background image
12.5. Other Anti-Avoidance Rules

Hybrid Mismatches

Greece adopted hybrid mismatch rules in line with the EU Anti-Tax Avoidance Directive, as amended (ATAD 1 and 2) with effect for tax years commencing on or after 1 January 2020. The objective of the rules is to prevent double deduction and deduction without inclusion as a result of mismatches arising between associated enterprises where there is a holding, directly or indirectly, of 50% or more in the voting rights, capital, or rights to profit.

If a mismatch arises, it is neutralized by:

  • In a double deduction mismatch, the deduction is denied at the investor's level, and where the deduction is not denied at the investor's level, the deduction will be denied at the payer's level; and
  • In a deduction without inclusion mismatch, the deduction is denied in the payer's jurisdiction, and where the deduction is not denied in the payer's jurisdiction, the amount of the payment that would otherwise give rise to a mismatch will be included in income at the payee's jurisdiction (relief provided in the event of dual inclusion income in current or subsequent years).

Reverse Hybrid Mismatch

Effective 1 January 2022, Greece introduced the reverse hybrid mismatch rules in line with the EU Anti-Tax Avoidance Directive (ATAD2). The law provides that if one or more associated enterprises being a non-resident maintains a total direct or indirect interest of 50% or more of the voting rights, capital interests, or rights to a share of profit in a hybrid entity incorporated or established in Greece, and such associated enterprises are located in a jurisdiction or jurisdictions which treat the said hybrid entity as taxable in Greece, then the hybrid entity will be considered as a tax resident of Greece and will be taxed on its income to the extent that such income is not otherwise taxed under any other provisions of the domestic law or the legislation of any other jurisdiction.

However, the reverse hybrid mismatch rules do not apply to a collective investment undertaking. For this purpose, a collective investment undertaking is defined as an investment organization or a company with broad participation of shareholders that holds a diversified portfolio of transferable securities, and which is governed by an investor protection regulation in the country where the undertaking or the company is established.

Exit Tax Rules

Effective 1 January 2020, Greece implemented the exit tax measures in line with the EU Anti-Tax Avoidance Directive, as amended (ATAD 1 and 2). The rules provide that the payment of exit tax may be deferred and paid in instalments over a period of five years where the assets, tax residence, or activities of a taxpayer are transferred to other EU/EEA Member States.

A letter of guarantee is to be provided for the deferral of exit tax when there is a proven and actual risk of non-recovery of the tax, i.e., when the ratio of current assets to total liabilities of the legal entity is lower than 1, based on the official financial statements of the last tax year. The guarantee must be equal to two instalments and should expire after 3 months and 2 business days of the payment date for the final instalment. However, if the amount is lower or the term of the letter is for a shorter duration, the exit tax must be paid in a lump sum.

Exit tax rules do not apply to assets transferred in relation to the financing of securities, assets posted as collateral, or where the asset transfer takes place in order to meet prudential capital requirements or for the purpose of liquidity management, provided that the assets are returned to Greece within a period of 12 months. However, a letter of guarantee is required in relation to such exemption, where the guarantee must be equal to the total amount of exit tax due and must expire 6 business days after the 12-month period.

Low or No Tax Jurisdictions and Tax Regimes

The domestic tax laws include a specific anti-avoidance rule whereby payments made to entities located in non-cooperative jurisdictions or preferential tax regimes are not tax-deductible.

Non-Cooperative Jurisdictions

Non-cooperative jurisdictions are defined as those that are not an EU Member State and which do not have an in-force agreement with Greece on administrative assistance in tax matters. Effective 1 January 2018, the definition of a non-cooperative jurisdiction has been amended in order to align with international developments.

A jurisdiction will be considered non-cooperative if the jurisdiction:

  • Is not an EU Member State;
  • Has not received at least a largely-compliant rating from the OECD on transparency and exchange of information standards;
  • Has not concluded an agreement with Greece providing for administrative assistance or has not signed the Mutual Assistance Convention; and
  • Has not committed to the exchange of financial account information under the OECD Common Reporting Standard by the end of 2018.

Effective from the tax year 2020, the following jurisdictions have been notified as non-cooperative jurisdictions:

Anguilla Antigua and Barbuda Barbados Benin
Botswana Burkina Faso Cambodia Cape Verde (until 30 April 2020)
Chad Djibouti Dominica Eswatini
Gabon Ghana Guatemala Guinea
Guyana Haiti Honduras Ivory Coast (Cote d' Ivoire)
Jordan Kazakhstan Kenya (until 31 October 2020) Lesotho
Liberia Madagascar Maldives Mali
Mauritania Mongolia (until 30 April 2020) Montenegro (until 30 April 2020) Namibia
Niger Oman Palau Panama
Papua New Guinea Paraguay Philippines Rwanda
Saint Maarten Seychelles Tanzania Thailand
Togo Trinidad and Tobago Vanuatu   

Preferential Tax Regimes

Preferential tax regimes are defined as those with a corporate tax rate equal to or less than 60% (50% until 31 December 2018) of Greece’s corporate tax rate (the current tax rate is 22%, reduced from 24% effective 1 January 2021).

