On 31 July 2020 and on 29 July 2020, the Greek Parliament Officially published two Laws, L. 4714/2020 and L. 4712/2020 respectively regarding various sections of transfer pricing. The two Laws cover the following changes:
Tax dispute Resolution mechanism
The Law introduces new tax dispute resolution process by creating an Out-of-Court Tax Dispute Resolution Committee, with limited application and time scope. Again, it transposes EU Directive 2017/1852 on tax dispute resolution mechanisms in the EU into Greek legislation.
Advance Pricing Agreements
The Law L.4714/2020 declares about the chance of retroactive effect in case of application for bilateral advance pricing agreement (Bilateral APA) or multilateral (Multilateral APA) pre-approval. Note that, Without interest and fines, amending declarations will be submitted as a result of a pre-approval decision of the intra-group pricing methodology that has already been issued at the entry into force of the law in where the submission is made within 60 days starting from 1 August 2020. For amending declarations submitted as a result of a pre-approval decision before 1 August 2020, the fines and interest for late payment are offset against future tax liabilities. Also, an APA application can be submitted for specific future cross-border transactions between related parties for a specific period of time, which may not exceed 4 years.
Penalty for late filing of CbC report
The Code of Tax Procedure keeps the penalties unchanged in case of late filing, non-filing, inaccurate, or incomplete submission of Country-by-Country (CbC) report. That means, a penalty of EUR 20,000 applies if a report is not filed and a penalty of EUR 10,000 applies for inaccurate or late filing.
Tax return and prepayments
The Law L.4712/2020 extends the deadline to submit annual corporate income tax returns up to 28 August 2020 for tax year 2019. On the other hand, the Law provides that income tax payment shall be effected in eight equal installments, where the two first installments shall be paid up to the last business day of August and each subsequent installment shall be paid up to the last business day of the following six months. This reduced income tax prepayment for tax year 2019 for both legal entities and individuals conducting business activities.
Incentives on Research & Development
The Law L.4712/2020 made a deduction in research and development (R&D) expenses at the time of their realization from legal entities’ gross income increased from 30% to 100%. This will be effective from 1 September 2020.
Hybrid mismatches
The Law L.4712/2020 introduced the transposition of the provisions of the Directive 2016/1164/ΕU, as amended by Directive 2017/952/ΕU, regarding exit taxation and hybrid mismatches into the Greek Income Tax Code. The Law includes a new article, Article 50 to amend the Article 66B and covers to the extent in where a hybrid mismatch results in a double deduction and to the extent that a hybrid mismatch results in a deduction without considering the deduction denied or not denied by the jurisdiction of the payer. The new provisions shall be applied retroactively as of 1 January 2020 onwards.
