New penalties for Greek TP failures

March 31, 2016

The most important development that took place in the last months of 2015 with regard to Greece’s transfer pricing regime was the enactment of Law 4337/2015, which led to the rationalisation of the respective penalty system.

Law 4337/2015 was enacted on October 17 2015, introducing amendments to Law 4174/2013, the Greek code of tax procedures (GCTP).

In a further development, Greece has recently signed the multilateral competent authority agreement (MCAA) for the automatic exchange of country-by-country reports.

Rationalisation of the penalty system

In the case of a TP adjustment by the tax auditors the amended penalties that apply, as compared to those of the previously applicable regime, are as follows:

Type of infringement	Penalty
Type of infringement	Law 4337/2015	Previous regime
Additional tax between 5% and 20% of the tax amount resulting from the initial tax return	10% on the difference	10% on the difference
Additional tax greater than 20% and less than 50% of the tax resulting from the initial tax return	25% on the difference	30% on the difference
Additional tax greater than 50% of the tax resulting from the initial tax return.	50% on the difference	100% on the difference, (also imposed in case of intentional inaccuracy)

For failing to comply with the obligation to file the summary information table (SIT), which is a summary of the TP documentation file, the amended penalties, compared to the ones previously applicable, are as follows:

Type of infringement	Penalty
	Law 4337/2015	Previous regime
Late filling of the SIT	One-off penalty calculated at 1/1000 of the value of intra-group transactions (not below €500 ($565) and not exceeding €2,000)	0.1% of the taxpayer’s revenue, ranging between €1,000 and €10,000.*
Delayed submission of amending SIT(where the difference from the amended transactions exceeds €200,000)
Submission of an inaccurate SIT (where the inaccuracy is higher than 10% of the transactions)
Failure to submit the f SIT	One-off penalty equal to 1/1000 of the value of intra-group transactions (not below €2,500 and not exceeding €10,000)	1% of the company’s revenues, ranging between €10,000 and €100,000.**

* According to a recent interpretative circular issued by the General Secretariat of Public Revenue, in case of a late filing of the SIT for fiscal years up to 31 December 2013, the penalty imposed is €100.

** In cases where failure to comply with the filing obligations is again assessed within five years from the first infringement, the penalties imposed were doubled. In the case of a third instance within those five years, the penalties were quadrupled.

Finally, the penalties for late submission of or failure to submit the TP documentation file the following penalties apply, imposed a month after a relevant request from the tax auditors and depending on the days of delay:

Law 4337/2015		Previous regime
Penalty	Infringement - Days of delay	Penalty	Infringement
€5,000	Between the 31st and 60th day	One-off penalty at 0.1% of the taxpayer’s revenue, ranging between €1,000 and €10,000	Late submission (not within the deadline of 30 days and irrespective of number of days of delayor an inaccurate/incomplete ΤP file *
€10,000	Between the 61st and 90th day
€20,000	After the 90th day or total failure to submit	One-off penalty at 1% of the company’s revenues, ranging between €10,000 and €100,000	No submission

* In cases where failure to comply with the filing obligations is again assessed within five years from the first infringement, the penalties imposed were doubled. In case of a third instance within those five years, the penalties were quadrupled.

Penal sanctions

Law 4337/2015 has also introduced a new article (article 66) of the CTP, with regard to the penal sanctions applicable in cases of tax evasion. The definition of tax evasion by the newly-introduced provisions applies to the majority of tax objects. In particular, the crime of tax evasion is committed by persons who intentionally avoid the payment of taxes (among which is corporate income tax, which also includes transfer pricing infringements).

The penal sanctions imposed in case of tax evasion, as concerns corporate income taxation, including transfer pricing, are as follows:

In case the tax corresponding to the concealed taxable income or assets exceeds €100,000 per fiscal year and per type of tax, the crime is regarded as an offence, triggering imprisonment for at least two years.
In case the above mentioned amount of tax, fine or contribution exceeds €150,000 per fiscal year, the crime is regarded as a felony, incurring imprisonment for over five years.

It should be noted that, under the newly-introduced regime, the persons that fall within the scope of the respective provisions are all those engaged, either temporarily or permanently, with the effective management, administration, or representation of the entity (either by private consent or directly by law or by a court decision or by any other case). Moreover, all persons who knowingly sign inaccurate tax returns as well as persons who provide direct assistance in the commission of tax evasion crimes are punished as direct accomplices.

Automatic exchange of CbC report

Greece has not yet enacted any relevant legislation implementing CbCR. However, the General Secretary of Public Revenues signed on 27 January 27 2016 the MCAA for the automatic exchange of CbC reports.

Written by Eftichia Piligiou and Vasiliki Athanasaki of Deloitte Greece