GREECE Law and Practice Contributed by: John C. Dryllerakis, John Papadakis and Nikos Kalantzis, Dryllerakis Law Firm
5. Anti-Avoidance and Anti-Evasion Measures 5.1 Definition and Identification of Tax Fraud, Evasion, Tax Avoidance and Abusive Schemes Tax Fraud and Tax Evasion (Criminal Offences) Under Greek law, tax evasion is considered a criminal offence and acts constituting intentional evasion are prosecuted both administratively and criminally. The following examples are established under Article 79 of the Greek Code of Tax Procedure (Law 5104/2024). A tax evasion crime arises where a person, with the intent to avoid payment of tax, conceals taxable income from any source by failing to file returns, sub - mitting false returns, or entering fictitious expenses in the accounts to reduce the tax base. It also includes failure to pay or incorrect payment of VAT, withholding taxes, or other levies and obtaining refunds through fraudulent concealment of facts. The issuance, acceptance or falsification of false or fictitious tax documents (eg, invoices) is treated as tax evasion if it is connected with tax evasion. Thresholds for classifying conduct as a felony vary by tax type (eg, EUR100,000 for income tax, EUR50,000 for VAT), with higher thresholds leading to more severe penalties. Tax Avoidance and Abusive Tax Planning The concepts of tax avoidance and abusive tax schemes are addressed in Greek domestic tax law through anti–abuse rules, with a focus on arrange - ments that seek to artificially reduce tax liabilities with - out overtly violating specific statutory provisions, as outlined below. Tax avoidance is generally understood in academic and legal doctrine as the use of legal means to achieve tax outcomes that reduce or eliminate tax liability, but it can verge on abuse when it exploits gaps, loop - holes, or unintended advantages in the law. To counter such arrangements, Greek law incorpo - rates a General Anti–Abuse Rule (GAAR) in the Tax Procedure Code (Article 39 of Law 5104/2024, for -
merly Article 38 of Law 4174/2013). Under this rule, the Greek Tax Administration may disregard any arrangement or series of arrangements that have been established with the main purpose or one of the main purposes of obtaining a tax advantage that frustrates the object or purpose of the applicable tax provisions. Such rules target artificial structures that lack eco - nomic substance. The GAAR is broad in scope and may be applied even in the absence of a specific statutory anti–avoidance provision targeting a particular type of scheme. It functions as a substance–over–form doctrine, allow - ing tax authorities to recharacterize or disregard arti - ficial arrangements for tax purposes. Indicators and Criteria for Abuse or Evasion In practice, Greek tax authorities and courts look to a range of factual and legal indicators to distinguish legitimate tax planning from abusive schemes or eva - sion, such as: • absence of economic substance – transactions executed primarily for tax benefit with little or no commercial rationale other than tax savings (sub - stance vs form); • fictitious documentation – use of fake invoices or records, or manipulation of accounting entries to artificially reduce taxable income; • concealment of income – failure to report or deliberately under–report cross–border income or taxable events; and • complex cross–border structures without business purpose – arrangements involving related parties in low–tax jurisdictions that lack a valid commercial justification (while specific criteria are not codi - fied in a single statutory list, interpretation under the GAAR allows tax authorities to challenge such structures if the main purpose is tax avoidance). In the context of cross–border transactions, Greece also applies EU Anti–Tax Avoidance Directive (ATAD) rules (eg, interest limitation, controlled foreign compa - ny rules) and transfer pricing rules to counter BEPS– type schemes and ensure arm’s length treatment.
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