Greece

Group taxation is not permitted in Greece.

Transfer pricing

Related entities are obligated to document the prices of their intra-group transactions.

An exemption from maintaining a transfer pricing documentation file is provided if:

• the above transactions or transfer of operations amount to up to EUR 100,000 annually and the total turnover of the liable party does not exceed EUR 5 million annually, or
• the above transactions or transfer of operations amount to up to EUR 200,000 annually and the total turnover of the liable party exceeds EUR 5 million annually.

Greek taxpayers qualifying as subject to documentation thresholds need to document all transactions irrespective of value.

The transfer pricing documentation file is accompanied by the ‘Summary Information Table for the inter-company transactions’, which is submitted electronically to the tax administration within the deadline for the submission of the annual income tax return.

The delayed submission of the Summary Information Table for the inter-company transactions incurs a penalty calculated at a percentage 1/1,000 of inter-company transactions (not below EUR 500 and not exceeding EUR 2,000). In the event of filing an amended Summary Information Table, a penalty applies only to the extent that the declared amounts are amended and such amendments exceed the amount of EUR 200,000. In the event that the amended amounts exceed EUR 200,000, the penalty is calculated at 0.1% on the value of the transactions subject to documentation requirements (minimum penalty of EUR 500 and maximum penalty of EUR 2,000).

The penalty for inaccurate submission of the Summary Information Table for the inter-company transactions is calculated at a percentage 0.1% of the inter-company transactions (not below EUR 500 and not exceeding EUR 2,000), to the extent that the inaccuracy is higher than 10% of the transactions.

The penalty for the non-submission of the Summary Information Table for the inter-company transactions is calculated at a percentage 0.1% of the inter-company transactions (not below EUR 2,500 and not exceeding EUR 10,000).

The penalty for the non-submission of the transfer pricing documentation file (imposed upon the expiration of the one-month deadline) is EUR 5,000, which is increased to EUR 10,000 if transfer pricing documentation is provided after 60 days, and to EUR 20,000 if it is provided after 90 days or not provided at all. 

A repetition within five years of the first infringement incurs double the initial penalty, whereas a second repetition within five years from the first infringement incurs quadruple the initial penalty.

The transfer pricing documentation file is kept at the registered seat of the liable party for the whole time period that the books and records are required to be kept and should be provided to the tax administration within 30 days from the receipt of the relevant request.

The obligation of updating the respective transfer pricing file is annual on the premise that the documentation thresholds are met.

The option of obtaining an Advance Pricing Arrangement (APA) of the methodology of specific future intra-group transactions with related parties is integrated in the Code of Tax Procedures. The object of the APA constitutes the total of the criteria used for the determination of the prices of intra-group transactions during a specific time period, which include mainly the transfer pricing methodology used, comparable or reference data, and the respective adjustments, as well as the critical assumptions on future developments. The object of the APA may constitute every other specialised matter concerning the pricing of transactions with related parties.

The validity of the APA decision cannot exceed four years. The possibility of implementing the APA decisions to previous tax years covers only cases of bilateral or multilateral agreements, explicitly excluding unilateral ones. The issuance of the APA decision does not impede the subsequent application of a mutual settlement procedure according to the applicable double tax treaty (DTT).

The APA decision may be renewed, revoked, or cancelled by a decision of the tax administration, provided that the legal conditions are met.

The Greek tax legislative framework provides for the possibility of roll-back implementation for bilateral/multilateral APAs, on the grounds that the following conditions are cumulatively met:

• The facts and circumstances of the taxpayers' operations for the years for which a roll-back is requested are identical with those of the years to be covered by the APA.
• The possibility of a tax audit must not have expired at the time of application for a roll-back clause for those tax years.
• The taxpayer must not have received a tax audit order.

As of September 2022, it is provided that if, following a tax audit, additional profits relating to inter-company domestic transactions are taxed at the level of a taxpayer in Greece, the related party that is also subject to tax is entitled to perform a corresponding adjustment to its taxable profits accordingly. This is performed through the submission of an amending income tax return (accompanied by the tax audit report), which should be submitted within three months from the delivery of the tax audit report.

