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At the time of writing, changes to the tax law were expected. Because of these expected changes, readers should obtain updated information be fore engaging in transactions.
A. At a glance
Corporate Income Tax Rate (%) 22 (a) Capital Gains Tax Rate (%) 22 (b) Branch Tax Rate (%) 22
Withholding Tax (%)
Dividends 5 (c)
Interest Bank Interest 15 (d)(e)
Interest on Treasury Bills and Corporate Bonds 15 (d)(e)
Repos and Reverse Repos 15 (d)(e) Other Interest Paid to Greek Legal Entities 15 Paid to Foreign Legal Entities 15 (e)(f)
Royalties from Patents, Know-how and similar payments 20 (e)(f)
Technical Service Fees, Management Service Fees, Consulting Service Fees and Fees for Similar Services 0/20 (g)
Net Operating Losses (Years)
Carryback 0 Carryforward 5
(a) Law 4799/18.5.2021 provides the following:
• The income tax rate for legal persons and legal entities is reduced to 22% (from 24%) for the 2021 tax year and onward.
• The corporate income tax rate remains at 29% for credit institutions (banks) for the tax years that the provisions of deferred taxation apply (Article 27A of the Greek Income Tax Code [GITC]).
(b) For details regarding the taxation of capital gains derived by legal persons or legal entities, see Section B.
(c) The 5% withholding tax rate applies to dividends and interim dividends dis tributed by a Greek corporation (anonymos eteria, or AE; in certain countries, a corporation is referred to as a société anonyme, or SA) and profits distrib uted by a Greek limited liability company (eteria periorismenis efthinis, or EPE). This 5% withholding tax is subject to rates applicable under double tax treaties or under the European Union (EU) Parent-Subsidiary Directive (amended by Directive 2011/96/EC).
(d) This 15% withholding tax is subject to rates applicable under double tax trea ties or under the EU Interest-Royalties Directive.
(e) This is a final tax if the beneficiary is a legal person (for example, a com pany) or legal entity that satisfies both of the following conditions:
• It does not have its tax residency in Greece.
• It does not maintain a permanent establishment for corporate income tax purposes in Greece.
In addition, non-Greek tax resident companies with no permanent establish ment in Greece are exempt from tax on interest arising from listed corporate bonds (applicable for interest payments made on or after 1 January 2020).
(f) This 20% withholding tax is subject to rates applicable under double tax trea ties or under the EU Interest-Royalties Directive. No tax is withheld on pay ments of royalties made to legal persons or legal entities that have their tax residence in Greece or that have a Greek permanent establishment in Greece.
(g) No tax is withheld if the recipient has its tax residency in Greece or another EU/European Economic Area (EEA) country; otherwise, a 20% withholding tax applies.
B. Taxes on corporate income and gains
Corporate income tax. Greek companies are taxed on their world wide income. Foreign business enterprises are taxed only on income derived from a permanent establishment in Greece or on profits generated in Greece. An AE, SA or EPE is Greek if its corporate seat or place of effective management is located in Greece.
A legal person or entity is considered to be a Greek tax resident in the following cases:
• It is incorporated or established under Greek law.
• It has its registered office in Greece.
• Its place of effective management is in Greece at any time dur ing the tax year.
The “place of effective management” concept should be reviewed on an ad hoc basis in the context of the factual background of each case. For this purpose, indicative criteria are listed, such as the following:
• The place where the day-to-day management of the company takes place
• The place where strategic business decisions are made
• The place where the annual general meeting of shareholders or partners or the board of directors takes place
• The place where the accounting books of the company are held
• The residence of the members of the board of directors
In addition, the Greek tax administration may examine additional factors, such as the residence of the majority of the shareholders or partners.
Rate of corporate income tax. The standard corporate income tax rate is currently 22% (see footnote [a] in Section A for further details).
Law 4799/18.5.2021 provides the following:
• The income tax rate for legal persons and legal entities is reduced to 22% (from 24%) for the 2021 tax year and onward.
• The corporate income tax rate remains at 29% for credit institu tions (banks) for the tax years that the provisions of deferred taxation apply (Article 27A of the GITC).
