Greece

Taxable period

By way of exception to the general rule, legal entities or legal persons that are more than fifty percent (50%) owned by a foreign legal entity or legal person may adopt the tax year of the foreign legal entity or legal person as their own tax year.

Tax returns

The taxpayer also has the right to amend the tax return by paying the respective difference in tax or by establishing one’s rights for a refund of tax paid in excess according to the amended tax return. An amended tax return must be submitted within ten (10) days from the notification of the provisional tax assessment by the Tax Administration or until the expiration of the Tax Administration's right to issue a tax assessment notice.

Payment of tax

As of 1 January 2021, an 80% prepayment of the current year’s CIT is withheld at source, based on the tax return, and is paid in eight (8)  equal monthly instalments.

CIT and tax prepayment based on the tax return are paid in six equal monthly instalments, the first of which should be paid until the last day of the seventh month following the end of the tax year and the remaining five until the last day of each consecutive month, which, however, may not extend beyond the same tax year.

For newly established companies, the prepayment is reduced by 50% for the first three years of operations.

Tax audit process

Tax audit procedures

The tax audit commences with the issuance of an audit order for open tax years, usually not more than five. The order concerns the audit of all tax issues (CIT, VAT, WHT, capital gain tax, etc.). The duration of the audit may vary from a few weeks to a few months, in certain cases.

The tax administration performs a tax audit from its offices on the basis of the financial statements, tax returns, and other documents that are submitted by the taxpayer, as well as the documents and information in its possession.

The performance of a complete on-site tax audit must be notified to the taxpayer by a previous written notification. A complete on-site tax audit is performed without prior notification in cases where indications of tax avoidance exist.

The tax administration may have access to the books and records and to other documents of the taxpayers, as well as to the receipt of copies thereof. The tax administration has the same rights with regard to books and records that are kept electronically. It is noted that the legal entity subject to keeping books and records must maintain these books and records for at least five years.

An extension of the on-site tax audit may be granted once for six months, as well as for another six months in extraordinary cases.

The right for a new audit of a tax period already audited is provided only in case new data arises that affects the calculation of the tax liability. ‘New data’ is defined as all data that could not have been known to the tax administration upon the commencement of the original tax audit.

The election of the cases subject to audit will be made on the basis of risk analysis criteria. Exceptionally, cases may be elected on the basis of other criteria, according to a decision of the General Secretary of Public Revenue. It should be noted that, based on Law 4389/2016, the General Secretarial for Public Revenue is abolished and a new Independent Authority for Public Revenue is formed aiming to the determination, the assessment, and the collection of tax, customs, and others public revenues.

The tax administration may use the following audit techniques for the indirect determination of the taxable basis:

• The proportionality principle.
• The analysis of the liquidity of the taxpayer.
• The net position of the relation between the sales price to the total turnover.
• The amount of bank deposits and expenses in cash.

The procedure of notification of the taxpayer of the results of the tax audit is provided. More specifically, a temporary corrective assessment of tax is issued in case a differentiation of tax arises on the basis of the tax returns of the taxpayer and the results of the audit.

Following the submission of such decisions and within 20 days from the receipt of the notification thereof, the taxpayer may submit its views in writing, whilst after that point a final corrective assessment of tax sheet is issued, which is notified to the taxpayer, within a month from the end of the deadline for submitting the taxpayer’s views in writing.

Center for Auditing Large Taxpayers (KEMEF)

Starting on 17.02.25, the new audit center, KEMEF, was established from the merger of the Audit Center for Large Enterprises (KEMEEP) and the Audit Center for Taxpayers with Great Wealth  (KEFOMEP). This merger creates the largest audit center in the country for legal entities and individuals, with jurisdiction across the entire territory.

