The Greek parliament recently voted the law 5024/2023 (Gazette 41/Α/24-2-2023) which included various tax measures, the most important of which are below:
1. Exemptions from ENFIA (Uniform Real Estate Property Tax)
ENFIA is a tax imposed on Greek real estate, which was introduced during the crisis, as a temporary tax.
Based on articles 22-27 of the new law, various real estates will be exempt from 2023 ENFIA. Said measure concerns properties located in areas affected by natural phenomena and disasters, areas under forced expropriation, urban planning inactive, as well as relocated communities or historical monuments and works of art.
2. Contributions of shares – capital gains taxation deferral for individuals
Article 28 of the new law amends article 42 paragraph 4 of the Income Tax Code, whereby providing for a deferral on capital gains tax where an individual contributes Greek or foreign securities to cover or increase the capital of Greek or non‐Greek legal entities or persons in exchange for securities of the recipient. The deferral is subject to the following conditions:
a.the contributor of the securities is an individual and the sole shareholder of the recipient,
b.the recipient is established in a tax cooperative jurisdiction (not necessarily in the European Union), and
c.the scope of its business relates to commercial, production or agricultural activities or the provision of services.
The taxation will occur upon the actual transfer of the securities. The new measure applies as from 2023 onwards.
This is a much welcome amendment which in conjunction with the recently enacted capital gains taxation upon the transfer of shares (subject to conditions) can render the Greek holding companies a very attractive and tax efficient investment vehicle for HNWIs.
3. Application to subject commercial leases to VAT
With this new provision, the timing of the application to subject a commercial lease to VAT is being addressed. Under the previous law, the application could be made before the first use of the property or within 30 days of the start of the accounting period. Under the amended law, the application can be made also after the first use of the property. In that case, the choice will apply from the next tax period.
4. Definition of Capital Goods for VAT Purposes
The new law abolishes, from the definition of the capital goods, the condition of the minimum duration of the right to use the property for at least 9 years.
This comes as no surprise following the Supreme Administrative Court’s decision (1108/2021) according to which a taxable person has the right to deduct input VAT on expenses incurred for construction works, improvements, and additions performed on third party real estate remains, even if the taxable person is not entitled – at the time the expenses are realized – to use such property for a period of at least nine years.
5. The obligation to notify the tax authorities of the volume discounts is abolished
The obligation to notify, 4 months in advance, the tax authorities of the volume discounts granted to clients is now abolished. Under the previous law, such notification was a prerequisite for a taxable person to be able not to include the volume discounts in the taxable value.