Capital gains. Capital gains earned by legal entities are treated as business income and are subject to corporate income tax at the standard rate if they derive from the following:
• Disposals of fixed assets
• Transfers of businesses as going concerns
• Disposals of real estate property that do not constitute a busi ness activity per se
• Transfers of securities (such as listed shares, unlisted shares, interests in partnerships, treasury bills, Greek state bonds and derivatives)
As of 1 July 2020, companies are exempt from capital gains tax arising from the disposal of a participation held in a legal entity, provided that they hold at least a 10% participation for a period of 24 months and that the conditions of Directive 2011/96/EU (Parent-Subsidiary Directive) are met. This income is not subject to tax on distribution or capitalization, while any related expens es are not deductible; by way of exception, corresponding losses may be tax deductible as of 1 January 2020, on the condition that they have been booked up to 31 December 2019 (tax deductibil ity of such losses is permitted only to the extent that such losses are realized up to 31 December 2022).
Sales of listed shares are also subject to a 0.2% transaction duty.
Administration. The fiscal year coincides with the calendar year. Legal persons or entities keeping double-entry books may set their tax year to end on 30 June or on any other date coinciding with the tax year-end of their foreign shareholder. An option for a tax year exceeding 12 months is not available. Greek SAs or AEs, Greek EPEs and branches of foreign companies must file an annual corporate income tax return by the end of the sixth month following the end of their fiscal year.
In general, on filing their annual corporate income tax return, legal entities must make an advance payment against the next year’s income tax liability. Law 4799/18.5.2021 provides the fol lowing:
• The rate of income tax prepayment for legal persons and legal entities is reduced to 80% (from 100%), and this reduced rate applies on the prepayment assessed with the income tax return for the 2021 tax year and onward.
• Exceptionally, income tax prepayment for Greek banking insti tutions and branches of foreign banks operating in Greece remains at 100% for the 2020 tax year and onward.
The final payment of tax is calculated by subtracting the advance payment made in the preceding year and other prepayments of tax (including taxes withheld at source) and foreign taxes paid on foreign-source income from the amount of tax due. The foreign tax credit cannot exceed the amount of Greek tax otherwise pay able on the foreign-source income.
A description of the penalties is provided below; if more than one penalty applies to the same tax offense, only the provision providing for the largest penalty applies.
A failure to file a corporate income tax return or to file in time a corporate income tax return results in the imposition of an administrative penalty ranging from EUR100 (if no tax is due) to EUR500 (if tax is due).
A failure to pay corporate income tax as a result of filing an inaccurate corporate income tax return results in the imposition of the following penalties:
• If the filing of an inaccurate corporate income tax return results in a difference of corporate income tax of 5% to 20%, the pen alty equals 10% of the amount of the difference between the tax assessed on the basis of the tax return and the corrective tax assessment.
• If the filing of inaccurate corporate income tax return results in a difference of corporate income tax exceeding 20% but not exceeding 50%, the penalty equals 25% of the amount of the difference.
• If the filing of inaccurate corporate income tax return results in a difference of corporate income tax exceeding 50%, the pen alty equals 50% of the amount of the difference.
A failure to file a corporate income tax return when corporate income tax would be due results in the imposition of a penalty equal to 50% of the amount of corporate income tax avoided.
In addition to the above, interest in arrears for the late payment of corporate tax is assessed; the current rate is 0.73% per month.
A failure to file a withholding tax return, the filing of an inac curate withholding tax return or the failure to pay withholding taxes on time results in the imposition of a penalty equal to 50% of the amount of the unpaid tax.
Dividends. A 5% withholding tax is imposed on dividends and interim dividends distributed to Greek or foreign beneficiaries by Greek SAs and profits distributed by Greek EPEs, unless an applicable double tax treaty provides otherwise (see Section F) or unless tax relief is available under the EU Parent-Subsidiary Directive (90/435/EEC), as amended by Directive 2011/96/EC).
For details regarding the rules in this directive, please see below. This tax represents the final tax liability of the recipient with respect to the dividends received if the recipient is a legal entity that does not have tax residency in Greece and does not maintain a permanent establishment in Greece.
