In October 2015, the Organisation for Economic Cooperation and Development (OECD) presented the final reports of its 15-action plan to tackle Base Erosion and Profit Shifting (BEPS). The OECD established the Inclusive Framework on BEPS in January 2016 so that all interested non-G20 countries and jurisdictions can work together for a timely implementation of the BEPS package. The inclusive framework developed a monitoring process for the implementation of four minimum standards, namely Action 5 (Countering Harmful Tax Practices More Effectively Taking into account Transparency and Substance), Action 6 (Preventing the Granting of Treaty Benefits in Inappropriate Circumstances), Action 13 (Transfer Pricing Documentation and Country by Country Reporting) and Action 14 (Making Dispute Resolution Mechanisms More Effective).
In this context, regarding Action 13, the Greek legislative framework introduced transfer pricing documentation requirements for Country-by-Country-Reporting (CbCR) with the Law 4484/2017, adopting in essence the EU Directive 2016/881 on automatic exchange of information for CbCR. Moreover, regarding Action 5, Law 4474/2017 transposed the EU Directive 2015/2376 on automatic exchange of information, with respect to cross-border advance tax rulings and advance pricing agreements (APAs).
Moreover, via Law 4607/2019, Greece has recently transposed EU Directive 2016/1164 (Anti-Tax Avoidance Directive I (ATAD I)), laying down rules against tax avoidance practices that directly affect the functioning of the internal market. The new law has not embedded ATAD I’s provisions regarding hybrid mismatches and exit taxation. However, it amended pre-existing provisions regarding thin capitalisation and Controlled Foreign Companies (CFC), as well as the general anti-tax avoidance rule (GAAR) of Article 38 of the Greek Tax Procedure Code. Based on the explanatory report of Law 4607/2019, the tax administration has the burden of proof that an arrangement is non-genuine and, in order to evaluate this, it should also examine whether the arrangement in question is included in the indicative cases, which are described in the EU Recommendation 772/2012, and it should interpret the GAAR in accordance with the domestic law, ECJ case law and the EU Recommendation. The GAAR applies to all Greek taxes (direct, indirect etc.) regulated by the Tax Procedure Code.
The aforementioned adoption of ATAD I also reflects implementation measures of BEPS Action 2 (Neutralizing the Effects of Hybrid Mismatch arrangements), Action 3 (Designing Effective Controlled Foreign Company Rules) and Action 4 (Limiting Base Erosion Involving Interest Deductions and other Financial Payments).
With respect to Action 15, Developing a Multilateral Instrument to modify Bilateral tax treaties (MLI), Greece has signed (but not yet ratified) the Multilateral Instrument (MLI Convention), but has reserved its right not to apply Articles 3-5 regarding hybrid mismatches, Articles 10-15 regarding permanent establishment (PE) status, Article 8 regarding dividend transfer transactions, and it has opted for the asymmetrical application of the simplified Limitation of Benefits Clause (LOB) based on Article 7(7)(b) of the MLI Convention. In accordance with Action 14, Greece has adopted Part V of the MLI on the mutual agreement procedure (MAP) and opted for Part VI of the MLI on mandatory binding arbitration (MBA). Greece reserved the right to set a three-year period limit for MAP, following which, a tax payer may request the MBA initiation and notify a reservation not permitting arbitration in the event of a decision already rendered on this issue by a court or administrative tribunal of either contracting state before or during the arbitration process. Moreover, the Independent Authority for Public Revenue (IAPR) has published clear guidance (Circular 1049/2017) on MAP procedure in practice under double tax treaties.
As a conclusive remark, Greece regularly takes the necessary legislative measures in order to conform with BEPS minimum standards and harmonise its tax system with both BEPS actions and the EU directives complementing and reinforcing the OECD’s BEPS project.
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