Answer ... Anti-avoidance rules are set out in the Greek tax law.
Answer ... The Greek Code of Tax Procedure has introduced into local law the General Anti-abuse Rule set out in Article 6 of the EU Anti-Tax Avoidance Directive 2016/1164/EU. According to the law, for the purposes of calculating tax liabilities, the tax administration does not take into account any arrangements which, having been put into place for the main purpose (or a main purpose) of obtaining a tax advantage that defeats the object or purpose of the applicable tax law, are not genuine, having regard to all relevant facts and circumstances. Arrangements shall be regarded as not genuine to the extent that they are not put into place for valid commercial reasons which reflect economic reality.
Answer ... Controlled foreign companies: The provisions of the Anti-Tax Avoidance Directive on controlled foreign companies have been implemented in Greek law. If a foreign legal entity is more than 50% controlled (voting rights/capital/profits) by a Greek resident and the corporate income tax paid on its profits is less than 50% of the Greek corporate income tax that would have been payable had it been a Greek tax resident, and more than 30% of its pre-tax profits falls under certain specific categories (mostly passive), any non-distributed income falling under those categories is proportionately attributable to the controlling Greek resident and taxable as business income. Foreign permanent establishments may also be captured. There is an exception for EU/European Economic Area-established entities carrying on substantive activities.
Thin capitalisation: The provisions of the Anti-Tax Avoidance Directive on interest limitation have been implemented in Greek law. ‘Exceeding borrowing costs’ (as defined) are deductible in the tax period in which they are incurred up to 30% of the taxpayer’s earnings before interest, tax, depreciation and amortisation (as defined). By derogation from this rule, taxpayers may deduct exceeding borrowing costs up to €3 million. Non-deductible exceeding borrowing costs may be carried forward without limitation. The interest limitation rule does not apply to financial undertakings (as defined).
Limitation on interest deduction: Interest on loans (other than bank loans, interbank loans, corporate bonds and bonds issued by credit cooperatives operating as credit institutions) is not tax deductible to the extent that it exceeds the interest rate on credit lines to non-financial corporations applicable at the time the loan is granted, as per the Bank of Greece’s Bulletin of Conjunctural Indicators.
Transfer pricing: Related-party transactions should comply with the arm’s-length principle. Greek legal entities and permanent establishments must maintain transfer pricing documentation subject to a de minimis threshold (see question 5.5).
Anti-hybrid: The exemption of dividends received by local companies based on the participation exemption rules (Directive 2011/96/EU) does not apply to the extent that such dividends are a tax-deductible item for the subsidiary.
The tax exemption of inbound dividends from EU subsidiaries and the exemption from withholding tax on outbound dividends paid to EU parent entities (see question 4.2) are not available for arrangements which have been put in place for the main purpose (or a main purpose) of obtaining a tax advantage that defeats the object or purpose of the applicable tax law and are not genuine having regard to all relevant facts and circumstances. Arrangements shall be regarded as non-genuine to the extent that they are not put into place for valid commercial reasons which reflect economic reality.
Limitation on losses: If there is a change to the direct or indirect participation or the voting rights in a legal entity in excess of 33%, and in the same or the next fiscal year there is a change in the entity’s activities amounting to more than 50% of its turnover compared to the previous fiscal year, then the provisions relating to the carry forward of tax losses do not apply.
Answer ... As a rule, Greek law does not provide for binding rulings. However, taxpayers may seek the tax administration’s non-binding views in writing on any tax issue; normally, tax auditors will respect such non-binding replies.
Answer ... Greek legal entities and permanent establishments that engage in related-party transactions should comply with the arm’s-length principle. The law refers to the Organisation for Economic Cooperation and Development general principles and guidelines on the interpretation and application of the arm’s-length principle. Legal entities and individuals are considered to be related parties where there is a direct or indirect participation of at least 33% in share capital, voting rights or profits, or where there is direct or indirect material managerial dependence or control or decisive influence.
Greek legal entities and permanent establishments are obliged to prepare transfer pricing documentation if the total value of the relevant transactions (including the transfer of functions) exceeds:
- €100,000 per tax year if the turnover of the taxpayer is €5 million or less; or
- €200,000 per tax year if the turnover of the taxpayer is more than €5 million.
In addition, country-by-country reporting rules apply (see question 6.3).
The law provides for the possibility to obtain an advance pricing arrangement.
Answer ... Tax liabilities are subject to a limitation period of five years. More specifically, the tax authorities may issue a tax assessment within five years of the end of the year within which a tax return ought to be submitted.
This limitation period can be extended in the following cases:
- If the taxpayer submits an initial or amended tax return within the fifth year of the initial limitation period, then the limitation period is extended for one year from the expiry of the initial five-year period.
- If the tax authorities request information from a foreign country, the limitation period is extended for as long as is required to receive this information plus one year, beginning from receipt of the information by the tax authorities.
- If the taxpayer brings a legal action against a tax assessment, especially regarding the disputed matter, the limitation period is extended for one year following the issue of the respective ruling.
Especially in case of tax evasion, the limitation period is 20 years.