Greek L.4646/2019 introduced significant amendments in the taxation of both individuals and legal entities.
Amendments to individuals’ taxation
The non-domiciled resident tax regime
An alternative way of taxation is introduced, with a maximum duration of 15 years, for individuals foreign tax residents during the previous 7 out of 8 years, who transfer their tax residence in Greece provided that they carry out investments amounting at least to €500.000 either in real estate, securities or companies in Greece. Such individuals are taxed on their foreign sourced income by paying a lump sum amounting to €100.000 per year.
Stock option taxation
The employee, partner or shareholder, member of a stock option plan, will be taxed on capital gains at the time of the sale of the shares with a tax rate of 15% provided that he/she holds them for at least 24 months from the date of their acquisition.
For stock options granted by a non-listed, small or very small company, the capital gains arising from their sale will be taxed at a 5% rate, subject to certain conditions.
Reduction of dividends’ taxation
As of 01/01/2020, the applicable rate for withholding tax levied on dividend income is set at 5%, instead of the current rate of 10%.
Amendments regarding the employees’ participation in voluntary exit schemes
The amounts employees receive due to their participation in voluntary exit schemes are not subject to the increased tax rates of early redemption of pension schemes.
Amendments to corporate taxation
Reduction of Corporate Income Tax Rate
As of tax year 2019 onwards, the tax rate for all legal entities is reduced from 28% to 24%.
Advance corporate income tax payment
As of tax year 2018, the advance corporate income tax payment will be equal to 95% of the corporate income tax due on business profits.
Capital gains taxation
As of 01/07/2020 onwards, capital gains earned by a legal entity as a result of the disposal/sale of qualified participation, are exempted from corporate income taxation. The requirements for the exemption are similar as for intra-group dividends.
As of 01/01/2020 a transitional period has been set for the tax recognition, under certain circumstances, of the capital loss incurred as a result of a sale of shares, in order to avoid any adverse implications upon legal entities that acquired shares prior to the effect of the new provision.
Amendments regarding the capitalization of tax-free reserves
- With the new tax law, Non-listed companies can also capitalize tax-free reserves deriving from various tax incentive laws with a reduced tax rate amounting to 5%, which exhausts the tax liability of both the entity and its shareholders.
- No time limitations are posed for the capitalization of reserves and the timing obligation (restriction) during which the capital may not be decreased and the company may not be dissolved is lowered from 10 to 5 years.
- The previously applicable requirement for equal capital increase (with cash injection), in case of Non-listed companies, is now abolished.
The new provision is applicable from 01/01/2020 onwards.
Debt forgiveness in the framework of a mutual agreement or court settlement
- In case that the claims of a creditor company against a debtor are waived, either on the basis of a mutual agreement between the parties, or through a court settlement taking place within their cooperation frame, the relevant profits are considered and taxed as income from business activities.
- Additionally, it is now explicitly stated that the above profits are not subject to donation taxation.
- The special exemption of article 62 of L. 4389/2016 (for the debt forgiveness towards credit institutions) remains in force.
As of 01/01/2020, interest income deriving from corporate bonds, securities, treasury bills and bonds of the Greek State will not be subject to income taxation and special solidarity tax in case that the acquirer (individual or legal entity) is a foreign tax resident with no permanent establishment in Greece.
Deduction of expenses from 01/01/2020 onwards
100% deductible expenses:
- expenses incurred for corporate social responsibility actions under the condition that the enterprise declares accounting profits at the time of action.
130% deductible expenses:
- Expenses for purchasing monthly or annual public transport cards for unlimited routes.
- Expenses for the lease of company cars producing zero or low emissions up to 50g CO₂/km, with a Before Taxes Retail Price up to €40.000.
- Expenses for purchasing, installing and operating publicly accessible charging stations for vehicles producing zero or low emissions up to 50g CO₂/km.
Expansion of the tax incentives of L. 27/1975
- The tax benefits and exemptions of L.27/1975 will also apply to foreign bareboat charterers and ship lessees as well as to their shareholders.
- Leasing companies are excluded from the aforementioned tax regime.
Countries with preferential tax regime
As of 01/01/2019 countries with a preferential tax regime are the countries with a corporate income tax rate equal to or lower than 60% of the corresponding tax rate in Greece, namely Bulgaria, Hungary, Ireland and Cyprus.
Statute of limitation
The aforementioned limitation period is extended for 1 year in case where:
- a tax return is filed during the last (5th) year.
- within the last (5th) year, new information comes to the knowledge of the tax authorities.
A 10-year limitation period is effective as of 01/01/2018 in case that a tax return is not filed or in case that new information come to the knowledge of the tax authorities after a 5-year period.
In cases of tax evasion concerning the years 2012-2017, the limitation period is reduced from 20 to 10 years.
As of 2018 the 20-year limitation period regarding tax evasion cases, is abolished.
Amendment regarding the joint and several liability of Directors of companies
The joint and several liability of Directors of companies (i.e. executive presidents, directors, CEOs, liquidators, and de facto directors) ceases to be objective. For the substantiation of Directors’ liability, the following cumulative conditions should be met:
- The aforementioned people held the relevant position either during the operation of the legal entity or at the time of its dissolution, merger or liquidation.
- Debts have been become due during their term of office.
- These debts have not been paid because of their fault.
VAT will not be imposed until 31/12/2022 in the following cases:
- sales of newly built real estate (with building permits issued after 01/01/2006).
- sales of real estate which will be constructed within the next 3 years.
No capital gains taxation is imposed on the sale of real estate until 31/12/2022.
Special Property Tax
Companies whose shares are traded on a regulated market or a multilateral trading facility as well as shipping companies owning real estate, are exempt from the 15% Special Property Tax.