A Greek subsidiary is not required to withhold the 5% withhold ing tax from dividends and interim dividends distributed to their EU parent companies if all of the following conditions are satis fied:
• The EU parent company holds a minimum 10% participation in the Greek subsidiary.
• The EU parent company holds the above participation in the Greek subsidiary for at least two consecutive years.
• The recipient EU parent company satisfies all of the following additional conditions:
— It has one of the legal types listed in Annex I of EU Directive 2011/96/EC.
— It is tax resident in one of the EU member states (and is not considered tax resident in any non-EU country).
— It is subject to one of the taxes listed in Annex I of Section B of EU Directive 2011/96/EC, with no option for a tax ex emption.
If a Greek tax resident legal person distributes dividends to its parent company and if the parent company has not completed the two-year holding period for a 10% participation but meets the rest of the exemption requirements (see above), the distribution can be exempt from withholding tax, provided that the local Greek tax resident legal person deposits a bank guarantee in an amount based on a specific calculation. This amount is almost equal to the amount of the dividend withholding tax due.
Foreign tax credit. Foreign-source income is usually taxable with a credit for foreign income taxes paid, up to the amount of Greek tax corresponding to the foreign-source income. The credit can not exceed the amount of Greek tax payable on the same amount.
C. Determination of trading income
General. Taxable income for all legal entities consists of annual gross income, less allowable deductions. In principle, expenses may be deducted only from gross income for the fiscal year in which they are incurred.
In general, all ordinary business expenses and specific items mentioned in the tax law may be deducted for tax purposes (with the exception of certain expenses that the law explicitly indicates are not deductible for tax purposes) only if the following condi tions are satisfied:
• They are made in the interest of the business or in the ordinary course of its business transactions.
• They reflect an actual transaction that has a value not consid ered lower or higher than the actual value, based on indirect audit methods (cross-checks).
• They are recorded in the accounting books for the period in which they are incurred and are supported by proper documen tation.
The Income Tax Code also includes a list of nondeductible expenses.
Special rules were introduced in 2020 with respect to a super deduction of research and development (R&D) expenses and advertising expenses, as well as of expenses related to the intro duction and use of zero-emission or low-emission vehicles.
R&D expenses. Under Law 4714/29.7.2020, R&D expenses increased by 100% are deducted at the time of their realization from legal entities’ gross income. The new provisions introduce an alternative procedure for the review and certification of such expenses by the General Secretariat for Research and Technology
through an audit report by a certified auditor or audit firm. The increased deduction of R&D expenses applies as of 1 September 2020, while the alternative review and certification process of such expenses may apply also to R&D expenses that have already been submitted to the General Secretariat for Research and Technology by 29 July 2020.
Advertising expenses of 2020, 2021 and 2022. Under Laws 4728/29.9.2020 and 4876/23.12.2021, advertisement expenses realized in the 2020, 2021 and 2022 fiscal years enjoy a super deduction equal to the following, provided that certain conditions are met:
• 100% for the 2020 fiscal year
• 60% for the 2021 fiscal year
• 30% for the 2022 fiscal year
Expenses related to zero-emission or low-emission vehicles. Recent amendments introduced by Laws 4646/12.12.2019 and 4710/23.7.2020 provide for the possibility of increased deduction of several expenses related to zero-emission or low-emission vehicles. These increased deductions include, among others, the following:
• For the leasing of a zero-emission company car, with a maxi mum retail price before taxes up to EUR40,000, the company is entitled to deduct the relevant cost from its gross revenue at the time of its realization, increased by 50% and by 25% for any additional amount. For low-emission cars (that is, up to 50 g CO2/km). the increased discount percentages amount to 30%, and to 15% for any additional amount.
• For the cost of purchase, installation and operation of publicly accessible charging points for vehicles of zero or low emissions (that is, up to 50 g CO2/km), undertakings may deduct the respective costs from their gross revenue at the time of realization, increased by 50% etc.
Inventories. Inventory and semi-finished products must be evalu ated according to current accounting principles. The tax law does not determine any official method for stock valuation. However, beginning with the tax year in which a valuation method is first used by a company for valuation of its inventory and semifin ished products, the company must use the method for a minimum of four years.