Condition for the refund or the offsetting of taxes, at the level of the taxpayer, is the payment from the related party of any taxes imposed due to the correction of profits of their inter-company transactions. If the tax assessment note is challenged by the taxpayer and an administrative or a legal decision is issued, the tax administration proceeds with the corresponding adjustment of profits to the related party.

These types of transfer pricing adjustments, known as corresponding adjustments, are met in various DTTs and have as primary objective the consistent allocation of profits by the two jurisdictions and the relief from double taxation. Through this provision, related parties could also obtain relief from double taxation resulting from transfer pricing adjustments in domestic transactions.

Country-by-country (CbC) reporting regime

On 28 July 2017, the Greek Parliament ratified Law 4484/2017, providing for new transfer pricing documentation requirements. The new law supplements the EU Council Directive 2016/881 on mandatory automatic exchange of information in the field of taxation that was initially incorporated in Greek legislation by Laws 4170/2013 and 4474/2017. The new requirements largely follow the guidance on CbC reporting provided under Action 13 of the OECD’s Base Erosion and Profit Shifting (BEPS) initiatives. In order to enable the Greek tax authorities to analyse potential transfer pricing risks, said requirements provide for the preparation and filing of a CbC report.

The Greek CbC reporting obligations require Greek ultimate parent entities controlling a multinational group of entities (MNEs) with annual total consolidated group revenues exceeding EUR 750 million to file CBC reports with the Greek tax authorities. In exceptional cases, Greek entities belonging to MNEs without a Greek resident ultimate parent company may also be obligated to file a CbC report. The new provisions also provide for notification requirements regarding the entity liable to file the CbC report.

The new requirements are applicable to fiscal years starting on or after 1 January 2016.

The penalty for late/inaccurate filing of the CbC report stands at EUR 10,000, while the penalty for the non-filing of the CbC report amounts to EUR 20,000.

Thin capitalisation

The thin capitalisation (more precisely 'interest limitation') rules are determined in connection to the taxable profits before interest, tax, depreciation, and amortisation (ΕBITDA). More specifically, interest expenses are not deductible to the extent that the surplus of interest expenses compared to interest income exceeds a percentage of 30% of ΕΒΙΤDΑ.

By way of derogation, the taxpayer may deduct exceeding borrowing costs up to EUR 3 million.

Any excess amount of non-deductible interest expenses may be carried forward indefinitely to future years and will be deductible in future years to the extent that these future years indicate an uncovered EBITDA amount.

The aforementioned rules do not apply to credit institutions, insurance and reinsurance companies, and pension institutions.

Moreover, pursuant to a recently introduced exemption, additional interest expense may be deducted if the company is part of a consolidated group and to the extent that certain figures (e.g. share capital to assets ratio) do not vary from the respective figures of the consolidated group.

Controlled foreign companies (CFCs)

The taxable income of a taxpayer with tax residence in Greece shall be increased by the undistributed income of a legal person or legal entity or PE with tax residence in another country, under the following conditions:

• The taxpayer, alone or together with affiliated persons, directly or indirectly owns shares, voting rights, or equity in excess of 50% or is entitled to receive more than 50% of the profits of that legal person or legal entity.
• The actual tax paid abroad by the foreign legal person or legal entity or PE is less than half of the tax that would be payable in Greece, based on the Greek Income Tax Code provisions, regardless of the country of establishment.
• More than 30% of the net income before taxes earned by a legal person or legal entity falls into at least one of the categories of income derived either from interest, dividends, capital gains, royalties, from financial leasing, from invoicing companies that earn sales and services income from goods and services purchased from and sold to associated enterprises adding no or little economic value, or income from insurance, banking, or other financial activities.

The above do not apply to legal persons or legal entities with tax residence in the European Union or residence in a country that is an EEA member to the extent that they carry on a substantive economic activity that is supported by staff, equipment, assets, and premises, as evidenced by relevant facts and circumstances.