Since it began in 2009 the Greek sovereign debt crisis has dominated discussion in the jurisdiction. While other countries that suffered a similar crisis, like Portugal, have recovered and have a more positive outlook, the same cannot be said of Greece. It is unsurprising, therefore, that the Greek government – under pressure from its creditors – is looking to improve its poor tax collection rates and broaden the country's tax base.
Tax receipts in Greece have consistently been below the expected level for the jurisdiction, and efforts have been made to claw back the lost revenue with a series of anti-tax evasion drives since the beginning of the fiscal crisis. Tackling the evasion problem is seen by Prime Minister Alexis Tsipras as key to overcoming Greece's financial woes.
With these anti-evasion drives, coupled with tax increases and the introduction of new taxes, there are five indirect taxes levied on goods and services alone. The burden on taxpayers in the jurisdiction, not just in terms of total tax payable but regarding the administrative effort that needs to be expended in order to remain compliant, creates more work for taxpayers and advisers.
Litigation is very common, and advisers expect to see its frequency stay the same or even rise. "Politically the tax authorities are under a lot of pressure to show that they are dealing with tax evasion, particularly by companies and high net-worth individuals," said one adviser. "The authorities are increasingly using the general anti-avoidance principle, which was introduced in Greece in January 2014, to target not only tax evasion, but also tax avoidance by these types of taxpayer."
"We are expecting this to continue for at least another two years," the adviser added.
Greeks have pointed out that the country's problems cannot be solved simply by increasing taxes and penalties, as a significant portion of the Greek population compared to other EU economies is self-employed and often gets advance warning of audits. This makes it possible to appear compliant to the auditor while not being so in reality. If the object is to change the culture of taxation in Greece, simply increasing the penalties for non-compliance will not work.
It is also common for professionals in the jurisdiction to be attached to their employers as contractors rather than as employees, meaning that while they are technically self-employed, their employment almost anywhere else in the EU would be seen as an employee, where they could be taxed as such. This situation has largely been attributed to punitive taxation, and has resulted in a significant loss of taxation to the Greek state and stripped the tax authorities of the ability to effectively regulate tax avoidance.
Advisers say the Greek tax authorities are becoming more sophisticated, but still have a long way to go. "In terms of transfer pricing, what they are looking for is a violation of the arms-length principle, it seems, however, that they have difficulty understanding some commonly-used financial instruments such as hybrid loans – this obviously makes it more difficult to deal with them," said one adviser. "This is something we see generally from not only the tax authorities but [also] the courts."
To further complicate the issue, advisers report it is becoming increasingly commonplace for large corporate taxpayers and high net-worth individuals to relocate out of Greece, with Cyprus, Belgium and Switzerland being key beneficiaries of this in terms of movement of structures and the receipt of the attendant tax revenues.
Such movement of capital out of Greece may be tempered by the automatic exchange of information (AEoI) with the first exchanges being made in 2017, and further implementation of the BEPS action points may even reverse this trend, however there is currently no news on when or if, despite Greece's membership of the OECD, the project will be transposed into domestic law.
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The Greek tax practice offers a full range of tax services including corporate, mergers & acquisitions, international and indirect tax, transfer pricing, global employer solutions, research & development government incentives, private client services, tax compliance and reporting services.
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|Corporate Income Tax||29%|
|Capital Gains Tax||29%|
|Net Operating Losses (years)|
|Bank interest||15%||B C|
|Interest on treasury bills and corporate bonds||15%||B C|
|Other interest rates||15%||C D|
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