Effective from the tax year 2020, the following jurisdictions have been notified as preferential tax regimes:

Albania Andorra Anguilla Bahamas
Barbados Belize Bermuda Bonaire
Bosnia and Herzegovina The British Virgin Islands Bulgaria Cayman Islands
Cyprus Gibraltar Guernsey Hungary
Ireland Isle of Man Jersey Kosovo
Kyrgyzstan Liechtenstein Macau Maldives
Marshall Islands Moldova Monaco Mongolia
Montenegro North Macedonia Paraguay Qatar
Saba (The Netherlands) Saudi Arabia Sri Lanka St. Eustatius (The Netherlands)
Timor-Leste Turkmenistan Turks and Caicos Islands United Arab Emirates

Mandatory Reporting of Cross-Border Tax Arrangements (DAC6/ MDR)

Greece has approved the law implementing the EU Council Directive (DAC6), which requires the reporting of cross-border tax planning arrangements and exchange of information with the other EU Member States. The reporting requirement primarily applies to intermediaries that design, market, organize, or manage the implementation of a reportable arrangement. However, the reporting requirements may also be shifted to the taxpayers in certain cases, including where an intermediary is subject to confidentiality obligations or where a taxpayer has designed an arrangement without external intermediaries.

The requirements apply from 1 July 2020, and reportable transactions must be disclosed within 30 days from the date the arrangement was first put in place. However, under a transitional regime, reportable transactions first put in place in the period from 25 June 2018 to 30 June 2020 must be disclosed by 31 August 2020. Further, the law also requires periodic reporting on marketable arrangements.

Failing to submit information on reportable cross-border arrangements will result in a penalty of EUR 5,000 if the taxpayer applies a simple bookkeeping system or EUR 10,000 in the case of double-entry bookkeeping. The submission of incomplete or inaccurate information will result in penalties of EUR 2,500 or EUR 5,000, respectively. In the case of late filing, a penalty of EUR 250 or EUR 500 per month, respectively, applies for up to three months, after which the penalty is set at EUR 2,500 or EUR 5,000. The penalties apply for each reportable arrangement.

Exchange of Cross-Border Tax Rulings

In line with BEPS Action 5 and the EU directive on mutual administrative assistance, Greece has adopted various measures in its domestic laws to enable the exchange of information on cross-border tax rulings and advance pricing agreements (APAs) beginning from 1 January 2017.

Financial Account Information Reporting and Exchange

Greece has adopted measures to implement the automatic exchange of financial account information with the EU Member States pursuant to Council Directive 2014/107/EU of 9 December 2014, which synchronized EU rules with the global standard for the exchange of information developed by the OECD under the Common Reporting Standard (CRS). Greece proceeded on 30 September 2017 with the exchange of information on accounts held by financial institutions. Further, Greece has also concluded an Intergovernmental Agreement (IGA) with the US for the implementation of the US Financial Account Tax Compliance Act (FATCA).

Beneficial Ownership Register

On 30 July 2018, Greece introduced the requirement for legal entities having a registered office in Greece to maintain adequate, accurate, and current information on their ultimate beneficial ownership in a special register to be kept at the registered offices of the legal entities.

Legal entities having their registered office in Greece or carrying out taxable business activities in Greece maintaining the special registry on their ultimate beneficial ownership are required to be linked to the Central Registry. However, companies listed on a regulated market or on a multilateral trading mechanism are not required to maintain a special register on their ultimate beneficial ownership since they are automatically registered with the Central Securities Depository. The ultimate beneficial ownership registry commenced operation on 3 March 2020, and entities were required to register by 1 May 2020.

On 21 July 2022, the Ministry of Finance announced an extension of the deadline for the declaration of beneficial ownership information in the Central Registry. The extension applies as follows:

  • For legal entities that are registered in the tax register or that have a change in beneficial ownership information up to 31 August 2022, the deadline for declaring the initial or change in beneficial ownership information is 31 October 2022; and
  • For legal entities that are registered in the tax register or that have a change in beneficial ownership information after 31 August 2022, the standard deadline applies, that is 60 days after the tax registration or the change in beneficial ownership information.

On 6 October 2020, the Ministry of Finance incorporated the Fifth EU Anti-Money Laundering Directive (2015/849) into Greek law. The new rules impose certain obligations on the ultimate beneficial owners (UBOs) of legal entities, including the following:

  • The UBOs of legal entities (including, through shares, voting rights, property rights, bearer shares, or control via other means) are required to provide such legal entities with all the necessary information for the legal entities to comply with the anti-money laundering and counter-terrorism financing regulations. Earlier, only the legal entities were obliged to collect the required information; and
  • The level of access that the public may have to the information on UBOs registered with the Central Registry differs depending on whether the person has a legitimate interest or not. However, the UBOs have the right to justifiably restrict the access to all or part of the information held with the Central Registry, to the extent that such access would expose the UBOs to a disproportionate risk of fraud, kidnapping, blackmail, violence or intimidation, or where the UBO is minor or incapable.