Intergovernmental agreements (IGAs) and cooperation
Greece and the United States have reached an agreement in substance and Greece has consented to disclose this status on the US Foreign Account Tax Compliance Act (FATCA) arrangements with effect from 30 November 2014. The IGA was ratified by L. 4493/2017, which was published in the Government Gazette in October 2017.
Common Reporting Standard (CRS) regime
By virtue of L. 4378/2017 and L. 4474/2017, Greece proceeded on 30 September 2017 to the exchange of information on accounts held by financial institutions. The exchange of information will take place in September of each respective year, and the deadline for the submission of the information to the tax authorities by the financial institutions is set in June of each year.
Base erosion and profit shifting (BEPS)
Greece adheres, in general, to the BEPS guidelines.
On 7 June 2017, Greece signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting ('Multilateral Instrument' or 'MLI'). However, Greece has not yet deposited its ratified MLI, and it is not in force for its covered DTTs.
In 2019, Greece transposed the Directive laying down rules against tax avoidance practices (ATAD) and more precisely the CFC rules, the General Anti-Avoidance Rule (GAAR), and the interest deduction limitation rules, which are in the spirit of BEPS guidelines.
Furthermore, on 31 July 2020, Greece completed the transposition of the exit taxation and the hybrid mismatch rules laid down in the Directive (EU) 2016/1164, as amended by Directive (EU) 2017/952. Said provisions apply as of 1 January 2020.
EU Directive on Administrative Cooperation (DAC6)
The new rules of DAC6 introduce mandatory disclosure requirements for certain cross-border tax arrangements, provided the main benefit of such arrangements is the expectation of a lower tax burden and/or of other specific characteristics (hallmarks) defined in the Directive.
The rules have to apply from 1 July 2020. However, the reporting obligation already applies to transactions implemented from 25 June 2018 onwards.
On 31 July 2020, the law implementing the Council Directive (EU) 2018/822 of 25 May 2018 into the local legislation was published in the Government Gazette. The law overall follows the DAC6 scope, hallmarks, and reporting requirements. Greece has also opted for the six-month deferral on reporting deadlines provided by the Council Directive (EU) 2020/876. Following this option:
- information on reportable cross-border arrangements, the first step of which was implemented between 25 June 2018 and 30 June 2020, shall be reported by 28 February 2021
- the period of 30 days for filing information by intermediaries and relevant taxpayers shall begin by 1 January 2021 where the triggering event took place between 1 July 2020 and 31 December 2020
- the first periodic report of marketable arrangements shall be made by intermediaries by 30 April 2021, and
- the first automatic exchange of information shall take place by 30 April 2021.
Choice of business entity
The main differences between a subsidiary (i.e. Société Anonyme [SA] or limited liability company [LLC]) and a branch of a company, from a corporate establishment perspective, are the following:
- A subsidiary is a separate legal entity from its parent company, whereas a branch does not form a separate legal entity, does not have its own shareholders, and, consequently, the funds needed for its operation are transferred from the overseas parent company.
- The parent company of a branch must be either the equivalent of a Greek SA or an LLC, whereas there is no such restriction for subsidiaries.
- The day-to-day management of a branch is exercised by the legal representative, a person appointed by the parent company, whereas an SA is represented by its BoD and an LLC is administered and directed by the administrator(s).
- No minimum capital is required for the establishment of a branch or LLC; nevertheless, if the parent company has the legal form of an SA, the share capital of the parent company should be, in principle, aligned with the minimum share capital requirements of a Greek established SA (i.e. EUR 24,000 and as of 1 January 2019 EUR 25,000).
- An SA appears to be a more popular type of company than a branch and an LLC. In particular, certain investors still tend to opt for the establishment of an SA company, particularly if they would like to participate in public tenders, etc.
The main legal differences between an SA and an LLC in Greece from a company law/establishment perspective are the following:
- An SA is managed by a BoD consisting of at least three members, whereas an LLC can be managed by only one individual, the administrator (legal entities are permitted to be appointed as BoD members or administrators). Following the recent reform of the Law on SA’s, small and very small entities may elect instead to appoint a single-member management body. Such appointment is contingent to a relevant statutory provision included in the company’s articles of association.