Provisions. Bad debt provisions and write-offs are deductible for corporate income tax purposes at a rate defined on a case-bycase basis, based the amount of the uncollected debt and the time period during which the debt remains uncollected.
For uncollected debts that do not exceed EUR1,000 and that are overdue for a period of more than 12 months, the taxpayer may establish a provision equal to 100% of the debt.
For uncollected debts that exceed EUR1,000 and that are overdue, the taxpayer may establish a provision equal to the follow ing:
• 50% of the debt if it is overdue from 12 to 18 months
• 75% of the debt if it is overdue from 18 to 24 months
• 100% of the debt if this is overdue for more than 24 months
Effective from 1 January 2020, regardless of the time that the debt was created, the following rules apply:
• Bad debts up to EUR300 per debtor (VAT included) can be written off, without the creditor being obliged to conduct all the proper legal actions to safeguard their collection, under the conditions set out by law. Bad debts written off cannot exceed 5% of the total amount of the receivables of the business per tax year.
• Bad debts written off in the context of a mutual agreement or judicial settlement can also be written off under conditions for tax purposes, without the creditor being obliged to conduct all the proper legal actions to safeguard their collection.
Restrictions are imposed on the formation of bad debt provisions for a shareholder or partner holding at least a 10% participation in a business and for business’ subsidiaries with a minimum 10% participation. Special rules are also provided for the deduction of bad debt provisions by banks, leasing and factoring companies.
Depreciation. Depreciation is performed by applying a specific depreciation rate to the acquisition or construction cost for a business asset. The depreciation of each fixed asset begins the month following the month in which the asset is first used or put into service by the taxpayer. The following table provides the annual depreciation rates.
Categories of assets
Depreciation rate (%)
Buildings, installations, facilities industrial installations, non-building facilities, warehouses and special loading and unloading vehicles 4
Construction and installation of charging points for zero-emission or low-emission vehicles 100 Plots of land used for mining purposes and quarries, except those used for ancillary mining activities 5
Public means of transportation, including airplanes, trains and ships, (other than those with zero or low emissions) 5
Machinery and equipment (except for personal computers [PCs] and software) 10
Means of private transportation of individuals (other than those with zero emissions or low emissions) 16
Means of private transportation of individuals with zero emissions 50
Means of private transportation of individuals with low emissions 25
Means of transportation of goods (other than those with zero or low emissions) 12 Means of transportation of goods with zero emissions 50
Means of transportation of goods with low emissions 25
Means of public transportation of individuals with zero emissions 50
Means of public transportation of individuals with low emissions 25
Categories of assets Depreciation rate (%)
Intangible assets and royalties and expenses of multiannual depreciation
PCs and software 20 Equipment used for scientific and technological research
Other fixed assets
An option exists for one-off depreciation of fixed assets valued up to EUR1,500 in the year in which the assets are acquired and placed in service. Newly established companies are eligible to claim depreciation for all of their fixed assets at a 0% rate for their first three years.
Under Law 4710/23.7.2020 enterprises may deduct from their gross revenue the depreciation cost of a zero-emission company car with a maximum retail price before taxes up to EUR40,000 increased by 50% (and by 25% for any excess amount). The cor responding percentages for low-emission cars (that is, up to 50 g CO2/km) are 30% and 15%, respectively.
Relief for losses. Tax losses may be carried forward to offset busi ness profits in the following five consecutive tax years from the tax year in which they are incurred. The right to carry forward tax losses ceases to apply if both of the following events occur:
• More than 33% of the direct or indirect shareholding participa tion or voting rights in a legal person or entity changes in a tax year.
• In the same and/or in the subsequent tax year. the business activity of the legal person or entity changes in excess of 50% in terms of its turnover, in relation to the tax year immediately preceding the tax year of the change described in the bullet above.
Offsetting of losses incurred abroad against business profits derived domestically is not allowed, with the exception of income arising in other EU or EEA member states that is not exempted based on an applicable double tax treaty. Losses may not be car ried back.
