Foreign tax credit
Tax paid abroad for income taxable in Greece is credited but is limited to the amount of Greek tax due.
The concept of deferred taxation applies on the basis of the IFRS to entities supervised by the Bank of Greece (namely banks and leasing companies, as well as factoring companies). In this respect, said entities may convert tax assets into tax credits in return for shares issued to the Greek state. Specific rules and conditions apply.
Incentives for job enhancement
Under certain conditions, an increase by 50% and up to 14 times the minimum wage of an unmarried employee over 25 years old per employment of the employers’ contributions is provided.
Other tax incentives
On 16 June 2016, Law 4399/2016 'Statutory framework for the establishment of Private Investments Aid Schemes for the regional and economic development of the country - Establishment of Development Council and other provisions' has been ratified by the Greek Parliament. The new Law provides a general framework, which is expected to be specified for each aid scheme through ministerial decisions to be issued. In essence, the provisions of the new Law will start to apply following the issuance of the relevant ministerial decisions. Up to date, the Ministry of Development has issued the required ministerial decisions for five (out of eight in total) aid schemes.
Under the new Incentive Law, an explicit reference to the provisions of the General Block Exemption Regulation (GBER) of the European Commission (651/17.07.2014, Law 187/1/26.06.2014) is being made for first time.
The new Law is structured into two sections: (i) the General Section, which includes the main regulations and restrictions of the GBER and refers to all aid schemes, and (ii) the Special Section, which describes the specific aid schemes, to which the provisions of the General Part and of the GBER are applied.
In comparison to other types of aid, the new Incentive Law focuses mainly on the tax incentives.
A threshold is being provided for the types of aid available to individuals’ investment projects, as well as to companies and groups of companies, in order to achieve dispersion of the beneficiaries of state aid.
Special categories of aid are being determined, either (i) on the basis of the performance of the companies (extroversion, mergers, employment increase, sectors, high added value), or (ii) on territorial basis (highland, border areas and areas with increased migration burden, industrial areas, innovations zones). Companies that fall under the special categories may be reinforced through capital aids, in case the latter are not provided, or by additional capital aids, in case the latter are provided.
The General Section regulates the beneficiaries of the aids, the terms and prerequisites for participation, the covered investment projects, the eligible expenses, the types of aids, the procedure regarding the filing of applications and evaluation of investments projects, as well as the issues regarding the implementation and completion of investments projects.
Beneficiaries of the aid schemes are any individual companies, commercial companies, cooperatives, social cooperative companies of Law 4019/2011, groups of producers, agricultural partnerships of Law 4015/2011, companies under formation or under merger, on the condition that they have been incorporated or merged before the commencement of the project, and joint ventures, provided that they have been registered with General Commercial Registry (GEMI).
As regards the terms and prerequisites for participation, it is provided that the compulsory nature of own-participation is abolished. The participation of the beneficiary in the cost of the investment project can take place either through own equity or through external financing. The main prerequisite is that 25% of the total investment cost does not contain state aid, support, or subsidy.
The minimum investment amount ranges from EUR 50,000 (for social cooperative companies) to EUR 500,000 (for large companies).
The investment projects that fall under the aid schemes should have the character of initial investment (buildings, machinery, intangible) and meet certain conditions (indicatively, creation of new plants, extension of existing plants’ capacity, etc.).
The investment projects that are covered by the new Law relate, in principal, to all economic sectors, subject to certain exceptions (sector of steel, coal, synthetic fibres, shipbuilding, etc.). Under conditions, the covered investment projects could also relate to:
- Production or co-production and distribution of heat from renewable energy sources and production of electricity by small hydroelectric projects.
- Processing and marketing of agricultural products, fisheries, and aquaculture products.
- Logistics services.
In respect of the eligible expenses, these are divided into: (i) eligible expenses of regional state aid nature based on the Regional State Aid Map (capital expenditure in tangible and intangible assets, employment cost of new employees) and (ii) eligible expenses of non-regional state aid, which aim to broaden and enrich the investment options towards new qualitative directions. The maximum amounts and percentages of regional state aids and non-regional state aids are also being determined. Based on the general framework, the maximum amounts and percentages of each individual aid scheme are being specified, in accordance with the provisions of the Special Section of the new Law.
Further, with regard to the types of aid, the following types are provided:
- Tax exemption (exemption from the payment of CIT on profits, before taxes, generated from the total business activity of the company, following the deduction of the CIT that corresponds to the profits distributed to the company’s shareholders).
- Subsidy of funds in order to cover part of the eligible expenses of the investment project.
- Subsidy of leasing for the acquisition of new machinery and other equipment (which cannot exceed the period of seven years).
- Subsidy of employment cost.
- Fixed CIT rate for a period of 12 years from the completion of the investment project, exclusively for investment projects of major size.
- Funding of corporate risk through Funds of Funds.
All types of aids can be provided either separately or in combination thereof and are all taken into account for the determination of the total aid amount of each investment project. The subsidy of funds and the leasing subsidy are not granted to companies that did not generate any profits in any of the seven tax years prior to the year in which the relevant application was filed. The types of aid are granted (and, respectively, the benefit starts to apply), following a relevant certification, either in lump sum (following the issuance of the decision certifying the completion and the commencement of the productive operation of the project) or gradually (according to the specific requirements per each type of aid granted).
Moreover, as regards the support and implementation of the new Law (filing of applications, documentation file, evaluation, etc.), all procedural issues will be carried out through the State Aid Information System of the Ministry of Finance, Development, and Tourism. The evaluation process includes the stage of completion and legality control and the evaluation stage and is carried out either through the method of comparative evaluation or through the method of direct evaluation. Investment projects that fall under the aid schemes are audited at any time and at any stage of implementation of the investment project or at any stage of fulfilling their long-term liabilities.
It is also provided that the investment project is completed following the commencement of the productive operation of the investment and in any case within the period prescribed in the relevant ministerial decision, which may not exceed three years from the date of issuance of that decision. An extension for two years is also provided, under certain conditions
In the Special Section of the new Incentive Law, the following aid schemes and the relevant aid granted per scheme are being prescribed:
|Aid scheme||Types of aid granted|
|Machinery equipment||Tax exemption.|
|General entrepreneurship||Tax exemption, subsidy of leasing, and subsidy of employment cost.|
|New independent small and medium enterprises (SMEs)||Tax exemption, subsidy of funds, subsidy of leasing, and subsidy of employment cost.|
|Innovative character aid for SMEs|
|Integrated regional and sector projects|
|Intermediary funding organisations (Funds of Funds)|
|Major investments||Public funding to private investors through: (i) equity or 'virtual' equity investment or sponsorship, or (ii) loans for funding of corporate risk directly or indirectly to eligible companies.|
The beneficiaries, the eligible expenses, the type of aids, the percentage of aids, the implementation procedure, as well as the evaluation and audit process are being specifically prescribed per each separate scheme of aid.
The maximum annual amount of state aid budget per each scheme of aid is set at EUR 150 million, for which no prior notification is required and which is deemed compatible with the internal market, in accordance with the provisions of GBER.
Finally, it is noted that, up to date, the Ministry of Development has issued the required Ministerial Decisions for five (out of eight) aid schemes, while the Ministerial Decisions for the following aid schemes are still pending to be issued: innovative character aid for SMEs, integrated regional and sector projects, and intermediary funding organisations (Funds of Funds).
The procedure for the submission of applications through the State Aid Information System started on 19 October 2016. Depending on the aid scheme, different deadlines apply for the submission of applications from the interested enterprises.