It was not that long ago that tax audits were performed by the Greek tax authorities (GTA), referring to cases made 10 or 15 years back, due to the continuous extension of the standard five-year statutory limitation period. As anticipated, taxpayers were obliged to recall and prove tax facts and transactions that took place years earlier and maintain all available data to this end. If they failed, they would face the imposition of extra taxes and penalties.
The standard five-year statute of limitation rule was restored as a principal rule, by virtue of a decision of the Greek Supreme Court in 2017. Since then, there have been both legislative and judicial developments that have further highlighted the underlying rule of performing tax audits within the statute of limitation, towards increasing compliance, efficiency and proper tax collection.
Legislative developments
Firstly, it should be noted that, before the Greek Tax Procedure’s Code (TPC - Law 4174/2013) entered into force, each taxation followed its own rules on the statute of limitations, inevitably resulting in inconsistencies and legal uncertainty. For example, an enterprise could not be audited for corporate income taxes if the five-year statute of limitation had lapsed; however, it could be (and was) audited for stamp duty purposes for a 20-year period. This inconsistency was dealt with largely by the TPC, which provided for a unified statute of limitations rules applicable to most taxes.
The TPC provides for the standard five-year statute of limitation, which can be extended for one year in specific cases. Per recent amendments (Law 4646/2019), the statute of limitation period is – among others – also extended for one year, in cases where new data or information from any source is brought to the attention of the GTA during the fifth year of the statute of limitation timeframe.
The 20-year statute of limitation period of the Greek state’s right to impose tax in cases of tax evasion, which was widely questioned, was also recently abolished.
However, for tax years as of 2018, an extended 10-year statute of limitation period is applicable where:
No tax return has been filed; and
New data or information increasing the taxpayer’s tax liability are brought to the attention of the GTA, which could not have been brought to their attention within the five-year statutory limitation period.
Case law developments
Interestingly, the court has recently delivered two decisions regarding the statute of limitations rules, reaffirming the prevalence of the default rule in the interest of legal certainty.
In greater detail, in a stamp duty case referring to tax years prior to 2014, the court reversed a long-standing position of the GTA regarding the statute of limitation period for stamp duty cases. The court overruled the GTA, alleging that the statute of limitation period for stamp duty obligations – due to the lack of specific provisions in stamp duty legislation – is 20 years, while upholding that the five-year statute of limitations rule should prevail.
Furthermore, the court ruled (also referring to tax years prior to 2014) that a shortened statute of limitations period may apply, in cases where certified auditors have performed statutory tax audits in enterprises, resulting in no tax findings.
What is next?
The GTA are to implement the so called ‘e-books’ as of October 2020, meaning that enterprises will be obliged to digitally transmit their accounting books and records to a GTA platform in a real-time environment. In conjunction with ‘e-books’, the GTA promote the establishment of ‘e-invoicing’ as the main manner of issuing invoices.
To this end, a recent legislative amendment provides that the statute of limitation period is reduced by two years, in case an enterprise issues e-invoices through a licensed provider, and by one year, in case an enterprise opts for the acceptance of e-invoices through licensed providers.
Concluding, one cannot fail to notice that both the Greek case law and recent legislative developments have set the pace towards the establishment of a more rationalised implementation of statute of limitations rules. The changes make better use of the available resources towards achieving tax compliance and efficient collection of taxes, while safeguarding legal certainty for the taxpayers.
Constantina NicolaouT: +30 210 2886 000E: constantina.nicolaou@gr.ey
