Corporate - DeductionsLast reviewed - 19 January 2023
Mandatory depreciation on a fixed annual basis applies by using fixed depreciation rates stipulated in the law. The transfer of depreciated amounts between fiscal years is not permitted.
The rates of depreciation are determined on the basis of the following table:
|Category of assets of the enterprise||Rate of depreciation per tax year (%)|
|Buildings, installations, facilities, industrial and special installations, non-building facilities, warehouses, and stations, including their annexes (and special loading and unloading vehicles)||4|
|Constructions and installations for charging of vehicles of zero or low emissions up to 50 g CO2/Km||100|
|Plots of land used for mining and quarries, unless used for ancillary mining activities||5|
|Public means of transportation, including airplanes, trains, vessels, and ships||5|
|Machinery and equipment (aside from personal computers and software)||10|
|Means of transportation of individuals apart from zero or low-emission means up to 50 g CO2/Km||16|
|Zero-emission means of transportation of individuals||50|
|Low-emission means of transportation of individuals up to 50 g CO2/Km||25|
|Means of transportation of goods apart from zero or low-emission means up to 50 g CO2/Km||12|
|Zero-emission means of transportation of goods||50|
|Low-emission means of transportation of goods up to 50 g CO2/Km||25|
|Zero-emission means of mass transportation of individuals||50|
|Low-emission means of mass transportation of individuals up to 50 g CO2/Km||25|
|Intangible assets, royalties, and expenses of multiannual depreciation||10|
|Personal computer equipment, principal and ancillary and software||20|
|Other fixed assets of the enterprise||10|
|Equipment and instruments used for the purposes of performing scientific and technological research||40|
Specifically for intangible assets and royalties, the rate may be adapted on the basis of the lifetime of the right.
Depreciation expenses are deductible by the owner of the assets, and the lessee in the case of finance leasing. For the definition of finance leasing, the Greek Tax Code refers to the provisions of the Greek Accounting Standards (L.4308/2014). However, as of 1 January 2020, the definition is supplemented, so that it is determined based either on the meaning of the International Financial Reporting Standards (IFRS), as adopted by the European Union pursuant to Regulation 1606/2002, or that of the Greek Accounting Standards, depending on the accounting framework followed by each entity.
There are some court cases that support the deductibility of goodwill as a start-up expense, but the specifics of each case must be carefully considered.
Organisational and start-up expenses
Based on the provisions of Law 4308/2014 (Greek Accounting Standards), any amount of start-up expenses shall be, under conditions, tax deductible within the year that they have been incurred, to the extent that they do not fall within a category of assets (including tangibles and intangibles).
Any expenses incurred for the acquisition of an asset that are directly related to the latter asset and are necessary for its use are included in the acquisition cost of said asset (e.g. concerning real estate property the real estate transfer tax, notary fees, registration fees, etc.).
Interest deductibility restrictions apply.
Non-deductible expenses include interest expenses on loans undertaken by the enterprise from third parties, to the extent that they exceed the interest that would arise if the interest rate was equal to the interest rate of loans on open deposit/withdrawal accounts provided to non-financial enterprises, as indicated in a Statistical Bulletin of the Central Bank of Greece at the prior time period closest to the date such loan was undertaken.
The above interest deductibility restrictions do not apply to inter-bank loans, bonds, and inter-company loans issued by SAs.
The amounts of bad debt provisions and the write-off thereof are deductible, as follows:
- For uncollected due debt up to the amount of EUR 1,000 for a time period exceeding 12 months, the taxpayer may form a provision at a percentage of 100% of the said claim.
- For uncollected due debt exceeding the amount of EUR 1,000 for a time period exceeding 12 months, the taxpayer may form a provision according to the following table:
Duration of late payment (in months) Provision (%) Greater than 12 50 Greater than 18 75 Greater than 24 100
The condition for the deduction of the provision for the aforementioned two cases is that the appropriate actions have been taken to ensure the right of collecting the said claim.
