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The new Greek Income Tax Code
The new Income Tax Code (ITC) was announced as part of the Greek Government's effort to overhaul the Greek fiscal system towards enhancing transparency and combatting tax avoidance and evasion. Taxand Greece takes a look at what the new ITC will involve.
To a certain extent the new ITC adopts rules and definitions already existing in EU and international tax materials (eg the OECD Model Tax Convention, the EU Merger Directive, the EU Council resolution regarding Controlled Foreign Corporations and thin capitalisation rules).
On the other hand, the formulation of some of the new rules seems to be elliptical or with conflicting provisions where there is a degree of uncertainty as regards the applicability of the previous income tax code which is not repealed. In general, assuming that the new Income Tax Code remains as enacted, its application in pragmatic terms may give rise to interpretational issues exceeding the level of those expected in a new piece of legislation.
As regards contents, the new ITC contains rules for combatting tax evasion and avoidance including on CFC and thin capitalisation, imputation of income from one’s expenditure levels, disallowance of payments to non-cooperating jurisdictions and preferential tax regimes. Moreover, the so called 'private' tax audit procedure run by statutory auditors that applied for fiscal years 2011 and 2012 and which could, to a certain extent, replace tax audits by the tax authorities is not retained, at least in this current version of the income tax code.
Structure-wise, the new ITC retains the principle of income taxation on the basis of:
- Worldwide income in respect of domestic tax residents
- Greek source income in respect of non-domestic tax residents
In addition to the recently enacted Codes of Fiscal Depiction of Transactions and Fiscal Procedure, the new ITC is expected to be complemented with a new framework for the rationalisation of existing –fragmented- tax incentives and special tax regimes. In principle, the ITC becomes effective in respect of revenues and expenses occurring in fiscal years starting on or after 1 January 2014.