Summer 2016 Tax Bulletin

Read the most important financial, accounting and tax updates during the Summer 2016 in Greece.

The European Commission has proposed to provide access to the tax authorities to the information of the ultimate beneficial owners (UBO), as an additional anti-fraud measure. So far these facts are brought to the attention of credit institutions and other investment vehicles, under the legislation against money laundering and kept there under conditions of confidentiality.

Over the past few years the VAT rates have increased significantly from 18% in 2005 to 24% in June 2016. As a result we have one of the highest VAT rates in the EU, ranging from 17% to 27%. Nevertheless, this increase has not led to a corresponding increase in public revenues. Thus, the total VAT revenues stagnated at 8% of GDP. (Revenues from income tax for individuals in 2015 amounted to 7.8 billion, corresponding to 4.5% of GDP and for legal persons to 2.9 billion.)

Details of arrears to the State over EUR 150,000 per natural or legal person are to be disclosed in the website of the Ministry of Finance if their payment is delayed for more than one year. As provided for by a newer bill that was tabled in the Greek parliament, the above elements will include the social contributions to Social Security Institutions. The Ministry of Finance  has already posted on the Internet the names of 13,000 public debtors.

The new bill that was tabled in the Greek parliament provides the possibility for more tax offenses to be subject to more favorable fines under Law. 4337/2015. In particular, an extension of the deadline for submitting irrevocable tax offense declaration of acceptance until October 30th 2016 is provided, which is necessary for the inclusion of older pending cases to favorable provisions. Indicatively, the penalty for failure to submit Tax return is reduced to 50% on the amount of tax from 120% applicable under the previous Law. 2523/97. It is recalled that for the fines concerning tax offenses a presumption of retroactive application of the new more lenient law is accepted (Council of State 4256/2001).

An exemption from income tax is provided for capital gains arising from the transfer of domestic corporate bonds. Corporate bonds issued by companies within the EU and EEA / EFTA benefit from the same exemption. The exemption from value added tax does not include the case of distribution or capitalization of goodwill.

Losses incurred abroad from conducting business or from capital transfer shall not be offset against income generated domestically. Exceptionally, foreign tax losses are recognized and offset against income arising in EU Member States or EEA (and not a third country), unless they are exempted by a double taxation treaty concluded and applied in Greece. Netting is made per country. These losses cannot be transferred after five years.

When it is difficult to identify the time when the right to receive income was acquired (e.g. decision of the competent body), the time when income was acquired from dividends from abroad is considered the time of payment to the beneficiary by crediting bank account or otherwise. The same applies to the foreign interest.

Services provided by a lawyer to non-taxable natural or legal persons and residents of a third country concerning the publication of a handwritten will and the issue of a certificate as well as filing tax returns are exempt from VAT. The exemption applies even if the above mentioned services are connected with immovable property situated in Greece.

Partners of a Private Capital Company (IKE) are not liable to be insured unless they have the status of an administrator or if the Private Capital Company is a single-member. It appears that from January 1st 2017 an unpaid administrator of a Private Capital Company will be required to pay contributions based only on the minimum insurable income of € 586 per month.

After completing 40 years of insurance freelancers/ self-employed will be able to request payment of reduced social contributions by 50% under the new insurance system. For the implementation of the reduction to take place, the insured should waive the increase in pension on the next insurance years.

The claims by social security institutions included in the Single insurance fund (EFKA) from unpaid insurance contributions are subject to the 20-year limitation. The limitation period begins on the first day of the next year in which an insurable employment or service was given. This regulation does not include claims that have been written off until 11.05.2016.

Properties that are owner occupied for producing or carrying any type of business are no longer exempt from additional Single Property Tax (ENFIA) and are now also subject to the additional tax.

The value of land parcels of natural persons taken into account when calculating the supplementary tax on Statements of Single Property Tax for the year 2016 and later. In addition, the deduction of 20% for empty and non-electrified buildings (residential and commercial property) is abolished.

The solidarity levy on all foreign-sourced income, irrespective of whether Greece has concluded or not the corresponding state convention for the avoidance of double taxation (Double Taxation Conventions -DTC). This does not apply in those cases where it is expressly provided that there is exemption from the special levy.

Insurance contributions are deducted from the proceeds of the tax year to which they are related provided that their payment was made on time, even in the next fiscal year (for example due to the extension of the legal deadline). The tax expenditure is not recognized fiscally if the payment of contributions took place late in the next fiscal year.