GREECE Law and Practice Contributed by: Maria Zoupa, Daphne Cozonis, Ioanna Tapeinou and Diana Tsourapa, Zepos & Yannopoulos
5.3 Capital Gains of Non-Residents Capital gains of non-resident corporations on the sale of stock in local corporations are not subject to tax, provided that the stock is not held through a PE in Greece. Under a rule whose application has been suspended several times (and is still suspended until 31 Decem - ber 2026), gains derived from the transfer of real estate property – as well as from the transfer of shares in companies that derive more than 50% of their value, either directly or indirectly, from real estate by indi - viduals who are not engaged in business activities – are subject to capital gains tax at 15%. In view of the consecutive suspensions, it has not been clarified whether such rules may also apply to non-resident companies directly or indirectly transferring stock in local corporations deriving more than 50% of their value from Greek real estate. For completeness, it is noted that under domes - tic legislation, foreign tax-resident individuals are exempt from tax on capital gains derived from the sale of shares in Greek companies, provided that such shares are not effectively connected with a permanent establishment in Greece and provided they are resi - dent in a jurisdiction that has a double taxation treaty with Greece. 5.4 Tax Implications of Change of Control Tax losses carried forward are forfeited if the direct or indirect participation in the capital or voting rights of a local company changes by more than 33% within a fiscal year, while at the same time – within the same or the next fiscal year – the local company changes its business activity in a way that affects more than 50% of its turnover when compared with the turnover prior to the change. Tax losses are not forfeited if the company is able to prove that the activity change is economically justifi - able in the context of the company’s business – for example, cost-cutting, achieving economies of scale, or intercompany restructuring. 5.5 Formula-Based Income Attribution Currently, no formulas are used to determine the income of foreign-owned local affiliates selling goods
application of MAPs for transfer pricing was rare and therefore the local tax authorities have yet to develop any consistent practice or view in this respect. 5. Taxation of Non-Local Corporations 5.1 Compensating Adjustments Compensating adjustments are allowed under Greek legislation. Increased scrutiny from the tax auditors should be anticipated insofar as downward adjust - ments are concerned. Taxpayers may perform compensating adjustments upon filing their annual tax returns or upon filing amended tax returns within the standard five-year statute of limitation. If, following a tax audit, an assessment of tax is made against a Greek taxpayer with respect to intragroup transactions performed with another Greek taxpayer that is a related party in the sense of Article 2 of the Greek Income Tax Code, the second related party tax - payer may request a corresponding adjustment to its taxable profits. This is done by filing an amending tax return accompanied by the notification of the relevant tax assessment act against the first taxpayer. A pre - requisite for the refund or set-off of tax to the second taxpayer requesting such a corresponding adjustment is the settlement by the first taxpayer of the above tax assessed – ie, payment of amounts of additional tax and penalties assessed. Use of the above rules does not preclude the first taxpayer’s right to challenge such an assessment before the competent authorities. 5.2 Local Branches and Local Subsidiaries In general, local branches of non-local corporations are effectively not taxed differently to local subsidiar - ies of non-local corporations when it comes to their Greek profits. Differences may exist as regards the Greek tax treatment of profit remittances or other pay - ments from a local branch to the non-local corpora - tion’s head office, due to those payments occurring within the same legal entity, as opposed to payments from a local subsidiary, which may be subject to with - holding tax, subject, however, to applicable exemp - tions (see 4.1 Application of Withholding Taxes for further details).
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