Key Features of KEMEF

• Comprehensive Audits: KEMEF conducts combined audits of particular complexity using modern audit methods.
• Scope: The audits  cover entities, corporate structures, shareholders, partners, and managers.
• Minimizing Tax Evasion: The audits  extend to a broader range of the tax audit chain, minimizing the chances of tax evasion or avoidance.
• Focus Areas: This includes audits of tax avoidance through artificial arrangements and hybrid instruments, as well as audits of cryptocurrencies, NFTs, and other encryption means and tools.

More specificallly,the operation of KEMEF is based on a new philosophy of audits relying on the verification of data through cross-checks, the utilization of information from third-party entities (such as banks and international organizations), and the use of advanced technological tools for the processing of tax data.

Tax auditors’ practice

In the past, complexity of the Greek tax legislation and the vagueness of its requirements enabled the tax auditors to dispute either the company’s results reflected in its accounting records or to disallow expenses. This is true in all tax audits and, in spite of companies’ endeavours to comply with the tax requirements, tax audits have always resulted in assessment of additional taxes and penalties.

The amount of additional taxes depends mainly on the following:

• Company’s vulnerability because of nature of business and transactions.
• Taxes already paid on the basis of the company’s income tax returns.
• Profits declared by competitors.
• Weaknesses and shortcomings that the tax auditors might reveal if a full audit is carried out.

In respect of deductible expenses, the legislation prescribes, among other requirements, that such expenses must be realised for the benefit of the company or in its ordinary course of normal business activity to represent, a valid transaction at a value that is not over or under the market value based on the data available by the tax administration, properly recorded in the company’s books in the respective period to which they relate, and can be evidenced by appropriate documentation, without defining what a business expense is. Consequently, the tax auditors dispute the deductibility of various items arguing that, in their opinion, they are not contributing to the company’s business income.

Greek SAs and LLCs whose annual financial statements are subject to a statutory audit by individual Certified Auditors and audit firms may optionally obtain an 'annual tax certificate' from their certified auditors upon the completion of a tax audit conducted, confirming compliance with Greek tax legislation. The tax audit is conducted on specific tax areas as defined by a special audit program issued by the Ministry of Finance in cooperation with the Committee of Accounting Standardization and Auditing (ELTE). The audit program is updated annually and is in accordance with the provisions of International Standard on Non-Audit Assurance Engagements 3000.

Statute of limitations

The tax administration may issue an administrative, estimated, or corrective tax assessment within five years from the end of the year in which the deadline for filing the respective tax return lapsed.

This five-year prescription period may be extended for one year if:

• the taxpayer files an initial or amending tax return within the fifth year of the prescription period or in case any information becomes available to the tax administration in the last year of the five-year period for a case that has been subject to full audit or in any other case that information, based on which a tax liability arises, comes to the attention of the tax administration from any source and solely for the matter to which it relates
• an application for the granting of information from a foreign state has been filed and commences from the date of the receipt of the respective information by the tax authority
• a mandatory administrative recourse has been filed and commences from the issuance of a decision that is not subject to recourse
• a Mutual Agreement Procedure is initiated, pursuant to the application of DTTs and the Arbitration Convention, or
• the taxpayer files an application for cancellation or amendment of the direct tax assessment, tax assessment sheet, or penalty imposition sheet, or in case of such cancellation or amendment without an application by the taxpayer.

For tax years, periods, and cases as of 1 January 2018 onwards, the statute of limitation period may be extended to ten years from the end of the year within which the deadline for filing the (last) return expires if no tax return has been filed within the five-year period. The same also applies if any new or not possibly known information within the five-year period comes to the attention of any tax administration service, based on which it appears that the actual tax liability exceeds the one determined by a previous tax assessment and solely for the matter to which it relates.

Especially, for cases of tax evasion pertaining to years 2012 to 2017, an extended statute of limitation period of ten years from the end of the year within which the deadline for filing a tax return expires, applies.

In case of a corrective tax assessment resulting in an amendment of the tax assessment act for a year for which the prescription period of the state’s right to audit has lapsed, the adaptation is made to the last year for which said right has not been prescribed.