GREECE Law and Practice Contributed by: Maria Zoupa, Daphne Cozonis, Ioanna Tapeinou and Diana Tsourapa, Zepos & Yannopoulos
or providing services. Tax authorities can determine taxable income through indirect techniques – such as analysing the price-to-turnover ratio or cash position – and other techniques set out in the legislation. Taxable profits are subject to re-adjustment in the case of transactions between related parties that are not in line with the arm’s length principle. A Greek taxpayer may request a corresponding adjustment to its profits following a primary transfer pricing adjustment in the context of a tax audit of an associated entity taxable in Greece. A relevant tax refund or set-off is only effected on the condition that the associated entity has paid the tax assessed as a result of the primary adjustment. 5.6 Deductibility of Intra-Group Management and Administrative Charges Payments by local affiliates for management and administrative expenses incurred by a non-local affili - ate may be disallowed if: • they are not in accordance with arm’s-length standards; • they are not considered to serve the business pur - poses of the local affiliate; or • they are not properly documented and recorded in the books reflecting the transactions of the relevant fiscal period. Payments to persons residing in states deemed as non-co-operative or preferential are not deductible, unless the taxpayer proves that these expenses are incurred for real transactions and do not result in prof - it-shifting aimed at tax avoidance or evasion. If the states in question are EU/EEA member states, payments to persons that are resident in such states are deductible in principle. The regimes that are deemed to be non-cooperative or preferential are set annually by means of governmental decision on the basis of criteria set in the law, including (for prefer - ential regimes) the criterion of taxation of profits or gains at a rate that is equal to or less than 60% of the applicable Greek income tax rate for corporations. 5.7 Restraints on Related-Party Borrowing There are no constraints relating specifically to relat - ed-party borrowing by foreign-owned local affiliates
to non-local affiliates, apart from the fact that interest must be in line with the arm’s length standard.
6. Taxation of Foreign Income of Local Corporations 6.1 Foreign Income Exemptions As a general rule, local corporations are taxed on their worldwide income, with the exception of business income attributable to a PE in one of the few jurisdic - tions that has a double taxation treaty with Greece that provides an exemption method. Any foreign tax paid can be credited against the Greek income tax pay - able, provided that the foreign tax does not exceed the Greek tax corresponding to such income and the relevant income paid has been properly documented. 6.2 Non-Deductible Local Expenses There are no local expenses that are treated as non- deductible owing to exemptions on foreign income, in particular. Certain limitations on the deductibility of expenses related to the acquisition of participations (eg, interest on loans used to finance participations) that yield tax-exempt dividends and capital gains income apply equally to foreign and domestic income. 6.3 Dividends From Foreign Subsidiaries Dividends from foreign subsidiaries are included in the tax basis of local corporations for income tax pur - poses. An underlying tax credit in respect of tax paid on the profits from which dividends are derived at the source state is allowed with regard to dividends sourced from countries with which Greece has signed a double tax - ation treaty that provides for such a credit mechanism (eg, China, Cyprus and the UK). Inbound dividends received by Greek companies from qualifying EU subsidiaries are exempt from income tax under the same conditions detailed in 4.1 Applica- tion of Withholding Taxes (applied in relation to the subsidiaries). Inbound dividends from qualifying non-EU subsidiar - ies are exempt from income tax as of the fiscal year 2025 under the following conditions:
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