GREECE Law and Practice Contributed by: Maria Zoupa, Daphne Cozonis, Ioanna Tapeinou and Diana Tsourapa, Zepos & Yannopoulos
• The distributing legal person must be a capital company according to the law of its country of establishment. • The distributing legal person must not be estab - lished in a jurisdiction deemed non-co-operative. • The distributing legal person must be subject to legal persons’ income tax or other similar tax with - out the possibility of an option or of being exempt. • The taxpayer receiving the dividends must hold a participation of at least 10%, based on value or number in the share or equity capital or voting rights of the distributing legal person and such par - ticipation is maintained for at least 24 months. Until completion of the minimum holding period, a bank guarantee of an amount equal to the amount of withholding tax that would otherwise be due can be deployed instead of payment of the withholding tax and a posterior refund claim. The above-mentioned exemption from Greek income tax on dividends received by Greek companies from qualifying EU and non-EU subsidiaries applies to the extent that such profits are not deductible by the sub - sidiary. This amendment targets hybrid instruments and is designed to prevent situations of double non- taxation due to mismatches in the tax treatment of profit distribution between the states in which the subsidiary and the parent company are situated. In addition, a special anti-abuse rule prohibits the tax exemption in case of an arrangement or series of arrangements which, having been put into place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the object or purpose of the applicable tax law, are not genuine having regard to all relevant facts and circumstances. 6.4 Taxation of Intangibles Developed by Local Corporations Gains or royalties derived from the transfer or licens - ing of an intangible developed by a local corporation to a non-local subsidiary are included in the taxable basis of the local corporation for income tax purposes. Transfers of intangibles between related parties due to business restructuring – whereby intangible assets or a transfer package consisting of functions, assets, risks and business opportunities are being transferred (whether within or outside Greece) – must be made
in exchange for arm’s length remuneration, and any gain is taxable. In addition, subject to specifications set in the law, taxpayers are subject to income tax in Greece on an amount equal to the market value of the assets they transfer, at the time of their exit, minus their value for tax purposes, in any of the following cases: • transfer of assets from their head office in Greece to their permanent establishment in another state if Greece ceases to have the right to tax the trans - ferred assets, due to the transfer; or • transfer of assets from their permanent establish - ment in Greece to their head office or to another permanent establishment in another state if Greece ceases to have the right to tax the transferred assets. 6.5 Controlled Foreign Corporation-Type Rules Under Controlled Foreign Corporation (CFC) rules, local corporations can be taxed on the income of their non-local subsidiaries and, where they are not otherwise taxable in Greece or are exempt, of PEs as earned. In accordance with such rules, profits earned by a CFC are added to the taxable profits of the local corporation, under the following conditions: • In relation to a CFC that is a legal person or entity, the local corporation by itself – or together with its associated enterprises – holds directly or indirectly a participation of more than 50% in the voting rights, or owns directly or indirectly a percentage of more than 50% of the capital, or is entitled to receive more than 50% of the profits of the relevant CFC (legal person or entity). • The actual corporate tax paid on the CFC’s profits is less than 50% of the corporate tax that would have been charged on such profits in Greece. • 30% or more of the income before taxes accruing to the CFC falls within the following categories: (a) interest or any other income generated by financial assets; (b) royalties or any other income generated from IP; (c) dividends and income from the disposal of shares;
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