The definition of a permanent establishment (PE) has been reviewed by Law 4172/2013 of 23 July 2013 and now essentially reproduces Art. 5 of the OECD Model. The only major difference resides in the time threshold for the existence of a construction permanent establishment which is set at more than 3 months (as against 12 months under the OECD Model).
The term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on in Greece, and includes especially:
- A place of management;
- A branch;
- An office;
- A factory;
- A workshop;
- A mine, an oil or gas well, a quarry or other place of extraction of natural resources; and
- A building site or construction or installation project, only if such project lasts for more than 3 months.
Further, an agency permanent establishment is deemed to arise where a person acts on behalf of a foreign enterprise, is authorized to conclude business dealings on its behalf and habitually exercises such authority primarily in Greece. Nevertheless, no agency permanent establishment is deemed to arise if the activities are carried out by an independent agent acting in the ordinary course of business, or are in the nature of the preparatory or auxiliary activities that would not cause a permanent establishment to exist if carried out through a fixed place of business (see below).
No permanent establishment is recognized in case the activities undertaken in Greece are in the nature of the following preparatory or auxiliary activities:
- The use of facilities solely for the storage, display or delivery of goods belonging to the enterprise;
- The maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
- The maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
- The maintenance of a place of business solely for the purpose of purchasing goods or merchandise, or of collecting information for the enterprise;
- The maintenance of a fixed place of business for the sole purpose of carrying out, for the enterprise, any other activity of a preparatory or auxiliary character; or
- The maintenance of a fixed place of business solely for any combination of the activities mentioned above, provided the overall activity resulting from the combination remains of a preparatory or auxiliary character.
Greece issued a guidance on the application of permanent establishment rules during the COVID-19 pandemic. The guidance clarified that, due to travel restrictions imposed, the period from 18 March 2020 to 15 June 2020 will not be taken into account in determining the existence of a permanent establishment, where the conditions depend on physical presence and the conducting of activities/management in Greece. However, this exception is not applicable where there would normally be a physical presence or conducting of activities/management in Greece regardless of the COVID-19 restrictions.
A guidance issued on 25 June 2021 provides that the period from 9 November 2020 to 14 May 2021 will also not be taken into account in determining the existence of a permanent establishment in Greece of foreign companies whose employees are temporary working from home in Greece during this period due to COVID-19 measures.
Further, in the period between 16 June 2020 and 9 November 2020, the impact of physical presence on permanent establishments will be determined on a case-by-case basis considering applicable travel restrictions during that period.
Specific guidance is also provided with respect to construction/installation permanent establishments, which includes that where a project has been temporarily suspended due to COVID-19, the period of suspension may still be taken into account in determining the existence of the permanent establishment.