A legal entity or other entity is considered as tax resident in Greece if one of the following conditions is met:
- It has been incorporated or established according to the Greek legislation.
- It has its registered seat in Greece.
- The place of effective management is located in Greece.
The determination by the tax authorities that the effective management of a legal entity is exercised in Greece is made on the basis of the actual facts and circumstances of each case and by taking into account mainly the place of exercising the day-to-day management, the place of making strategic decisions, the place where the annual general meeting of shareholders or partners is held, the place where the books and records are kept, the place where the meeting of the members of the BoD or other executive management board takes place, and the residence of the members of the BoD or other executive management board.
For determining a legal entity as being tax resident in Greece, the exercise of effective management in Greece for any period during the tax year is sufficient.
Companies that are established and operate according to Law 27/1975 ‘on the taxation of vessels [etc.]’ and L.D. 2687/1953 ‘on the investment and protection of foreign capital’ are explicitly excluded from the application of these provisions on tax residence.
Permanent establishment (PE)
The definition of a PE of foreign legal entities in Greece following the principles stipulated in the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention and its Commentary, as explicitly mentioned in the Explanatory Report of the Greek Corporate Income Tax Code, is 'a fixed place of business through which the business of an enterprise is wholly or partly carried on'.
The term ‘permanent establishment’ includes especially:
- A place of management.
- A branch.
- An office.
- A factory.
- A workshop.
- A mine, an oil or gas well, a quarry, or any other place of extraction of natural resources.
In order for a construction site in Greece to constitute a PE, a time period of at least three months is required, instead of the time period of 12 months provided in the OECD Model Convention.
A distinction applies between the cases of maintaining a PE through a dependent agent and not maintaining a PE when performing activities through an independent agent (e.g. broker, general commission agent).
Greece has also reserved the right to not apply the provisions of the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (Multilateral Instrument or MLI) concerning the artificial avoidance of PE status.