Greece: Amendments to withholding tax regime applicable to Greek and foreign affiliated legal entities

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

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

Greece: Amendments to withholding tax regime applicable to Greek and foreign affiliated legal entities

kalogera.jpg

Kalliopi Kalogera

Greece has recently experienced a radical reform on the applicable tax framework by implementing new provisions abolishing the ones of the former Greek Income Tax Code (L.2238/1994). The withholding taxes regime is among the various tax subjects affected. Under the provisions of the New Greek Income Tax Code (L.4172/2013), withholding tax applies (among others) to dividend (10%), interest (15%) and royalties (20%) payments as well as to the consideration for the provision of several services (20%).

More specifically, and as regards the dividend, interest and royalties payments made between Greek and foreign affiliated entities, the new provisions have transposed into the Greek tax legislation the EU Parent-Subsidiary Directive (2011/96/EU) and the EU Interest & Royalty Directive (2003/49/EU) and therefore a withholding tax exemption may be granted if the affiliated entities are (i) EU tax residents; (ii) subject to corporate income tax; (iii) incorporated into specific legal forms mentioned in the respective annexes of the Directives (mostly SAs and Ltds); and (iv) the minimum holding percentage set in the applicable rule is preserved for more than 24 months. However, it remains unclear how these provisions are going to interact with the new anti-tax avoidance rule introduced by the new Tax Procedures Code (L.4174/2013).

Interestingly, according to the new provisions as interpreted by a Circular of the Ministry of Finance (POL 1120/2014), the imposition of withholding tax on payments received for the provision of technical, administrative, consultative or other relevant services from foreign entities in Greece (including the services provided to their affiliated Greek entities) depends on the existence of a local permanent establishment. In particular, only a foreign entity with a permanent establishment rendering such services in Greece shall be subject to withholding tax, which is credited against its year-end corporate income tax liability. It should be noted that the lack of technical details for the application of this provision has created uncertainty on how the payer will be able to determine whether a permanent establishment of the service provider exists in Greece for the purpose of imposing withholding tax.

Kalliopi Kalogera (kalliopi.kalogera@gr.ey.com)

EY

Tel: +30 210 2886816

Website: www.ey.com

more across site & shared bottom lb ros

More from across our site

Levine, who served under the Joe Biden administration, led the US’s negotiations on the OECD’s two-pillar solution
The deal to acquire ITR's parent company is expected to complete by the end of May 2025
JBS, the biggest meat company in the world, allegedly used Luxembourgian ‘mailbox companies’ to avoid taxes between 2019 and 2022
Despite the conviction of Jessa Dabalos, the Tax Practitioners’ Board’s investigative work continues with five outstanding PwC scandal probes
Heads of tax need to push their teams forward as strategic business advisers to add value across their organisations, says Sandy Markwick
Scott Bessent reportedly felt undermined by Musk naming Gary Shapley as acting IRS commissioner; in other news, Baker Tilly will combine with a top 15 US firm
The promise of nine years’ tax certainty and a ‘rational and pragmatic’ government process makes APAs a no-brainer, Indian tax advisers tell ITR
Despite garnering significant revenues from multinationals, Italy’s digital services tax presents pressing double taxation issues, say Stefano Simontacchi and Francesco Saverio Scandone of BonelliErede
ITR’s research shows that in-house tax counsel in Asia also feel underserved by their advisers’ international networks
World Tax global head of research Jon Moore tells ITR how his team spots standout submissions, and gives early statistical insights into this year’s entries
Gift this article