On 23 February, 2024, the Greek Ministry of Finance initiated a public consultation on a proposed bill aiming to incorporate the OECD’s Pillar Two Model Rules, as outlined in the EU Minimum Tax Directive. This draft bill is currently open for public consultation until 6 March 2024. Key points of the proposed bill include:
- Safe harbor rules: The draft bill integrates the agreed transitional Country by Country Reporting Safe Harbour and the transitional UTPR Safe Harbour into the legislative text. Furthermore, it includes a Qualified Domestic Minimum Top-Up Tax (QDMTT) safe harbor rule, aligning with the July Administrative Guidance. Under this provision, the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR) Top-up Tax are considered zero in Greece concerning other jurisdictions applying a qualified DMTT, contingent upon specific conditions.
- Income inclusion rule (IIR)/UTPR: The income inclusion rule (IIR) applies to fiscal years starting after 31 December 2023. The undertaxed profits rule (UTPR) generally takes effect a year later, beginning with fiscal years after 31 December 2024. However, if the ultimate parent entity (UPE) is in a Member State opting for delayed application of IIR and UTPR, then UTPR becomes applicable for fiscal years starting after 31 December 2023. The UTPR top-up tax is collected as an additional top-up tax.
- Domestic minimum top-up tax (DMTT): Beginning after December 31, 2023, a Domestic Minimum Top-Up Tax (DMTT) will be applicable, following the standard Global Anti-Base Erosion (GloBE) rules for calculating Effective Tax Rates (ETR) and Top-Up Tax liability. Notably, the DMTT must be applied to 100 percent of the top-up tax calculated for local constituent Entities, without limitations based on the ultimate parent entity’s ownership percentage. Consistent with OECD guidance on qualified DMTTs, any foreign covered taxes (e.g., CFC taxes) allocated to local constituent entities under the regular GloBE rules should be excluded for Greek DMTT purposes. Furthermore, the draft specifies that the computation of DMTT must be based on either International Financial Reporting Standards (IFRS) or local Generally Accepted Accounting Principles (GAAP), subject to the conditions outlined in the July Administrative Guidance.
- Implementation timeline:
- IIR: Applies to financial years starting 31 December 2023.
- UTPR: Applies to financial years starting 31 December 2024, with potential exceptions based on the parent company’s location.
- Safe harbor rules: Must be implemented within 18 months of the law’s publication.
This proposed law, if implemented, will bring Greece in line with the EU’s minimum tax regulations and aim to ensure a fairer tax landscape for large corporations.
