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).
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.
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.
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 are defined as those that are not 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 is amended in order to align with international developments.
A jurisdiction is 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.
Greece on 20 March 2023 gazetted the list of non-cooperative jurisdictions for the tax year 2021. The list consists of the following:
|Algeria (from 1 January 2021)||Anguilla||Antigua and Barbuda||Barbados||Belarus (from 1 January 2021)|
|Benin||Botswana||Burkina Faso||Cambodia||Congo (Rep. of) (from 1 January 2021)|
|Djibouti||Dominica||Eswatini (until 30 June 2021)||Gabon||Ghana|
|Ivory Coast||Jordan (until 30 November 2021)||Kazakhstan||Liberia||Lesotho|
|Oman (removed from 1 January 2021)||Mali||Madagascar||Maldives||Mauritania|
|Namibia (until 31 March 2021)||Niger||Panama||Palau||Papua New Guinea|
|Paraguay (until 31 October 2021)||Philippines||Rwanda||Seychelles||Sint Maarten|
|Thailand||Togo||Trinidad and Tobago||Tanzania||Chad|
|Vanuatu||Vietnam (from 1 January 2021)|
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).
Greece on 13 March 2023 gazetted a list of jurisdictions with preferential tax regimes. The list applies for the tax year 2021 and consists of the following:
|Barbados||Belize||Bermuda||Bonaire||British Virgin Islands|
|Bosnia and Herzegovina||Bulgaria||Cayman Islands||Cyprus||Gibraltar|
|Guernsey||Hungary||Ireland||Isle of Man||Jersey|
|North Macedonia||Paraguay||Qatar||Saba (NL BES)||Saudi Arabia|
|St. Eustatius (NL BES)||Sri Lanka (removed from 1 January 2021)||Timor Leste||Turkmenistan||Turks and Caicos|
|United Arab Emirates||Vanuatu|
Greece has approved the law implementing the EU Council Directive (DAC6), which requires the reporting of cross-border tax planning arrangements and the 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 first reporting of information on reportable cross-border arrangements, implemented between 25 June 2018 and 31 January 2021, took place on 28 February 2021. The first automatic exchange of information between the tax authorities of the Member States took place on 30 April 2021. Reportable transactions must be disclosed by intermediaries and relevant taxpayers within 30 days from the date the arrangement was first put in place, for transactions designed or implemented as of 1 February 2021. 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.
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.
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).
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.