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Clarification of the Tax Treatment of SPVs Undertaking PPPs
The tax provisions of Law 3389/2005 (PPP law) governing Public-Private Partnerships (PPP) and particularly concessions for the delivery of infrastructure and public services with budgeted cost below Euro 200 million, had been amended by virtue of law 4013/2011. The Greek Ministry of Finance has recently issued Circular providing clarifications on the tax treatment of special purpose vehicles (SPVs) that are formed by the private sector for the purpose of entering into PPP Contracts. Taxand Greece details the clarifications.
Clarifications cover Corporate Income Tax Clarifications and VAT Clarifications:
(a) Corporate Income Tax (CIT) clarifications
The revenue earned by the SPV is considered realised at the time that the consideration provided in the PPP Contract becomes due and payable. In the same line, the SPV should issue respective invoices until the end of the accounting year, within which the consideration has become due and payable. The above applies only to SPVs that do not operate the project after it has been completed.
Multinationals should be aware that the CIT treatment in question deviates both from the generally applicable principle of severability of fiscal years, as well as from the tax rules applicable to contactors that undertake public technical works. In the latter case, the time of realisation of revenue coincides with the time that the relevant works are certified by the State.
Multinationals should also note that, as regards VAT refunds, tax authorities are under the obligation to proceed with the refund of requested VAT in a 90-day deadline as from the filing of the respective claim of the SPV.