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Swiss Parent Companies to Receive Payment of Dividends or Royalties


Greece adopted measures to implement an Agreement between the EU and the Swiss Confederation relating to interest / royalties and dividend payments. Taxand Greece details the measures.

Greece has transposed into its domestic legislation the Agreement between the European Community and the Swiss Confederation providing for measures equivalent to those laid down in Council Directive on taxation of savings income in the form of interest payments ("the Agreement"). Article 15 of the Agreement as well as (the corresponding) Article 15 of Law 3363/2005 regulates the tax treatment of dividend distributions and / or interest payments and / or royalties effected between companies established in the EU and Switzerland. In particular, Article 15 precludes the country of source (i.e. the country where the subsidiary entity distributing the dividends and / or paying the interest and / or royalties is established) from imposing any tax provided that certain conditions are met.

Nevertheless, the International Economic Relations Directorate (the "IERD") of the Greek Ministry of Finance was not applying Article 15 of Law 3363/2005, as the conclusion of certain negotiations between Greece and the Swiss Confederation (regarding among others their efforts to counter fraud and all other illegal activities affecting their financial interests) was pending. Such negotiations have recently been concluded. Following this development, the IERD has officially taken the position by means of a Ministerial Decision that no tax shall be withheld in Greece on the aforesaid Greek-sourced income realised by Swiss (affiliated) companies (provided that the applicable procedure for the application of Law 3363/2005 is complied with).

In addition and for those payments that have been subject to withholding taxes in Greece (such as the 10% dividend withholding tax), the IERD acknowledged the entitlement of the foreign recipient of such income (Swiss Parent company) to claim retroactively for a refund for the amount of tax that had unduly been paid to the Greek State.

Taxand's Take

In light of the above, Swiss parent companies will be in a position under conditions to obtain exemption from Greek withholding tax on dividends, interest and royalties payable from their Greek subsidiaries whereas any tax already paid that would have been exempted under the preceding rules may be refunded to them by the Greek State subject to a relevant claim.

Your Taxand contact for further queries is:
Yerassimos C. Yannopoulos
T. +30 210 6967 000

Taxand's Take Author