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Greek Parliament Ratifies New Tax Law
Increase of corporate income tax rate
The new tax law provides for an increased corporate income tax rate, set at 26% instead of the formerly applicable rate of 20%. The corporate income tax rate increase has been accompanied by a reduction of the withholding tax rate applicable on profit distributions, leading to an overall tax burden of 33.4% (ie 26% corporate income tax rate plus 10% withholding tax in profit distribution).
Simplification of rules on the depreciation of fixed assets
The new tax law simplifies the depreciation regime applicable with respect to assets acquired from 1 January 2013 onwards. In particular, the new law provides for the obligatory depreciation of tangible and intangible assets under a common "regular" depreciation rate method, while abolishing the "declining" rate depreciation method. Applicable depreciation rates are merged into 10 basic categories applicable for all industries, while a few exceptions are provided for specific industries such as mining.
Changes in the tax treatment of interest income
- The rate of withholding tax which applies on the basis of domestic legislation on Greek and foreign sourced interest on Bank deposits, private bonds and repurchase agreements is increased from the existing 10% to 15% in respect of interest remitted or credited from 1 January 2013.
- The rate of withholding tax which applies on Hellenic State Treasury Bills and bonds on the basis of domestic legislation is increased from the existing 10% to 15% as regards interest arising from 1 January 2013.
- Interest remitted by individuals abroad is subject to 20% withholding tax if the beneficiary thereof is an individual and 33% if the beneficiary is a legal enitity.
Introduction of Advance Pricing Arrangements
The new law introduces the use of unilateral Advance Pricing Arrangements (APAs) between Greek enterprises and the Greek tax administration, intending to proactively resolve potential transfer pricing disputes.