On the basis of article 27 of the Income Tax Code (ITC), the Public Revenue Authority has released a Circular entitled ‘POL 1088’ on 24th June 2016 for providing clarifications on the carry-forward of losses provision. In accordance with article 27 of the ITC, losses experienced by any type of company may be carried forward for 5 years. The offsetting of preceding years’ losses has priority over offsetting successive years’ losses and loss carry-backs are not permitted. This Circular describes the loss carry-forward provisions applicable to both natural person practicing business activities and predefined natural person under article 45 of the ITC. Foreign legal persons and entities with having no permanent establishment in Greece and receive income from dividends, interest and royalties may not use the carry-forward provision, as the income is treated as final Greek withholding tax. Losses can be offset against profits from business activities. Moreover, the Circular clarifies:
- the tax treatment of losses suffering by the individual not practicing business activity;
- timeline for losses carry forward;
- tax treatment of losses in respect of liquidation of a company;
- the situation of carry forward losses;
- tax treatment of the reduction in a company’s share capital due to deduction of losses;
- In case of exchange of bond (PSI);
- Losses incurred in third countries are not taken into account. That means, losses from business actions used in another EU/EEA country are considered in Greece only if Greece has the right to tax the foreign results under the relevant tax treaty or Greek legislation.
