponding checks.

13.4 What restrictions and requirements apply with regard to the import of plant and machinery?

It may be necessary to pay import duty when a product enters the European Union. As the European Union is a customs union, a unified import duty is applied at the point of entry, regardless of the EU member state in which this occurs. The product can then move within the EU market without further customs requirements. Often, the supplier must provide proof of the product's origin, such as:

• a certificate of origin; or
• a declaration of origin issued by an approved exporter.

Some products must comply with specific technical and/or health requirements and hygiene standards. Different types of certifications may be required for these purposes. This is often the case for technical requirements for industrial products, as well as health and hygiene requirements for food and agricultural products.

13.5 What restrictions and requirements apply with regard to foreign workers and experts?

Greece has specific laws governing the employment of foreign workers and experts, with different regimes applicable to EU citizens and those from third countries. Third-country citizens seeking employment in Greece are required, under Law 4251/2014, to meet certain conditions. These include:

• having a residence permit with the right to work;
• submitting documentation for the issuance of a residence permit with the right to work; and
• obtaining an entry visa with the right to work and often additional certificates or permits depending on the individual's country of origin (eg, meeting asylum requirements).

On the other hand, EU citizens have the right to work in Greece without needing a work permit. They enjoy the same rights as Greek citizens, such as wages, healthcare, safety, social security and tax benefits. Social security contributions are generally mandatory to ensure access to public health services throughout their stay.

13.6 Is your jurisdiction party to bilateral investment and withholding tax treaties which might facilitate foreign investment?

Greece actively encourages foreign investment through its participation in a network of bilateral investment treaties (BITs) and double tax agreements. Under the Agreement on the Termination of BITs among the EU Member States, signed in Brussels on 5 May 2020 by 23 EU member states and in effect since 29 August 2020, all BITs between EU member states were terminated without future legal consequences. This:

• safeguards the integrity of the EU market;
• ensures the uniform application of the EU legal system;
• upholds the principle of non-discrimination among investors from EU countries; and
• guarantees equal terms of competition.

Additionally, Greece has an extensive legislative framework regarding contracts with third countries, significantly contributing to the prevention of double taxation of income and the rationalisation of tax matters for foreign investors. Potential foreign investors thus have a strong incentive to invest in Greece, as they benefit significantly from these agreements and should be able to easily overcome any fiscal obstacles that may arise in international business activities.

14 Environmental, social and ethical issues

14.1 What is the applicable environmental regime in your jurisdiction and what specific implications does this have for project financings?

A series of laws regulate the environmental regulatory framework in Greece – in particular, Laws 4014/2011, 4685/2020, 4964/2022, 5037/2023, as amended and in force. Particular emphasis is placed on environmental projects relating to green energy and ecological development. The evaluation of environmental impacts through the approval of the environmental terms is a necessary procedure for every project. Through this process, a thorough assessment of the potential environmental impacts of projects is conducted by specialised evaluators, who propose measures to counterbalance any environmental effects.

Projects also require various permits from competent authorities (eg, construction licence, installation licence, production licence). Stricter conditions apply if the project is located in an area with a Natura designation, depending on:

• the nature of the project; and
• the category it falls into.

In such cases, a corresponding special ecological assessment process is followed by relevant public services to protect the unique biodiversity of the area. There are also specific legislative provisions regulating issues such as waste management and hazardous chemicals.

The Greek environmental regulatory framework is fully compliant with EU law. Greek banks and investors adhere to additional environmental standards, which are also incorporated as obligations in the project financing documentation.

14.2 What is the applicable health and safety regime in your jurisdiction and what specific implications does this have for project financings?

The regulatory framework regarding the health and safety of workers in Greece is mainly governed by Law 3850/2010, as amended and in force, and specific legislative provisions, in compliance with EU law (primarily EU Directive 89/391/EEC).

Health and safety legislation requires the establishment of strict safety measures, risk assessments and training programmes for the protection of workers. Specifically, special regulations aimed at preventing workplace accidents require employers to have professional doctors and trained safety technicians (under certain conditions) in their establishments. The legislative framework imposes various obligations on employers in the case of a workplace accident, such as a requirement to immediately report the accident to the Hellenic Labour Inspectorate (an independent administrative authority) demonstrating that the employer has taken all necessary health and safety measures (ie, was not at fault). Otherwise, the legal representative of the company may face criminal sanctions. Additionally, the employer must follow a specific process, including:

• the assessment and classification of risks, starting with the preparation of a relevant report (an occupational risk assessment report); and
• the implementation of all preventive, technical and organisational/administrative measures.

According to Law 4808/2021, businesses employing more than 20 employees must adopt a policy for the prevention of violence and harassment in the workplace. Securing all necessary licences and certifications is also imperative for the commencement of any project.

14.3 What social and ethical issues should be borne in mind in the project finance context?

Several crucial social and ethical issues must be borne in mind in relation to the sustainable and responsible development of projects. Given the threat of climate change, measures and actions that will reduce any negative environmental impacts should be prioritised in the business plan and may affect the financing planning.

Furthermore, supporting fair labour practices is an essential ethical obligation which variously encompasses, among other things:

• protecting and respecting workers' rights;
• ensuring safe working conditions; and
• prohibiting discrimination in the workplace.

The defence of ethical values in relation to issues of financial misconduct, transparency and anti-corruption is also critical, to preserve the integrity of the project.

15 Trends and predictions

15.1 How would you describe the current project finance landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

In 2023, Greece reached an economic milestone as it regained its investment-grade rating after a series of upgrades by major credit rating agencies in recent years. This indicates that Greece has regained international trust and is thus attracting the attention of even more potential investors. One of the goals for 2024 (according to the national financial plan) is to increase investments by more than 15% through a series of reforms which will attract more investment, thus increasing the country's competitiveness.

Overall, the national financial plan for 2024 includes measures for direct and indirect income increases amounting to €1.6 billion. Significant reforms expected in 2024 include:

• a reduction in the capital concentration tax rate from 0.5% to 0.2%, costing €22 million annually; and
• a 50% reduction in the stock exchange transaction tax rate, costing €21 million annually.

These factors indicate that Greece is on a path of robust development, making it a suitable choice for investments.

16 Tips and traps

16.1 What are your top tips for the smooth conclusion of a project financing in your jurisdiction and what potential sticking points would you highlight?

Ensuring the smooth completion of project financing in Greece requires a strategic approach and careful management of key factors, risks and stakeholders. It is crucial to have a clear and feasible business plan that addresses all factors, risks and challenges that may arise during implementation. In this context, selecting the right type of project financing is critical, as each type is designed to address different needs.

For potential investors seeking external funding, connections in the financial, banking and investment sectors are always useful, as these reduce suspicion and build trust between parties, facilitating discussions and negotiations. Maintaining open communication with government authorities, local agencies and authorities is also helpful for the prompt resolution of bureaucratic issues that often arise in finance projects.

Assistance from experienced consultants covering the legal, financial and technical aspects of the project is also necessary, to identify and address potential issues that could jeopardise the project. In this context, given the complexity and frequent legislative changes in certain areas of Greek law, careful consideration is the selection of trained and experienced lawyers is required, to avoid unpleasant surprises during project implementation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.