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Guidance on Tax Treatment of Government & Private Bonds

The Greek Ministry of Finance issued guidance in respect of the procedure for withholding tax on capital gains arising from the transfer of Greek Government and private bonds. Taxand Greece summarises the key points affecting corporates.

The guidelines affect, among others, compliance obligations of banks and investment services firms, whereas they also address a number of interpretation issues. Key points within the guidelines include:

In the case of a transfer of bonds before maturity, tax is to be withheld on the difference between (i) the sale price and (ii) the aggregate of the acquisition cost and any unpaid interest accrued until the date of transfer

  • In the case of holding until maturity of bonds acquired on the secondary market, tax is to be withheld upon maturity on the difference between the face value and the acquisition price of the bonds
  • The rules apply in respect of bonds issued by both domestic and foreign issuers
  • Capital gains upon transfer of bonds issued by Greek private issuers are subject to tax in general, including withholding tax, as of 29 February 2012 despite existing exemptions in the legislation governing such bond issues (Law 3156/2003)
  • The payer (intermediating bank or investment services firm) is from now on liable to withhold the tax upon payment or crediting of the relevant amount in favour of the recipient
  • It is clarified that banks and investment services firms are required to report specified data on the beneficiary recipients, including the taxable amount and any tax withheld with regards to capital gains from the transfer of bonds acquired within 2012. This was to be completed and sent electronically to the tax authorities by 17 May 2013. Any tax remitted to the Greek State without having been withheld from payments to beneficiary recipients until issuance of the guidelines is to be refunded

Discover more: Guidance issued on the tax treatment of Government and private bonds

Your Taxand contact for further queries is:
Daphne M. Cozonis
T. +30 210 69 67 000

Taxand's Take

These guidelines follow the recent introduction of withholding tax at 20% and, with regard to non-resident legal entities without a permanent establishment in Greece, at 33%. The guidelines do not at this time address particular procedures in respect of non-resident beneficiaries (eg in relation to Treaties for the Avoidance of Double Taxation). All multinationals which operate in Greece should research these guidelines in more detail to stay afresh of all updates.

Taxand's Take Author