Greece has embraced the European Commission's recommendation
(on December 6 2012) for an action plan to strengthen the fight
against tax fraud and tax evasion, which, among others,
includes the implementation of a general anti-abuse rule
(GAAR). Namely, by virtue of Article 38 of the Greek Tax
Procedures Code (i.e. L. 4174/2013), a domestic GAAR has been
introduced into the Greek fiscal landscape, in force as of
January 1 2014, according to which the tax authorities may
disregard any artificial arrangement or series of arrangements
aiming to avoid taxation and lead to a tax advantage.
Considering the aggressive stance generally adopted by the
Greek tax administration during recent tax audits, the first
GAAR footprints have appeared in the decisions issued from the
dispute resolution department (DRD), before which the taxpayer
may challenge a tax assessment note, prior to addressing the
dispute before the administrative courts.
In light of the above decisions from the DRD, both referring
to stamp duty assessments on loans, the Greek tax
administration denied the stamp duty exemption provided on the
basis of the "territoriality" principle whereby loans signed
and executed outside of Greece would not fall within the scope
of the Greek Stamp Duty Code. The above conclusion was drawn by
claiming the application of the GAAR.
Specifically, up to now, a loan agreement entered into
between a Greek and a foreign entity may be exempted from stamp
duty on the basis of the "territoriality" principle, provided
that certain conditions were cumulatively met (i.e. signature
of the loan outside Greece, along with the loan's "execution"
outside Greece, which effectively means that the respective
payments should be exclusively realised through foreign bank
accounts). Namely, the Greek borrower entity should maintain a
foreign bank account, via which all cash flows relating to the
said loan (i.e. the deposit of the loan amount, payment of
interest and repayment of the loan) are affected.
Nevertheless and despite stamp duty levy being of a typical
form-over-substance nature, these new rulings invoking the
GAAR's application and following a substance-over-form approach
concluded that the intermediation of a foreign bank constitutes
an artificial arrangement whose goal has been to avoid stamp
duty imposition. The Greek tax administration has disregarded
the existence of the foreign bank account of a Greek company,
since the loan has been used for the settlement of local
liabilities, e.g. in one case it was even used for the payment
of the Greek company's stamp duty liability arising from a
previous tax audit.
Lastly, the domestic GAAR's application has not yet been
tested before the Greek courts. One could at least hazard a
guess under the purposive interpretation adopted by the courts
until now, but the GAAR might leave taxpayers without a map or
compass. If one claims that the map based on previous case law
was very changeable and sometimes unpredictable guide, almost
inevitably the first fundamental question arises: Does the
domestic GAAR provide adequate safeguards for the taxpayer?
Konstantina Kalakou (email@example.com),
Tel: +30 210 2886 000