Greece

Foreign tax credit

Tax paid abroad for income taxable in Greece is credited but is limited to the amount of Greek tax due.

Deferred taxation

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 of tax deductibility 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.

Scientific and technological research expenses

The expenses of scientific and technological research, including the depreciation of equipment and instruments used for the purposes of conducting scientific and technological research, are deducted from the gross income of companies at the time of their realisation, increased by 100%.

The criteria for the characterisation of the above expenses are determined by a joint decision of the Minister of Finance and the Minister of Development and Investments, which is issued after a suggestion of the Governor of the IAPR. In the event that losses occur after deduction of the above percentage, they shall be carried forward (up to five years), in accordance with Article 27 of the Greek ITC. 

With effect from September 2022, according to Article 12 of L. 4965/2022, for R&D projects greater than EUR 60,000, certification of scientific and technological research expenses by a certified auditor or audit firm is mandatory.

Patent incentives

According to the provisions of Article 71A of the Greek ITC, the profits of a company arising from the exploitation of an internationally recognised patent in its name and developed by itself are exempt from income tax for up to three consecutive years, starting from the year in which these profits were realised for the first time. The exemption is granted on the condition that there is a connection with the research and development (R&D) expenses incurred by the company for the development of the patent.

Moreover, the amount of the above-mentioned exemption is calculated as follows:

Eligible R&D expenses / Total R&D expenses x Profits from the exploitation of the patent = Exemption amount

The numerator may be increased up to 30%, on condition that it does not exceed the total amount of R&D expenses. 

Additionally, the amount of the exemption, which is calculated as above, is depicted in a special reserve account and is subject to taxation in accordance with the general provisions of the Greek ITC when distributed or capitalised (i.e. upon use).

This exemption is granted provided that there is R&D expense that was carried out by the patent development company. New developments are in force as of 01 January 2022 according to the provisions of Article 89 of Law 4864/2021, which amended Article 71A of the Greek Income Tax Code (Law 4172/2013).

Other tax incentives

On 4 February 2022, Law 4887/2022, 'Development Law - Greece Strong Development’, has been voted by the Greek Parliament. The new Development Law provides a general framework, specified for each aid scheme foreseen through ministerial decisions issued. In essence, the provisions of the new Law start to apply following the issuance of the relevant ministerial decisions. Up to date, the Ministry of Development and Investments has solely proceeded with the issuance of ministerial decision for the following aid schemes: 'Manufacturing - Supply chain', 'Enhancement of Tourism Investments', 'Agri food - primary production and processing of agricultural products - fisheries and aquaculture', and ‘Entrepreneurship 360°’.

Under the 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 made.

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 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.

General Section

The General Section of the new Law regulates the beneficiaries of aids provided, 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 commercial companies, cooperatives, social cooperative companies of Law 4019/2011, groups of producers, organisations of producers, agricultural partnerships of Law 4384/2016, urban cooperatives, companies under formation or under merger (on the condition that they have been incorporated or merged before the commencement of the project), public and municipal enterprises and their subsidiaries (under specific conditions), joint ventures provided that they have been registered with General Commercial Registry (GEMI), and individual companies with a maximum eligible investment project cost of EUR 200,000 and solely for the aid scheme 'agri food - primary production and processing of agricultural products - fisheries and aquaculture'.

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, agricultural partnerships, groups of producers, organisations of producers, urban cooperatives, and agricultural partnerships) to EUR 1 million (for large companies). Moreover, for medium-sized companies, the investment amount is set at EUR 500,000, for small companies at EUR 250,000, and for very small companies at EUR 100,000.

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 Law relate, in principle, to all economic sectors, subject to certain exceptions (sector of steel, coal, synthetic fibres, shipbuilding, etc.). Under certain 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.
• Tourism.
• 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 (which cannot be enhanced with any other state aid).
• Business risk financing only for new entrepreneurship aid scheme.

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 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 Law (filing of applications, documentation file, evaluation, etc.), all procedural issues will be carried out through (i) the Development Planning Directorates of the Regions of the country (for the investment plans of an eligible amount up to EUR 1 million, which are implemented within the boundaries of each region), (ii) the Private Investment Directorate of the Ministry of Interior, Macedonia - Thrace Sector (for the investment plans of an eligible amount of more than EUR 1 million and up to  EUR 3 million implemented in the Regions of Western and Central Macedonia and Eastern Macedonia and Thrace), and (iii) the State Aid Information System of the Ministry of Development and Investments (for the remaining investment plans).

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.

Special Section

Aid schemes

In the Special Section of the new Law, the following aid schemes and the relevant aid granted per scheme are being prescribed:

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.