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New Tax Law Amends Transfer Pricing Rules
Arm's length principle
Compliance with the arm's length principle is explicitly treated as a condition for the tax deductibility of intra-group charges. Transactions concerning the transfer of shares/parts, businesses and rights on real estate assets are explicitly covered by the new transfer pricing regulations and therefore are required to meet the arm's length principle. Transfer pricing rules are also applicable in the case of loan transactions between associated enterprises, along with thin capitalisation rules.
Transfer pricing documentation requirements
The scope of transfer pricing documentation requirements is extended to cover a brief information memorandum summarising the key features of controlled transactions performed during each fiscal year. This is in addition to the transfer pricing file, which is already required. The ultimate deadline for preparing the transfer pricing file and submitting the information memorandum expires 50 days following fiscal year end. Delayed reporting of controlled transactions, through the information memorandum, or delayed submission of a transfer pricing file to auditing authorities shall be sanctioned by a fine equal to 1/1000 of the company's gross revenues.
Abolition of transfer pricing market regulation regime
Pursuant to the new law, transfer pricing rules set out in article 26 of Law 3728/2008 (market regulation rules) are abolished. This leads to the unification of the 2 transfer pricing regimes that have been working in parallel during past years and the significant reduction of applicable transfer pricing documentation penalties.