GREECE Law and Practice Contributed by: Ioannis Charalampopoulos, Daphne Kasimati, Afroditi Kazani and Ioanna Exarchou, Machas & Partners
In some instances, double taxation treaties (DTTs) are enforceable, or EU legislation could be applicable, which may reduce the withholding tax. If a foreign lender is actively involved in managing or overseeing loans in Greece, this could constitute a permanent establishment trigger for the lender, exposing them to Greek corporate tax on their prof- its. Mitigation involves ensuring the proper structure of the transaction to minimise the risk that the foreign lender has a physical presence or significant business activities in Greece. Please also refer to 4.2 Other Taxes, Duties, Charges or Tax Considerations . Depending on the type of financing, certain assets will typically be required by the lenders to form the collat- eral package. Together with the form that the security typically takes, the most common assets encumbered for the benefit of the financiers are set out below. • Ownership rights, such as shares, share units, participations and interests in legal entities: the security may take the form of financial collateral or a pledge (see Pledge below). • Claims arising out of bank accounts, intragroup or other loans or credit agreements, insurance con- tracts, lease contracts, etc: the security may take the form of assignment of claims (see Assignment 5. Guarantees and Security 5.1 Assets and Forms of Security below) by way of pledge (for credit claims and claims on bank accounts, the security may also form financial collateral). If certain conditions are met, a floating charge may also be permissible. • Movable assets: the security may take the form of a pledge. If certain conditions are met, a floating charge may also be permissible. • Immovable assets: the security may take the form of a mortgage or prenotation of a mortgage (see Mortgage below). The valid creation of a pledge in accordance with the Greek civil code would entail the delivery of the under- lying asset to the lender.
In relation to the costs, each official service by a court bailiff would be in the region of EUR40. Pledge A pledge is perfected by execution of a private agree- ment with a certified date (such as a notarial agree- ment) or by an electronic document, service of the agreement via a court bailiff to the respective legal person and registration with the Unified Electronic Pledge Registry (the “Registry”). A share pledge, the most common security over ownership rights, should be registered with the shareholders’ book if the shares are paper-form, and the relevant certificates should be annotated. In the case of dematerialised shares, the pledge agreement should be serviced to the central securities depository and registered in its system. Assignment Claims are commonly secured through an assign- ment by way of pledge or, if certain criteria are met, under financial collateral. The assignment agreement is established by executing a private agreement with a certified date (such as a notarial agreement) or by an electronic document service via a court bailiff to the debtor of the assigned claim, which owes obliga- tions according to the contract, and registration with the Registry. For bond loans, any annotation must be made on the physical bond certificate (if issued), and the bondholder register must reflect the encum- brance. Floating charges require registration with the competent pledge registry and service of the agree- ment on the pledgor. A notification form in connection with the assignment agreements should be registered with the Registy, and the agreement should be deliv- ered to the pledgor. Mortgage A mortgage is perfected by the registration of the respective title, which confers the right to record a mortgage upon the lender with the competent land registry or cadastral office (as applicable). The said title is comprised of a notarial deed or a court deci- sion. The perfection of a prenotation of a mortgage also includes the registration of the respective title, which may be a court decision, a payment order, or minutes of a mediation procedure, with the land reg- istry or cadastral office.
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