Any foreign exchange control restrictions which had not been abolished in recent years have been completely lifted during 1994.
Importation of foreign currency into Greece is unrestricted and the exportation of foreign currency is also no longer subject to restrictions, however, all exportations of foreign exchange must still be effected through the commercial banks who will check the authenticity of the transaction, requesting supporting documentation. Receivables may be used to offset payables in foreign exchange. In accordance with the relevant legislation, with the exception of specific cases, all contracts which give rise to rights or obligations to pay a price or rent for property or a fee for any service or work in favour of a person residing in Greece may only be concluded in drachmae. Any provision in a contract in contravention of the above will be void. In this case a fair price may be set by the courts. Such price may not exceed the drachma equivalent of the foreign currency at the rate of exchange ruling on the date when the contract was concluded. This restriction also prohibits the price from being expressed in drachmae, the amount of which will be determined in accordance with the rate of exchange at some future date.
Foreign Currency Earnings
All persons established in Greece and realising profits, commissions or other benefits in foreign exchange from the provision of services in Greece to persons established abroad or receiving rents from the leasing of immovable property in Greece or the proceeds from the sale thereof are obliged to sell the foreign currency received to an authorised bank within a reasonable period of time of the receipt thereof unless such funds will be spent to cover other obligations arising from abroad in foreign currency. Greek exporters of goods or services are now permitted to maintain all of their foreign exchange receipts in foreign exchange bank accounts with banks operating either in Greece or abroad.
While there are a number of exceptions to the above rules, the shipping industry, insurance of ships, certain bank loans, etc. require the approval of the Bank of Greece.
Foreign Currency Accounts
Both residents and non-residents may maintain foreign currency accounts with banks in Greece. Such accounts may be credited only with foreign currency which is not required to be assigned to the Bank of Greece, as in the case of residents' earnings from employment abroad, proceeds from disposal of foreign assets, inheritances, etc.
The funds and interest thereon may be freely transferred abroad.
There are restrictions on the amount of foreign currency which residents may obtain as travelling allowances for holidays or business although the limits have been recently raised substantially to the sum of 2000 ECU. These restrictions apply only to foreign currency provided in exchange for drachmae. There is no restriction on the amount of free foreign currency which may be taken out of the country. Nevertheless, care must be exercised to ensure that the proper documentation to support such amounts is available for inspection at the point of departure from Greece.
However, for business trips, there are no exchange limits as to the amounts that may be charged on company credit cards.
There are no longer restrictions on the amount of foreign currency which residents may obtain for residents studying abroad.
Persons permanently residing abroad are permitted to freely re-export cheques, letters of credit, etc., in foreign currency which are issued directly to their name (not by endorsement) as well as traveller cheques in their name. Foreign bank notes up to a certain amount not declared upon entry into Greece may be carried by non-residents on leaving Greece, provided they have not remained in Greece for more than one year. The amount of Greek bank notes which may be carried by travellers to and from Greece is limited.
Drachmae bank accounts of non residents
Non residents may maintain bank accounts in drachmae which accounts have been credited with drachmae arising from the conversion of foreign currency to Drachmae and relevant currency conversion certificates (commonly referred to as "pink slips") have or will be issued for that purpose.
The drachmae sums may be re-converted into foreign currency and remitted abroad or used for other transactions in foreign currency, upon presentation of the above mentioned "pink slip" to the commercial bank.
Blocked funds arising from certain transactions (e.g. sale proceeds from certain real estate transactions, tax refunds), where the debtor was in the past obliged to deposit the relevant amount in a blocked account in favour of the creditor with a bank in Greece, have been abolished. Accordingly, proceeds from such transactions are no longer placed in blocked accounts and release of previously blocked funds requires only an application by the beneficiary of the bank account to the Bank of Greece.
Payments to foreign residents for purchased goods and services including construction, engineering, information services, etc., and remittances of profits, dividends, etc., are freely permitted. Prior permission of the Bank of Greece is no longer required for purposes of monitoring such payments and transfers and all payments are now effected through the commercial banks who are responsible for reviewing the authenticity of such transactions.
Greek Residents Investing Abroad
As of 1 July 1991, Greek residents may make direct investments in real estate and enter into transactions involving securities in EU member states under certain conditions. Such investments in non-EU member states are also allowed as of mid-1992. Greek residents are obliged to import the proceeds of liquidation of such investments within a reasonable time of liquidation, unless such proceeds are reinvested or deposited in foreign bank accounts or used to settle obligations abroad.
Foreign Investor Participation
In general there are few restrictions on foreign investment participation. The following are the exceptions where restrictions do apply:
(i) Real estate located in border areas may only be owned by Greek or EU residents or nationals.
(ii) Shares in Real Estate Companies which are defined as companies having more than 60% of their capital and reserves invested in urban real estate may only be owned by Greek or EU residents, or nationals of Greek origin.
(iii) More than 25% of the share capital in private radio or TV companies can not be owned by non-EU residents.
There are also limitations for non EU residents participating in airline companies, shipping interests and mining interests.
Repatriation of Foreign Capital
Previously, approval from the appropriate authority (either the Bank of Greece for non-EU origin or the Ministry of National Economy for EU origin) had to be obtained prior to importation of capital funds or prior to effecting a capital transaction in order for profits and/or proceeds of distribution to be transferred abroad at a later date. In accordance with Presidential Decrees 96/1993 and 104/1994, such prior approval is no longer required and all transfers are now effected through the Commercial Banks in Greece. When approving such transfers abroad, the Commercial Banks are responsible for investigating the authenticity of transactions and accordingly they would request documentation to show that the transaction (including the importation of capital/capital investment) in fact took place and was authentic. For capital movements, it is recommended that a Currency Conversion Certificate (commonly referred to as the "Pink Slip") be obtained at the time of importation of the capital and that it be properly completed.
The contents of this article are intended to provide a general guide to the subject matter. Specialist advice should be obtained before any action is taken.
For further information contact Marios T. Kyriacou, KPMG Peat Marwick Kyriacou, Athens, Tel: 00 301 77 52 001; Fax: 00 301 77 04 182 or enter text search "Peat Marwick Kyriacou" and "Business Monitor".