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


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 (


Tel: +30 210 2886816


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