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Greece: Tick the box for a shifting Greek PE landscape


Konstantina Kalakou

Recent developments clearly show that the topic of permanent establishment (PE) is high on the Greek tax agenda. As per the practice followed to date by the Greek tax authorities, multinational entities that have a presence in Greece (through a subsidiary) do not often find themselves under the audit microscope provided that the Greek subsidiary has taxable revenues (commonly arising from services that the latter provides to other Group entities). On the other hand, commissionaire structures were scrutinised with the absence of contractual or negotiation authority on behalf of the agent, giving leeway for taxpayers. To this end, a ruling of the Court of Appeal has stated that a Greek agent that has been appointed only for promotion services of the foreign UK entity cannot trigger a PE.

Nevertheless, it seems that the Greek tax authorities are inclined to move into a new era: they have started to scrutinise Greek subsidiaries of Groups by ignoring the contractual framework put in place by the Group entities. To this end, they have recently assessed a PE for Greek tax purposes based on the argument that a Greek subsidiary qualifies as a dependent agent of a foreign Group entity; namely, they have ignored the contractual framework put in place which stated that the Greek subsidiary performs mainly functions of an auxiliary or preparatory character: support services to clients, or marketing services, for example.

Along with these developments from a direct tax viewpoint, significant case law on the meaning of 'fixed establishment' from a VAT perspective paves the way to a harmonised PE notion close to the one introduced recently by the OECD. As per recent jurisprudence in the context of a refund of VAT incurred by a UK branch, the Supreme Court held that in order to determine whether a UK branch has a fixed establishment in Greece, one should take into consideration both the human and technical resources of the Greek service supplier (sub-contractor) ignoring any fragmentation of activities, since the latter is involved in the execution of the agreement with the Greek customers of the branch and the equipment owned by the branch in Greece. The Supreme Court has actually adopted a stricter stance than that of the CJEU decision in Welmory sp. Zoo v Dyrektor Izby Skarbowej w Gdansku, while it has stated that the absence of contractual or negotiation authority on behalf of the agent does not add much to the PE analysis. The Court also ruled that this interpretation applies equally to the PE meaning of the applicable double tax treaty from a direct tax perspective.

This information confirms that not only are the Greek tax authorities taking a keener interest in foreign companies operating in their jurisdiction and viewing the assessment of a local PE as a soft target to increase their revenues, they also have the Courts as an ally. This might be a part of a wider trend where the volume of tax audits and tax disputes is rising, creating an uncertain landscape for taxpayers with a significant risk on double taxation.

It remains, therefore, to be seen whether Greece is rapidly moving towards the post-BEPS page of history in an attempt to comply with the recent international tax policy design or the recent PE developments merely illustrate a domestic revenue-driven trend.

Konstantina Kalakou (

EY Greece

Tel: +30 210 28 86 338


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