GREECE Law and Practice Contributed by: Maria Zoupa, Daphne Cozonis, Ioanna Tapeinou and Diana Tsourapa, Zepos & Yannopoulos
a deduction, include income or limit tax relief, in order to address situations of: • mismatches arising from conflict in the characteri - sation of financial instruments, payments and enti - ties, or from the allocation of payments; and • hybrid transfers, imported mismatches and other cases of mismatches with double deduction out - comes, including cases involving dual tax resi - dency. 9.7 Interest Deductibility and Territorial Tax Regime Greece does not apply a territorial tax regime, instead local tax residents are taxed on their worldwide income. See 6.1. Foreign Income Exemptions for further details. For further details on interest deductibility rules of the domestic legislation, see 2.5 Deduction of Interest . 9.8 Controlled Foreign Corporation Reform Greece does not apply a territorial tax regime. For further details on local CFC rules, see 6.5 Controlled Foreign Corporation-Type Rules . 9.9 Anti-Avoidance Rules The application of Greece’s general anti‑abuse rule (GAAR), special anti-abuse rule regarding dividends that are exempt from tax and the principal purpose test (PPT) as implemented by virtue of the ratification of the Multilateral Instrument (MLI) to DTCs to dis - regard arrangements lacking commercial substance could have an impact on both inbound and outbound investors. For further details, see 7. Anti-Avoidance Provisions and 9.1 Adoption of BEPS Recommen- dations . 9.10 Transfer Pricing and IP Taxation Prior to BEPS, the applicable legal framework for transfer pricing in Greece fully endorsed the arm’s length principle as defined in Article 9 of the OECD Model Tax Convention and interpreted by the OECD Transfer Pricing Guidelines. BEPS-driven transfer pricing reforms in Greece have shifted the focus even more firmly toward substance, value creation, and DEMPE functions, leading to stricter documenta - tion requirements and more intensive audits. Greek
tax authorities increasingly challenge low substance foreign IP entities and scrutinise outbound royalty payments. Please see 4.4 Transfer Pricing Issues for Inbound Investors for further details. 9.11 Country-by-Country Reporting and Transparency Provisions Pursuant to L. 4484/2017, Greece transposed EU Directive (EU) 2016/881, introducing the automatic exchange of country-by-country (CbC) reports within the EU, into its domestic legislation. Multinational groups with total annual consolidated revenues exceeding EUR750 million are required to submit a CbC report on an annual basis, providing tax authori - ties with information on revenue, profit before income tax, income tax paid and other details regarding the allocation of the group’s profits in different jurisdic - tions. The CbC report also provides information on which group entity is operating in a particular tax juris - diction and the business activities in which each entity is engaged. Also, by virtue of Law 4714/2020, Greece transposed into its domestic legislation Council Directive (EU) 2018/822, adopted on 25 May 2018, amending Direc - tive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in rela - tion to reportable cross-border arrangements (DAC 6). 9.12 Digital Economy Businesses Greece has not adopted a unilateral digital services tax, nor is any such measure currently under consider - ation. Instead, Greece follows the EU (as it is obliged) and OECD policy framework, under which the taxation of foreign digital businesses is primarily shaped by BEPS actions and OECD proposals for taxing the digi - talised economy. These initiatives aim to align taxation with genuine economic activity and value creation – most notably by preventing the artificial avoidance of permanent establishment status and by ensuring that transfer pricing outcomes reflect the economic sub - stance and value generated within each jurisdiction. However, with respect to the concept of “permanent establishment” in the context of e‑commerce transac - tions, Greece does not adhere to all interpretations on the OECD Model Convention provisions on electronic commerce, particularly regarding whether the mere
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