The formation of provisions of bad debt is prohibited in the following cases:
- For due debt of shareholders or partners of the enterprise with a minimum participation percentage of 10% and the subsidiary companies of the enterprise with a minimum participation percentage of 10%, unless the claim of such debt is pending before court or court of arbitration, or if the debtor has filed an application for bankruptcy or for a procedure of rationalisation or an enforcement procedure has commenced against the debtor.
- For due debt that are covered by insurance or any guarantee or other contractual or in rem security or for debts of the state or local authorities or for those that have been provided with a guarantee granted by those bodies.
It is provided that a claim may be written off, provided that the following conditions are cumulatively met:
- An amount corresponding to the debt has been previously recorded as income.
- It has been previously written off from the books of the taxpayer.
- All legal actions for the collection of the debt have been exhausted.
For tax years beginning on 1 January 2020 onwards, bad debts, the total amount of which does not exceed EUR 300 per counterparty, including VAT, may be written off under conditions, without needing though to fulfil the above stricter requirements.
Moreover, it is possible to write off bad debts under a mutual agreement or judicial settlement, regardless of whether a provision has been accounted and without requiring that all legal actions to recover the claim have been taken.
Banks may deduct provisions of bad debt at a percentage of 1% on the amount of the annual average of real grants, as indicated by their monthly accounting statements. Aside from the aforementioned deductibility percentage, banks may deduct from their income additional special provisions regarding their clients, for which the settlement of interest has ceased. Moreover, specific provisions on leasing and factoring companies are included.
The tax deductibility of donations is not expressly regulated in the respective Greek tax legislation (in contrast to the previously applicable Greek ITC providing for the tax deductibility of specifically enumerated donations, up to a certain amount). Thus, the deductibility of charitable contributions shall be examined in light of the generally applicable deductibility criteria, focusing on the productivity of such expenses on a case-by-case basis.
For tax years beginning on or after 1 January 2020, expenses relating to corporate social responsibility actions are considered as incurred to the interest of a company or within its ordinary course of business and will be deductible in the tax year in which they were incurred. However, this will only be possible if the company’s accounting result is profitable, unless such actions are carried out at the request of the state.
Fines and penalties
Fees from activities constituting a criminal offence, fees from penal clauses, fines, and penalties are not recognised as deductible expenses.
Taxes, other than income tax, extraordinary contributions, and VAT corresponding to non-deductible expenses that are not deductible as input VAT, are recognised as deductible expenses.
Other significant items
A general rule on the deductibility of all real and evidenced business expenses realised for the benefit or in the frame of the usual transactions of the company, the value of which is not deemed as higher or lower than the market value, and duly registered in accordance with the rules of recording of transactions is established, with the exception of the restrictively enumerated expenses that are not deductible.
The non-deductible expenses include:
- Some cases of loan interest (see Interest expenses above).
- Every kind of expense concerning the acquisition of goods or receipt of services of a value exceeding EUR 500, provided that the partial or total payment was not made through a means of bank payment.
- Unpaid insurance contributions.
- Provisions, with the exception of the explicitly regulated bad debt provisions (see Bad debt above).
- Fees and penalties, including additional payments.
- Provision or receipt of services in cash or in kind that constitute a criminal offence.
- The income tax, including the freelancers’ duty and extraordinary contributions, as well as the VAT corresponding to non-deductible expenses, provided that it is not deductible as input VAT.
- Deemed income in case of self-use of property, to the extent that the latter exceeds a percentage of 3% of the objective value of the property.
- Expenses for the organisation and conducting of informative conferences and meetings concerning the hospitality (meals and stay) of clients or employees if exceeding the amount of EUR 300 per participant and to the extent that the total annual expense exceeds a percentage of 0.5% of the annual gross income of the enterprise.
- Entertainment expenses, with the exception of such expenses realised by taxpayers having as a main object the provision of entertainment services.