Groups of companies. Each company forming part of a group must file a separate return. The law does not provide for consoli dated tax returns or other group relief.
D. Other significant taxes
The following table summarizes other significant taxes.
Nature of tax Rate (%)
Value-added tax (VAT)
Standard rate 24
Reduced rate 13 (special reduced rate of 6%)
Stamp duty on private loan agreements 2.4/3.6
Capital duty 1.1 Annual real estate tax; imposed on the value of real estate owned by legal entities; the rate depends on the zone of the real estate, its surface, year built, whether the property faces a national road and other factors
Nature of tax Rate (%)
Special property tax; imposed on the “objective” value of real estate property; the tax does not apply if the company has listed shares or if it discloses its corporate structure and the ultimate individual shareholders or partners are revealed 15 Real estate transfer tax; imposed on taxable value 3
E. Miscellaneous matters
Transfer pricing. Greek tax law includes a transfer-pricing clause (Articles 21 and 22 of the Code of Fiscal Procedure) that is aligned with international standards. In addition, the transferpricing legislation requires that an enterprise maintain documen tation files.
Effective from of 1 January 2014, a new definition of “associated/ affiliate enterprises” is introduced. The new law defines the term “associated person,” which extends to legal entities, individuals and any other body of persons. The term encompasses two per sons if any of the following circumstances exists:
• One of them holds directly or indirectly shares, parts or quotas in the other of at least 33%, estimated on the basis of total value or number, or equivalent profit participation rights or voting rights.
• Another third person participates directly or indirectly in the other two in any of the aforementioned ways.
• Between them, direct or indirect management dependence or control exists or the possibility exists for one person to exercise decisive influence over the other or for a third person to do so in both of them.
Effective from 1 January 2014, the concept of advance pricing arrangements (APAs) is introduced in Greek transfer-pricing legislation. Law 4714/29.7.2020 introduced for the first time in Greece the possibility of retroactive effect of bilateral or multilateral APAs on certain conditions.
Debt-to-equity rules. No deduction is allowed for interest expens es (with the exception of interest on banking loans and corporate bond loans) incurred on loans granted by third parties to the extent that the interest rate exceeds the interest that would be payable if the applicable interest rate were equal to the interest rate for loans connected with revolving accounts to noncredit or nonfinancial enterprises, as published by the Bank of Greece.
Interest expenses are not recognized as tax-deductible expenses, to the extent that the excess interest expenses (interest expense less any interest income) exceed 30% of the taxable profits be fore interest, taxes, depreciation and amortization (tax EBITDA). The tax EBITDA is determined based on the financial statements prepared in accordance with Greek accounting rules following the addition of the tax adjustments provided by the GITC.
By exception, Law 4916/2022 (FEK A’ 65/28.03.2022) has introduced a possibility for full tax deduction or tax deduction exceeding the percentage introduced by the law (30%) with regard to the excessive borrowing cost for taxable persons that belong to a consolidated group. According to this law, such
taxable persons are allowed to deduct the excessive borrowing cost in either of the following amounts:
• In full, provided that the taxable persons can prove that the percentage of the share capital in relation to their total assets is equal or higher (or lower by no more than 2%) when compared to the respective percentage of the consolidated group and pro vided that all assets and liabilities are valued based on the same method as in the consolidated financial statements
• In an amount higher than the amount they would be eligible to deduct based on the general interest limitation rule. This higher amount of tax is calculated in the following two stages:
—
At the first stage, the group percentage should be deter mined by dividing the excessive borrowing cost of the consolidated group toward third parties with the EBITDA of the group.
—
At the second stage, the group percentage is multiplied with the EBITDA of the taxpayer.
Further clarifications from the side of the tax administration are expected.
For the purposes of applying the above, “exceeding borrowing costs” is defined as the difference between the taxpayer’s taxable interest revenues and other economically equivalent taxable rev enues and the deductible borrowing costs of such taxpayer, while the term “borrowing costs” includes interest expenses on all forms of debt as well as expenses incurred in connection with the raising of finance. EBITDA is the sum of taxable income, taxadjusted amounts for exceeding borrowing costs, as well as taxadjusted amounts for depreciation and amortization. Tax-exempt income is not taken into account for such calculation.