- Both BoD members and administrators have to acquire a Greek tax registration number and a Greek residence permit (if applicable) prior to the establishment of the relevant companies. It should also be noted that the acquisition of a residence permit for non-EU citizens is a time consuming procedure.
- The shareholders of an SA are not required to be registered with the Greek tax authorities (however, if the said shareholders are also BoD members, they are required to be registered with the competent Greek tax authorities), whereas the partners of an LLC have to be registered with the Greek tax authorities.
- Establishment/incorporation of an SA is performed through the so-called One Stop Shop Authority (i.e. Notary Public). Any appropriate documents (applications, declarations, certificates, etc.) required for establishment process should be produced and submitted to the Notary Public by the founders of the SA, as said persons are defined in the Articles of Association (AoA) of the SA under establishment, or their representatives appointed by virtue of an (duly legalised as to the signature of the founders) authorisation. After the submission of the necessary documentation to the competent One Stop Shop Authority, the said authority accomplishes all the necessary steps for the establishment of the Greek SA, including the granting of the Greek tax registration number. Depending on the particular activity of the SA under establishment, the satisfaction of particular regulatory requirements, such as the acquisition of certain licences, might be required.
- As of 1 January 2019, incorporation of an SA by way of a private agreement is introduced. This is conditional to adopting without deviation the template of L.4441/2016, i.e. the Model Articles of Association for SA’s and that the capital contribution does not require execution by way of notarial deed (e.g. contribution of real estate assets).
- Establishment/incorporation of an LLC is performed through the One Stop Shop Authority (i.e. Notary Public). Any appropriate documents (applications, declarations certificates, etc.) required for the establishment process should be produced and submitted to the Notary Public by the founders of the LLC, or their representatives appointed by virtue of written authorisation (duly legalised as to the signature of the founders). After the submission of the necessary documentation to the competent One Stop Shop Authority, the said authority accomplishes all the necessary steps for the establishment of the Greek LLC, including the granting of the Greek tax registration number. Depending on the particular activity of the Greek LLC under establishment, the satisfaction of particular regulatory requirements, such as the acquisition of certain licences, might be required. SA and LLC companies are supervised by the Greek Ministry of Development (joint supervision by the General Commercial Registry and the competent Prefecture of the registered seat of the SA), which necessitates certain filings to be performed (e.g. minutes of BoD, general announcements, financial statements).
- The recent amendment of the Law on Limited Liability Companies introduced significant changes to the incorporation of entities of said legal form. In particular, further to incorporation by way of a notarial deed, the incorporation of an LLC may also be executed by way of a private agreement, provided that the exclusive content of the template/model incorporation statutes of Law 4441/2016 for LLC’s are adhered to, without any deviation.
- LLC’s are mandatorily incorporated for a specific duration.
The 'Private Company' (PC)
- The PC constitutes a legal entity and is commercial in nature, even if its object is not per se commercial. The capital of the PC can be freely determined by the partners and can amount to zero, whilst its partners participate in the PC by means of capital, non-capital, and guarantee contributions.
- The PC is not entitled to acquire, either directly or indirectly, its own capital parts.
- The PC has its registered seat in the municipality referred to in its AoA, while the transfer of the registered seat of the PC in another country of the European Economic Area does not necessarily result in the dissolution of the PC, provided that the recipient country recognises the transfer and the continuity of legal personality. The PC is not obligated to have its actual seat in Greece, whilst the PC is capable of establishing various types of secondary establishments either in Greece or abroad.
- The term of the PC is definite; if not otherwise stipulated in the AoA of the PC, the PC has a term of 12 years following its establishment.
- The PC is administered and represented by one or more administrators.
- The administrator represents the PC and conducts in its name all actions pertaining to the administration of the PC, the management of its assets, and, in general, the pursuit of its objects.
- The establishment of the PC is effected by means of its registration with the Greek General Commercial Registry (GEMI).
- The PC is dissolved: (i) at any time following a resolution of the partners, (ii) when its definite term has expired, unless the term of the PC is extended by virtue of a resolution of the partners, (iii) if the PC defaults, and (iv) in all other circumstances contemplated by the law or the AoA.