New Tax Bill
The Greek Government has announced recently the introduction of a new tax bill that will be put into force public consultation, before being tabled to the Parliament later this month. This tax bill includes certain important amendments to the Income Tax Code (L.4172/2013), the Tax Procedure Code (L.4174/2013) the Value Added Tax Code (L.2859/2000), the Special Real Estate Tax Law and the laws regulating certain collective and alternative investments funds.
The most important changes are the following:
Amendments to Tax Residence Rules
- A lump-sum taxation regime of tax residence is introduced for High-Net Worth Individuals. Under circumstances individuals transferring their residence to Greece can request to qualify for such a special tax regime. According to this regime, the tax payers pay a lump sum tax of 100.000 EUR per annum (plus 20.000 EUR for any relative qualifying for this regime) and are exempt from any income tax on their non Greek sourced income, as well as inheritance and donation tax for their non Greek assets. The application of such a special regime cannot be extended for more that fifteen (15) years.
- The definition of tax residence of individuals is amended.
Amendments to Personal Income Taxation
- The personal income tax rates on employment income are slightly reduced.
- The withholding tax rate on dividends is reduced to 5% , applicable as of 1.1.2020.
- The imposition of personal income tax and special solidarity contribution on the capital gains from the disposal of real estate is suspended until 31.12.2020.
- The provisions regarding the taxation of benefits in kind and group pension insurance contracts are amended.
- Individual should proceed with at least 30% of their expenses incurred out of their employment and business income (up to the amount of 20.000 EUR per annum) by electronic means; otherwise they are subject to increased personal income tax.
- The supply of public transport cards and low emission cars to employees is tax free at the level of employee and super-deducted by 30% at the level of the employer.
- Certain expenses performed by individuals for the operational aesthetic and energy related improvement of buildings are tax deductible for a percentage of 40% over a period of four years , capped at an amount of 48.000 EUR.
- The interest income earned by Greek non resident individuals and entities (without a Greek permanent establishment) from certain types of corporate bonds is not subject to Greek income tax and special solidarity contribution. Additionally, the interest income from Greek sovereign bonds and notes earned by Greek non resident individuals is exempt from special solidarity contribution.
Amendments to Corporate and Business Income Taxation
- The corporate Income Tax rate is reduced to 24% for the tax year 2019.
- The Participation Exemption provisions are extended to capital gains. In particular, capital gains are exempted from corporate income tax at the level of Greek resident entities, provided that certain requirements are met (i.e. 10% holding or the shares of an EU entity for at least 36 months.) Such capital gains are not taxed upon their distribution or capitalization.
- Expenses performed in the context of the Corporate Social Responsibility policy of a business are explicitly tax deductible, under certain circumstances.
- Certain types of debt waivers are subject to income tax, but are not subject to donation tax.
- The provisions regarding tax depreciations are amended.
- The provisions regarding the tax deductibility of bad debts are amended.
- The provisions implanting the Interest and Royalty Directive are clarified.
- The prepayment requirement of the tax year 2018 for Corporate Income Tax is reduced to 95%.
- The provisions regarding the taxation of certain tax reserves are amended.
Amendments to Tax Procedure
- A ten- year limitation period is introduced for the cases whereby new elements are brought before the Tax Authority’s intention after the lapse of the general five-year limitation period- a provision similar to the one of the previous Income Tax Code (L.2238/1994)
- The twenty year limitation period in cases of tax evasion regarding the FY 2012,2013,2014 , 2015, 2016 & 2017 is abolished, while the twenty year limitation period is replaced by a ten year limitation period.
- The provision regarding the joint and personal liability of the individuals appointed at the companies’ administration for non payment of the latters’ tax liabilities is amended. The version of the article under consultation provided for three requirements that should be met on a cumulative basis, in order for the individuals to be considered as jointly liable.
- In addition, the new provision indicates that individuals considered as jointly liable for the payment od due debts of legal entities under the previous regime may be released from the aforementioned liability further to the filing of an application before the competent tax authority in case they do not meet the requirements to be introduced.
Amendments to Value Added Tax
- The VAT imposed to the sale of new houses by constructors subject to VAT further to the filling of a relevant application is suspended until the 31.12.2022.
- Certain VAT rates are reduced.
- The maximum number of instalments for the payment of ascertained debts owed to the Greek State (debts from taxes, customs and other liabilities ) is increased to forty eight (48).
Amendments to Special Real Estate Tax
- Certain types of entities are added to those that are exempt from the Special Real Estate Tax, e.g. Alternative Investment Funds managed by a AIF Manager (as per the definitions of the AIFM Directive), companies owned or managed by an AIF, a AIF Manager, a European Long Term Investment Fund, a Venture Capital Mutual Fund, a UCITS, a European Venture Capital Fund or European Social Entrepreneurship Fund (as per the definitions of the respective statutes, directives and regulations).
Amendments to the taxation of certain Collective and Alternative Investment Funds
- The effective tax rate under which Greek UCITS are taxed is reduced, since the thresholds of 0,025%- 0,375% on the applicable tax rates per semester that used to be applicable are abolished.
- The effective tax rate under which Greek Real Estate Investment Companies and Real Estate Investment Mutual Funds are taxed is reduced, since the threshold of 0,375% on the applicable tax rate per semester that used to be applicable are abolished.
- The effective tax rate under which the Greek Portfolio Investment Companies are taxed is reduced, since the threshold of 0,375% on the applicable tax rate per semester that used to be applicable is abolished.