The Deputy Finance Minister, Katerina Papanatsiou, signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“Multilateral Instrument” or “MLI”). More than 76 other countries and territories, Greece signed the Convention on 7th of June 2017 at Paris.
The Convention is a key outcome of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project, which aims to offers concrete solutions for governments to close the gaps in existing international tax rules by transposing results from the OECD/G20 BEPS Project into bilateral tax treaties worldwide.
The convention contributes in reducing by multinational companies and avoiding double taxation, while creating a more stable and well-functioning global tax system. The Convention enables all signatories, inter alia, to meet treaty-related minimum standards that were agreed as part of the Final BEPS package, including the minimum standard for the prevention of treaty abuse under Action 6.
The effective date for MLI depends on the timing of domestic ratification process. The Convention will enter into force after signatories have completed their domestic requirements and deposited their instruments of ratification with the OECD.
The Government published Law 4472 on 19th of May 2017 in the Official Gazette. It includes several reform measures concerning the medium-term fiscal targets for 2018-2021 and tax cuts. In accordance with Article 14 of Law 4472/2017, the corporate income tax rate was reduced to twenty six per cent (26%) from twenty nine per cent (29%). The corporate rate for credit institutions is remain twenty nine per cent (29%) rate. There are some changes to the individual income tax brackets and special solidarity tax brackets. The changes on individual income tax brackets and special solidarity tax brackets are given below:
Individual income tax brackets:
|Less than or equal to EUR 20,000||20%|
|Over EUR 20,000 up to 30,000||29%|
|Over EUR 30,000 up to 40,000||37%|
|Over EUR 40,000||45%|
Special solidarity tax brackets:
|Up to EUR 30,000||0%|
|More than EUR 30,000 up to 40,000||2%|
|Over EUR 40,000 up to 65,000||5%|
|Over EUR 65,000 up to 220,000||9%|
|More than EUR 220,000||10%|
From 1st January 2020, the personal income tax and special solidarity tax amendments will be applied. The new corporate tax rate (26%) will be applicable from 1st of January 2019. The law also gives other measures regarding public pension, social security, employment law, and others.
The Parliament has adopted a draft bill on 11th of April 2017, which contains some amendments on income tax code and VAT code. The Corporate Income Tax payment needs to be completed by six installments instead of eight. Note that, the first installment needs to be paid on the last working day of the month following the filing deadline and the rest of five installments must be paid by the last working day of the following five months. The first payment shouldn’t be paid during filing of the corporate tax return. Again, the individual income tax return has to be submitted by 30 June. The timeline has also been fixed on 12th of May 2017 for the farmers under the special farmers’ VAT regime who have to change to the standard VAT regime. So, late filing penalties will be cancelled or refunded to taxpayers. The provision applicable for 2016 regarding proportionate payment of road tax for vehicles has been extended to 2017. All these new provisions will effect from the 2016 financial year.
The Public Revenue Authority has presented guidelines via POL 1049/2017 in relation to implementation of the Mutual Agreement Procedure (“MAP”). The Guidelines give detail on the provisions recently introduced in the tax code. According to the guidelines the General Secretary is authorized to issue or ratify a MAP decision and deliver guidelines on the relevant procedure.
The MAP process permits taxpayers who consider that they have been taxed in a manner contrary to a Double Taxation Agreement (DTA) by one or both contracting states to submit their case within a specified deadline to the tax authorities of the state of their tax residence. The objective of the new guidelines is to clarify the procedure by describing some practical situations. The guidelines cover the submission of a MAP request, the minimum content of the request, applicable deadlines and the interaction between the MAP process and pending litigation in national courts.
Guidance regarding tax rules through Circular POL 1057/2017 have been issued by the Public Revenue Authority. The guidelines clarify the rules on restructuring in relation to the different types of company at a domestic or EU cross-border level, introduced by Law 4172/2013 (new Income Tax Code).
The previous lack of guidance had given rise to uncertainty as to the application of the new law and how it interacted with prior regimes providing for tax neutrality of certain re-organizations. There was also uncertainty about the method for computing tax liabilities after a taxpayer has benefited from the roll-over relief granted by the rules. The rules relate to mergers, total and partial divisions, share exchanges, transfers of assets and the change of location of the registered office of an SE or SCE. According to the new guidance, paragraph 7 was replaced by paragraph 2 of article 32 of l. 4465/2017 (GG A’47 / 04.04.2017) with effect from the publication of the law in the Official Gazette on 4th of April 2017 in accordance with Article 62 of the law. The guidance covers the procedure for approval of mergers and issues such as the valuation of assets and determination of the share exchange ratio.
An amendment regarding the draft bill, which amends the Income Tax Code and other provisions was submitted to the Greek parliament on 16th March 2017. The amendment states to the tonnage tax payment and the NAT special levy of category A Greek-flagged vessels. In accordance with the amendment, the tonnage tax and the contribution is paid in USD or GBP based on the euro exchange rate. This was determined by the European Central Bank at the time of the filing of the tonnage tax return. At present, the exchange rate, which was determined by the Bank of Greece applies. A draft bill was submitted to the parliament on 8th March 2017.
The Council of State/Supreme Administrative Court published its decision (No. 425/2017) related to the statute of limitations (SOL) provision for the taxpayer’s refund claim. In accordance with the Court, the taxpayer’s claim for refund of the income tax paid needs the previous withdrawal of the filed tax return.