Tax Introduction

Furthermore, the Constitution precludes the retroactive imposition of tax at a time previous to the publication of the pertinent law. Finally, the taxation powers of the State are limited by the individual rights protected under the Constitution.

Taxes in Greece are primarily separated into income tax, property tax and expenditure tax. Income tax is regulated by Law 4172/2013 and is imposed every calendar year on both natural persons and legal persons and entities. As regards tax residence, Law 4172/2013 is in line with the corresponding definitions of the OECD Model Tax Convention. The income of natural persons is divided into four categories with regard to source: income from salaried services and pensions; income from business activity; income from capital; and capital gains income. Each source has a separate taxation bracket and tax co-efficients. All income gained by a legal entity is considered as income from business activity. Certain types of income (such as income from dividends, interest and rights) are taxed independently. The Code also includes special regulations for intra-group dividends, for corporate restructuring and for combating tax avoidance (such as those concerning controlled foreign companies).

Property taxation includes real property ownership taxes, such as the Single Property Tax (ENFIA), the Special Company Property Tax and taxes on the transfer of property, such as tax on inheritance, donations and parental donations.

Expenditure tax includes VAT, excise duties, Property Transfer Tax, Stamp Duties and Capital Accumulation Tax. The keeping of accounting records and data is required by the legislation concerning the Greek Accounting Standards (Law 4308/2014), which replaced the Code of Tax Reporting of Transactions on 01.01.2015 and, before that, the Hellenic Code of Accounting Books and Records, which was characterised by exhaustive regulations of issues and excessive formality. The new law is more closely aligned with the International Financial Reporting Standards (IFRS). Moreover, it classifies entities according to their size. The new law further facilitates the documentation of transactions, simplifying the rules on the content, bookkeeping methods and storage of accounting records.

Administrative taxation procedure, i.e. the procedure that concerns the certification and collection of taxes and the imposition of administrative and criminal sanctions due to infringement of taxation legislation, is now regulated in a uniform manner for all taxation objects by Law 4174/2013 (Code of Tax Procedure), in force since 01.01.2014. The new Code includes rules on, inter alia, the notification of taxation administration documents (which can take place electronically, by registered post or by notification) and the appointment of a tax representative for individuals without a postal address in Greece. It provides broad powers to the Taxation Administration for the provision of information and documents thereto by both taxpayers and third parties. It regulates issues concerning the submission of tax statements and the documentation of transfer pricing. Under the Code of Tax Procedure, tax audits can be either full or partial and can be carried out on-the-spot or from the offices of the Taxation Authority. Tax can be determined directly by the taxpayer, simply by submitting a tax statement, without the intervention of the Taxation Administration, or by the latter, following a tax audit (corrective determination of tax) or without an audit (administrative determination, estimated determination, preventive determination). The right of the Greek State to impose taxes and fines is time-barred within five years from the end of the year in which the relevant tax statement was submitted. However, this deadline can be extended up to twenty years in the case of tax evasion. Furthermore, in order to collect taxes, the Taxation Administration has at its disposal numerous preventive measures (such as conservative seizure, signing of mortgages, freezing of bank accounts and deposit boxes, non-issuance of certificates and documents) and enforcement measures (such as the seizure of mobile and fixed assets, attachment of funds held by third parties, etc.). Inaccurate submissions, late submissions, as well as tax payment are subject to interest. Infringements of taxation legislation (such as late submission or non-submission of tax statements, non-response to a request by the Taxation Administration, non-cooperation with a tax audit, non-registration in the tax register, etc.) are punishable by fines, as well as criminal sanctions under certain conditions, i.e. depending on the amount of unpaid tax or the value of critical tax data. Administrative taxation and criminal taxation are independent from each other and take place concurrently in the case of ascertainment of a taxation infringement that is also subject to criminal sanctions.

More specifically, a tax evasion offence is committed by not submitting an income tax statement – ENFIA – EFA or by submitting an inaccurate one and by introducing fictitious expenses in order to reduce the taxable amount, by not paying or inaccurately paying VAT and other withheld or attributable taxes, duties or contributions and by issuing or accepting fake and fictitious taxation data. In order for the act to be punishable, the tax corresponding to the taxable income or assets that have been concealed must exceed 100,000 euros per type of tax for each taxation or accounting year. As regards the non-payment of VAT, on the one hand, and other withheld taxes, duties and contributions, on the other, these acts are not punishable for amounts under 50,000 euros and 100,000 euros, respectively, whereas under the previous system these acts were punishable from the first euro.

An important distinction as regards the dispute of acts and omissions of the Taxation Administration is that this dispute can initially take place only by requesting an administrative appeal by a special directorate of the Ministry of Finance before any appeal is lodged with the Courts. In order to expedite the resolution of taxation disputes and discourage the exercise of unnecessary and clearly unfounded legal remedies, other special regulations are in force for taxation disputes. These include the enforcement of a shorter appeal deadline, proceedings for certain disputes being conducted at the first and final instance by the Court of Appeals, the determination of the Judge’s authority specifically for taxation acts, limitations on the provision of temporary judicial protection from a demand for payment of taxes and a court judgment, the obligation to pay part of the tax in order for a taxation appeal to be discussed and the enactment of a proportional fee (i.e. as a percentage of the disputed amount) for the admissible exercise of legal remedies and redress.

Despite recent efforts to codify it, tax law in Greece in its entirety still remains largely fragmented. Moreover, precisely because of the pressure on this law to secure direct public revenue, it is frequently changed abruptly and extraordinarily in relation to what we know in general of public law, resulting in its rules not always being in compliance with constitutional or EU standards concerning tax.