However, such interest expenses, are recognized as fully tax deductible, provided that the amount of excess interest expenses recorded in the accounting books does not exceed EUR3 million per year. Further, the law recognizes the ability to carry forward without any time limitation exceeding borrowing costs that can not be deducted in the current tax year.
Nonetheless, the above thin-capitalization rules [maximum threshold up to which exceeding borrowing costs are deducted] do not apply to the following:
• Exceeding borrowing costs incurred on loans used to fund a long-term public infrastructure project, in cases in which the project operator, borrowing costs, assets and income are all in the EU
• Special Purpose Vehicles to the extent that the interest expendi ture is connected to the carrying out of public project(s) or public service(s) by means of a concession agreement ratified by the Greek parliament with a law, or by means of a PublicPrivate Partnership signed on or before 31 December 2014
• Credit or financial institutions
Controlled foreign corporations. Controlled foreign corporation (CFC) rules have been effective in Greece from 1 January 2014 and have been recently updated after the local implementation of the EU Anti-Tax Avoidance Directive (ATAD) through the enactment of Law 4607/2019. These rules are designed to deal with tax avoidance of Greek companies through the shifting of
revenues to subsidiaries in low-tax jurisdictions. Basically, these rules provide for the inclusion in the taxable income of the Greek companies’ undistributed passive income (for example, interest, dividends and royalties) of foreign subsidiaries under the conditions stipulated in the law. The CFC provisions do not apply to CFCs established in the EEA, as long as such entities perform substantial economic activity, supported by employees, equipment, assets and premises, as evidenced by relevant facts and circumstances.
Mergers and acquisitions. Company law regulates mergers and acquisitions in Greece. However, significant tax exemptions and relief for company restructurings may be available.
Transfers of operations. The tax law regulates the tax treatment of a group business restructuring that results in a transfer of operations (exit taxation). In the case of a local or cross-border intra-group restructuring qualifying as a transfer of functions, assets, risks and business opportunities (profit potential), the transfer of these items is considered a “transfer package” for the purposes of the law. If, within the context of such restructuring, a transfer of an intangible asset takes place (among other transfers), such transfer must be made for consideration according to the arm’s-length principle, taking into account the total value of the underlying assets and the transfer package (relevant functions and risks transferred). If the taxpayer can prove that no significant intangible assets have been transferred and that arm’slength consideration has been paid with respect to the specific transfer that took place, the transfer-package provisions do not apply.
General anti-avoidance rule. Fiscal Procedure Code Law 4174/2013 introduced a general anti-avoidance rule that has been updated after the local implementation of the EU ATAD through the enactment of Law 4607/2019. The new provisions introduced the term “principal purpose” of an arrangement (principal purpose test) as a determining factor for whether such an arrangement is considered genuine and, consequently, considered by the tax authorities. If an arrangement is consid ered to be non-genuine, the relevant tax liability is calculated based on the provisions that would have been applicable if such arrangement were not in place. For the purposes of tax deter mination, the tax administration ignores an arrangement or a series of arrangements put into place if the main purpose, or one of the main purposes, is the obtaining of a tax advantage that defeats the objective or purpose of the applicable tax law. For the purposes of determining whether such arrangements are genuine, not all relevant data and circumstances of each case are considered, while the extent as to which the arrange ment in question is being implemented for valid commercial reasons that reflect the economic reality is used as a criterion for this determination. In this context, the tax administration examines whether each arrangement falls within certain cir cumstances (for example, the arrangement is applied in a man ner that is not consistent with usual business conduct or it leads to a significant tax advantage that does not reflect the business risk assumed by the taxpayer). The abovementioned provisions of Law 4607/2019 are applicable to income received and
expenses incurred during tax years commencing beginning on or after 1 January 2019.
Exit taxation and hybrid mismatches. Law 4714/29.7.2020 imple mented into Greek tax legislation the provisions of Directive 2016/1164/EU, as amended by Directive 2017/952/EU, regarding exit taxation and hybrid mismatches.