- Private consumer expenses.
- Total of expenses that are paid to tax residents in non-cooperative states or states with a preferential tax regime, unless the taxpayer proves that these expenses refer to real and usual transactions that do not have as their objective the transfer of profits or income or capital with the purpose of tax avoidance or evasion.
- Expenses relating to tax-exempt dividends.
- Any kind of salary payments, provided that the partial or total payment was not made through a means of electronic payment.
- For tax years beginning on or after 1 January 2020, rental expenses, provided that their payment was not made by electronic means or through a payment service provider.
A super deduction by an additional 100% of specific expenses related to green economy, energy, and digitalisation is available for small and medium-sized businesses.
Net operating and capital losses
Losses can be carried forward five years. Carrybacks are not permitted.
Pursuant to a rule on the abuse of provisions on the transfer and setoff of losses, in cases where the direct or indirect ownership or voting rights of an enterprise are changed at a percentage exceeding 33% and, in the same or the following year from such change of ownership or voting rights, the activity of the legal person/entity changes at a percentage exceeding 50% of its turnover in relation to the immediately preceding tax year from the change of shareholding structure or voting rights, the carryforward of tax losses ceases to apply.
Payments to foreign affiliates
Royalties, interest, and service fees paid to foreign affiliates are deductible expenses under certain requirements and conditions.
Special restrictions on transactions with non-cooperative states and states with preferential tax treatment
Greek tax law has established rules in relation to non-cooperating states and states with preferential tax treatment.
As of the tax year 2018, jurisdictions shall be considered as non-cooperative if they are non-EU member states, their position regarding transparency and exchange of information in tax matters has been assessed by the OECD and has not been rated as ‘highly compliant’, and which:
- have not concluded and do not implement a mutual agreement for administrative assistance in tax matters with Greece or have not signed the Convention on Mutual Administrative Assistance in tax matters concluded by the Council of Europe and OECD, and
- have not committed to automatic exchange of financial account information, by 2018 the latest.
Non-cooperative states are determined by a Ministerial Decision published annually, which takes into account changes as regards execution and implementation of mutual agreements for administrative assistance in tax matters by relevant jurisdictions.
Pursuant to a Decision issued in November 2021, the jurisdictions considered as non-cooperative for 2020 are specified as follows:
|Antigua and Barbuda (until 1 February 2019)||Ghana||Oman|
|Botswana||Honduras||Papua New Guinea|
|Brunei (until 1 July 2019)||Jordan||Paraguay|
|Cabo Verde (until 31 April 2020)||Kenya (until 31 October 2020)||Rwanda|
|Cambodia||Kingdom of Lesotho||SintMaarteen|
|Cote d' Ivoire||Madagascar||Tanzania|
|Dominica (until 1 August 2019)||Maldives||Thailand|
|Dominican Republic (until 1 December 2019)||Mali||Togo|
|Djibouti||Mauritania||Trinidad and Tobago|
|Eswatini||Mongolia (until 30 April 2020)||Vanuatu|
|Guinea||Montenegro (until 30 April 2020)|
A legal entity, irrespective of its legal form, is considered located in a preferential tax regime, even if its residence of registered office is located in an EU member state, in cases where it is not subject to taxation in this state or is de facto not subject to taxation, or is subject to tax on income or capital at an amount that is equal to or lower than 60% of the tax that would have been due, in accordance with Greek tax legislation, if such entity were resident or were maintaining a PE in Greece.
Preferential tax regimes are determined by a Ministerial Decision published annually, which takes into account the above criteria.
Pursuant to a Decision issued in August 2021, the states with preferential tax treatment for 2020 are specified as follows:
|Bosnia and Herzegovina||Republic of Maldives||Turkmenistan|
|British Virgin Islands||Marshall Islands||Turks and Caicos Islands|
|Bulgaria||Republic of Moldova||United Arab Emirates|