GREECE Trends and Developments Contributed by: Maria Zoupa, Daphne Cozonis, Ioanna Tapeinou and Diana Tsourapa, Zepos & Yannopoulos
new equipment and applications while it also lever - ages artificial intelligence and business intelligence, with funding from the EU’s Recovery and Resilience Facility. Within this context, one of the Authority’s pro - claimed goals is to deploy artificial intelligence and machine learning in order to identify compliance fail - ure risks. Against this new and advanced audit back - ground, special care should be taken to ensure that tax positions are meticulously planned, consistently applied, and thoroughly substantiated with contem - poraneous documentation. Transfer pricing continues to be a point of particu - lar focus and emphasis in recent tax audits, making rigorous documentation in this area all the more criti - cal. Areas that may attract attention in the context of transfer pricing audits include, among others, the attribution of profits to permanent establishments and the pricing of intra-group financing transactions. Also, more than in the past, tax authorities are seeking to invoke anti-abuse provisions in the course of tax audits; however, the relative novelty of this approach means that the application of such provisions may not always be fully developed or methodologically rigorous, and no substantial body of administrative or judicial jurisprudence has yet emerged in this area. It should also be noted, that, notwithstanding the above-mentioned advanced technological devel - opments or more sophisticated areas of focus, tax authorities continue at times to place considerable emphasis on strict compliance with formal require - ments, and may rely on any perceived failure to satisfy such formalities – occasionally interpreted in accord - ance with their own reading of the applicable rules – particularly where material amounts are at stake. Tax Considerations in M&A Transactions As M&A activity continues to grow in both volume and complexity, tax considerations have assumed an increasingly prominent role in deal structuring and negotiation. In this context, tax representations, war - ranties, and indemnities in transaction documenta - tion are subject to careful scrutiny and often intensive negotiation. A notable recent trend in the local market is the growing use of warranty and indemnity (W&I) insurance policies, which increasingly extend to cover
tax-related risks, thereby facilitating deal certainty and providing parties with an additional layer of protection against unforeseen tax exposures. Tax Authorities’ Published Guidance in Relation to Recent Law 5162/2024 on Tax-Neutral Reorganisations Setting aside the more granular technical aspects, the guidance offers welcome clarity on a number of points of practical significance for businesses, including the following: • The relevant legal regime applies (subject to the applicable conditions and restrictions) regard - less of the shareholders’ tax residence. However, the guidance emphasises that non-tax-resident legal persons would not, in any event, be subject to Greek taxation on capital gains arising from the disposal of shares, provided that such gains are not attributable to a permanent establishment maintained by those persons in Greece. • Valuation obligations are determined exclusively by corporate law and therefore not by this tax regime. • Any further transformation of the receiving entity under the regime should not trigger tax, subject to the anti-abuse rule. • The receiving company may increase its share capital by an amount corresponding to the fair value of the net assets received from the trans - ferring entity – with such assets retaining for tax purposes their historical tax basis – without the portion of this increase attributable to the revalua - tion surplus giving rise to a tax liability, as it would otherwise be the case under generally applicable income tax rules. • Under the regime in question, the shareholders’ tax basis in shares received pursuant to a tax-neutral reorganisation is the market value of those shares. However, where such shares are transferred within two years of completion of the reorganisation, the tax basis reverts to the historical tax basis as at immediately prior to the reorganisation. The guid - ance clarifies that an early transfer of shares by one shareholder does not affect the tax treatment of the remaining shareholders or of the participat - ing companies. • Where shareholders are legal entities, the revalua - tion surplus arising from the transformation is not
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