Exit taxation. Under the newly introduced rules, once a taxpayer (Greek tax resident legal person/entity or a Greek permanent establishment) transfers assets, the business carried on by its permanent establishment or its tax residence out of Greece, Greece taxes the capital gain created in Greece (even if that gain has not yet been realized at the time of the exit). At the time of the exit, the taxpayer is subject to Greek corporate income tax.
Hybrid mismatches Under the newly introduced rules, hybrid mismatches arise from differences in the legal characterization of payments or entities among two different jurisdictions. A hybrid mismatch arises between associated persons (for example, asso ciated entities, taxpayer and associated entity, and head office and permanent establishment) or under a structured arrangement. Mismatches are dealt with by primary and secondary correction rules, as the case may be (for example, correction rules for double deduction, for deduction without inclusion, for imported mismatches, for mismatches involving permanent establish ments, for hybrid transfers and for tax residence mismatches). The new provisions apply as of 1 January 2020.
Law 89/1967 regime. Enterprises licensed to operate under the Law 89/1967 regime may enter into a favorable APA with the tax authorities. A license may be granted to enterprises under this regime if certain conditions are met. The principal condition is that the company must be exclusively engaged in the provision of specific services to foreign associated companies, the foreign head office or foreign branches. The Ministry of Economy and Finance grants the license after reviewing and approving the applicant’s transfer-pricing study (based on the cost-plus method).
F. Treaty withholding tax rates
Under most double tax treaties, the rates in the table below apply to the extent that the amount of interest or royalties is at arm’s length. The domestic withholding tax rates apply to any excess amounts. In addition, certain recent double tax treaties include an anti-abuse clause.
Greece has implemented EU Directive 2003/49/EC. Under this directive, withholding tax on interest and royalties paid between associated companies of different EU member states was abolished, effective from 1 July 2013.
The following table provides treaty withholding tax rates for divi dends, interest and royalties.
Belgium
Bosnia and Herzegovina
Dividends Interest Royalties
% % %
0/5 (m)(n) 0/10 (l)(o) 0/5 (o)
5 (m) 10 10
Bulgaria 0 (n) 0/10 (o) 0/10 (o)
Canada 5 (m) 10 10
China Mainland 5 (m) 0/10 (l) 10
Croatia 0/5 (m)(n) 10 0/10 (o)
Cyprus 0 (n) 0/10 (o) 0 (e)
Czechoslovakia (i) 0 (n) 0/10 (o) 0/10 (o)
Denmark 0 (n) 0/8 (o) 0/5 (o)
Egypt 5 15 15
Estonia 0/5 (m)(n) 0/10 (o) 0/10 (a)(o)
Finland 0 (n) 0/10 (o) 0/10 (k)(o)
France (s) 0 (n) 0/10 (o) 0/5 (o)
Georgia 5 8 5
Germany 0 (n) 0/10 (o) 0
Hungary 0 (n) 0/10 (o) 0/10 (o)
Iceland 5 (m) 8 10
India 5 15 20
Ireland 0/5 (m)(n) 5 0/5 (o)
Israel 5 10 10
Italy 0/5 (n) 0/10 (j)(o) 5 (a)(g)(o)
Korea (South) 5 (m) 8 10
Kuwait 0/5 (p) 0/5 (p) 15
Latvia 0/5 (m)(n) 0/10 (o) 0/10 (a)(o)
Lithuania 0/5 (m)(n) 0/10 (o) 0/10 (a)(o)
Luxembourg 0/5 (n) 0/8 (o) 0/7 (h)(o)
Malta 0/5 (m)(n) 0/8 (o) 0/8 (o)
Mexico 5 0/10 (l) 10
Moldova 5 (m) 10 8 Morocco 5 (m) 10 10 Netherlands 0/5 (n) 0/8/10 (f)(o) 0/7 (h)(o)
Norway 5 10 10
Poland 0/5 (n) 0/10 (o) 0/10 (o)
Portugal 0/5 (n) 0/15 (o) 0/10 (o)
Qatar 5 0/5 (q) 5
Romania 0/5 (n) 0/10 (o) 0/5/7 (a)(h)(o)
Russian Federation 5 (m) 7 7
San Marino 5 (m) 10 5
Saudi Arabia 5 5 10
Serbia 5 (m) 10 10
Singapore (t) 5 (m) 0/7.5 (u) 7.5
Slovenia 0/5 (n) 0/10 (o) 0/10 (o)
South Africa 5 (m) 8 (j) 5/7 (a)(h)
Spain 0/5 (m)(n) 0/8 (o) 0/6 (o)
Sweden (v) 0/5 0/10 (o) 0/5 (o)
Switzerland 0/5 (n) 0/10 (o) 0/5 (o)
Tunisia 5 15 12 Turkey 5 0/12 (l) 10 Ukraine 5 (m) 10 10
United Arab Emirates 0/5 (r) 0/5 (r) 5
United Kingdom 0/5 (n) 0 0
United States 5 0 (b) 0 (d)
Uzbekistan 5 10 8
Non-treaty
(a) The rate is 5% for royalties paid for the use of industrial, commercial or scientific equipment (7% under the Romania and South Africa treaties).
