International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

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

Greece: Treaty analysis: Greece-Cyprus DTT tax credit mechanism relating to dividend payments


Kalliopi Kalogera

Greece has a broad network of Double Tax Treaties (DTTs) in place, however, only a handful of them (e.g. Albania, Georgia, Uzbekistan) include clauses permitting the tax credit of the corporate tax paid on profits in the country of the distributing entity against the income tax to be paid for dividends in the country of residence of the receiving person (individual or legal entity), among which is the DTT between Greece and Cyprus.

The rule for the avoidance of double taxation introduced in Article 21 of said DTT provides for that income tax to be paid in Greece for the received dividends should be decreased by the total tax payable in Cyprus comprising both of any tax withheld on the dividend payment in Cyprus as well as the Cypriot corporate tax paid on the underlying profits of the Cypriot distributing entity.

The local legislation has in general adopted this position with respect to dividends received from local legal entities by their EU-subsidiaries in case the EU Parent-Subsidiary Directive (as incorporated in the local legislation) does not apply, by further providing for a specific unilateral tax- credit mechanism. However, Greek tax resident individual shareholders cannot equally benefit from such regime due to lack of respective local tax law provisions and mechanism.

Very recently, the Directorate of International Economic Affairs of the Ministry of Finance has circulated a document wherein it is stipulated that the tax-credit provisions of the Greece-Cyprus DTT applies to Greek tax residents (including individuals) receiving ordinary dividends from Cypriot legal entities. Therefore, corporate Cypriot tax paid from the distributing entity may be credited against the Greek income tax arising at the level of the Greek tax resident shareholder from the received dividends (currently set to 15%). Given that this document explicitly specifies that only the corporate tax that is actually paid in Cyprus will be taken into account, the tax sparing clause included in par.3 of Article 21 of said DTT remains non-applicable in the Greek tax practice.

This document may open the way for this treatment to be broadly followed for dividends received from foreign entities established in countries where the DTT agreement in place includes similar provisions by Greek tax resident individual shareholders.

It should, though, be noted, that each distributing structure may still be tested under Greek General Anti-Tax Avoidance rules – according to which the Greek tax authorities may disregard any artificial arrangement and proceed to impose any tax that would have been due without it- resulting to the denial of said tax credit in case the distributing entity lacks business substance (e.g. premises, personnel, business activity etc).

Kalliopi Kalogera (


Tel: +30 210 2886 816


more across site & bottom lb ros

More from across our site

The German government unveils plans to implement pillar two, while EY is reportedly still divided over ‘Project Everest’.
With the M&A market booming, ITR has partnered with correspondents from firms around the globe to provide a guide to the deal structures being employed and tax authorities' responses.
Xing Hu, partner at Hui Ye Law Firm in Shanghai, looks at the implications of the US Uyghur Forced Labor Protection Act for TP comparability analysis of China.
Karl Berlin talks to Josh White about meeting the Fair Tax standard, the changing burden of country-by-country reporting, and how windfall taxes may hit renewable energy.
Sandy Markwick, head of the Tax Director Network (TDN) at Winmark, looks at the challenges of global mobility for tax management.
Taxpayers should look beyond the headline criteria of the simplification regime to ensure that their arrangements meet the arm’s-length standard, say Alejandro Ces and Mark Seddon of the EY New Zealand transfer pricing team.
In a recent webinar hosted by law firms Greenberg Traurig and Clayton Utz, officials at the IRS and ATO outlined their visions for 2023.
The Asia-Pacific awards research cycle has now begun – don’t miss on this opportunity be recognised in 2023
An intense period of lobbying and persuasion is under way as the UN secretary-general’s report on the future of international tax cooperation begins to take shape. Ralph Cunningham reports.
Fresh details of the European Commission’s state aid case against Amazon emerge, while a pension fund is suing Amgen over its tax dispute with the Internal Revenue Service.