Greece: GAAR rising: First administrative rulings in the spotlight

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Greece: GAAR rising: First administrative rulings in the spotlight

intl-updates-small.jpg

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?

kalakou.jpg

 

Konstantina Kalakou

Konstantina Kalakou (konstantina.kalakou@gr.ey.com), Maroussi

EY

Tel: +30 210 2886 000

Website: www.ey.com

more across site & shared bottom lb ros

More from across our site

The US president also unveiled a new 50% levy on copper imports; in other news, a UK wealth tax proposal has been criticised by the Institute for Fiscal Studies
Wim Wuyts, who had been head of the specialist tax network since 2017, is moving on to a new role with WTS’s Belgian member firm
MNEs are increasingly using algorithmic tools in TP. Sahasranshu Dash argues that data ethics should therefore plug directly into the TP design process
The Institute of Chartered Accountants in England and Wales also queried whether HMRC resources could be better spent scrutinising larger entities
Grant Thornton’s Austria tax head likens his practice to an escape room, shares his football coaching ambitions, and explains why tax is cool
Awards
ITR is delighted to reveal all the shortlisted nominees for the 2025 EMEA Tax Awards
Awards
ITR is delighted to reveal all the shortlisted nominees for the 2025 Asia-Pacific Tax Awards
The fates of pillars one and two hang in the balance after the US successfully threw its weight around in G7 and Canadian negotiations
Rafael Tena tells ITR about the ‘crazy’ Mexican market, ditching the hourly rate, and refusing to grow his fledgling firm in an ‘unstructured way’
It should be easy for advisers to be transparent about costs, Brown Rudnick partner Matthew Sharp said in response to exclusive ITR in-house data
Gift this article