(b) The 0% rate applies if the recipient does not control directly or indirectly more than 50% of the voting power in the payer. However, the 0% rate does not apply to interest paid to US recipients to the extent that the interest is paid at an annual rate exceeding 9%.
(c) For details, see Section A.
(d) The 0% rate does not apply to cinematographic film royalties paid to US residents.
(e) The rate is 5% for film royalties.
(f) The rate is 8% if the recipient is a bank or similar entity.
(g) The rate is 0% for copyright royalties for literary, artistic or scientific works, including films.
(h) The rate is 5% for royalties for literary, artistic or scientific works, including films.
(i) Greece honors the Czechoslovakia treaty with respect to the Czech and Slovak Republics.
(j) Under the South Africa treaty, the rate is 0% for interest paid to the South Africa Reserve Bank. Under the Italy treaty, the rate is 0% for interest pay ments made by the Greek government, interest payments made to the Italian government and interest payments relating to government loans.
(k) The 10% rate applies to copyright royalties for literary, artistic or scientific works.
(l) The rate is 5% if the recipient is a bank. Under the China Mainland, Mexico and Turkey treaties, the rate is 0% if the recipient is a government bank.
(m) According to the provisions of the relevant tax treaty, the 5% rate applies if the recipient of the dividends is a company that owns more than 25% of the payer corporation. In any case, effective from 1 January 2020, dividend dis tributions made by Greek companies are subject to a 5% dividend withhold ing tax rate even for non-treaty jurisdictions.
(n) The 0% rate applies if the conditions of the EU Parent-Subsidiary Directive are met (for Switzerland, the 0% rate applies if the conditions of the European Community (EC)-Switzerland agreement providing for measures equivalent to those in Directive 2003/48/EC are met).
(o) The 0% rate applies if the terms of the EU Interest-Royalties Directive are met; for Switzerland, the 0% rate applies if the conditions of the EU-Switzerland agreement providing for measures equivalent to those in Directive 2003/48/EC are met.
(p) The 0% rate for dividends and interest payments applies if the recipient is the government of Kuwait or a state division or subdivision, the Central Bank of Kuwait or other government organizations or government funds.
(q) The 0% rate on interest payments applies if the recipient is the government of Qatar.
(r) The 0% withholding tax rate for dividends and interest payments applies if the recipient is the government of the United Arab Emirates (UAE) or its political subdivisions, the Central Bank of the UAE or certain UAE invest ment authorities.
(s) On 11 May 2022, a new tax treaty was signed between Greece and France (which will replace the one concluded in 1963). It is expected that both countries will transpose this treaty into their domestic law and will enact it in the next few months.
(t) On 14 March 2022, the Singapore-Greece income tax treaty and the protocol entered into force. The provisions of the treaty and protocol will become effective mostly on 1 January 2023.
(u) The withholding tax rate for interest is 0% if the beneficial owner is a bank or if it is paid to the government of Greece or Singapore.
(v) Sweden has unilaterally terminated its tax treaty with Greece; for income tax purposes, such termination is effective for income derived as of 1 January 2022.