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Greece revisits statute of limitations rules
Constantina Nicolaou of EY in Greece explains how recent case law and legislative developments have paved the way towards better implementation of statute of limitations rules.
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.
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