Worldwide Tax Summaries--GREECE（1999-2000）(part1)
Worldwide Tax Summaries--GREECE（1999-2000）(part1)
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There have been no significant tax or regulatory developments in the past year.
TAXES ON CORPORATE INCOME
Corporations (SAs) and limited liability companies (EPEs) are taxed on total annual profits before disribution of dividends, profits, fees to directors, and profits to employees/workers. Profits are taxed only at the company level. There is no withholding tax on dividends or profits otherwise distributed and no income tax in the name of the EPE members. If total annual profits of SAs and EPEs include dividends or profits from participations in other companies, these profits are deducted to arrive at taxable profits of SAs and EPEs. If total annual profits include tax-free income or income taxed on the basis of speCIAl regulations with termination of the reated tax liability, taxable profits are adjusted accordingly.
Domestic SAs and EPEs are subject to income tax at the following rates on total profits less allowable transfers to tax-free reserves.
1.For domestic corporations with registered and bearer shares not listed at finanCIAl year-end on the Athens Stock Exchange, domestic banking corporations and purely credit cooperatives-40%.
2.For domestic corporations listed at finanCIAl year-end on the Athens Stock Exchange-35%.
3.For domestic EPEs-35%.
Specifically for EPEs, the rate of 35% applies to tatal net profits after being reduced by business fees to dministrators/members (up to three with the greatest praticipation percentages). Business fees are calculated by
applying these percentages to 50% of total net profits.
The above rates are reduced by 40% for profits of companies derived from activities carried out on islands with less than 3,100 inhabitants.
With respect to domestic SAs and EPEs that are taxed on the basis of imputed profits, if following the distribution of profits of the specific financial year there remains a balance of untaxed profits shown in the account "Tax-free profits of technical and construction companies," 40% of this is taxed in the name of the legal entity at the rate of 405 or 35%, depending on the legal entity concerned. A special income tax return must be filed by the end of the ninth month from its year-end and the tax due paid in three equal monthly installments. These profits, after the deduction of the tax payable, should be shown in a speCIAl account in the books of the company and may be distributed or capitalized without any
further tax charge. These provisions also apply to state enterprises, cooperatives and branches of foreign companies and are effective for technical projects undertaken from the publication of the new law in the Government Gazette (February 17,1998) and thereafter.
Corporate residence is determined primarily by place of incorporation. However, subject to related tax treaty provisions, foreign corporations are subject to Greek taxation if operations, such as maintaining inventories from which orders are filled and leasing machinery or equipment, are carried on in Greece.
Value-added tax/The standard rate is 18%. There is a reduced rate of 8% on basic necessities (4% on books, newspapers and periodicals). Supplies of goods and services to individuals and legal entities subject to VAT and established in European Union (EU) countries (intra-Union supplies) are exempt from VAT. Exports of goods and certain services to non-EU countries
are also exempt.
Contribution tax on capital accumulation/A 1% tax contribution is imposed on capital accumulation (i. e., formation of business companies and joint ventures, capital increase, ect.) by (1) business companies and joint ventures; (2) cooperatives of all degrees and any other from of company, legal entity, or union of persons or society aiming to make profits; and (3) branches of foreign companies.
Special tax on banking activities/As from May 1,1993 the special tax on banking activities on loans and credit agreements was abolished, and as from January 1,1994 the rate of the speCIAl tax on gross revenues of banks (i. e., interest commissions, discounts, currency or exchange differences,
ect.) was reduced from 8% to 4%. As from September 1,1997 this rate has been further reduced to 3%.
Real estate tax/As from January 1,1997 a real property tax is assessed on all property owners except those owning certain categories of property, i. e., farming or stock farming expanses, mining rights, woody expanses, and buildings and machinery used in business operations, including hotels. New
buildings are exempt for a maximum period of seven years. In addition, certain categories of owners are exempt, such as the Greek state; state corporations, including soCIAl security funds and utilities; embassy and consular property of foreign governments; and hotels for one-half of their land's value. For legal entities the tax rate is 0.7% and is applicable to taxable value in excess of Dr69 million.
Share transfer tax/Transfers of shares are not subject to any transfer tax. However, the transfer of shares of companies wning real property (leased or used otherwise for the purpose of earning income) located in urban areas is subject to a tax of 5%. In addition, a 5% tax is also levied in respect of the sale of shares in a Greek corporation of which the capital, including reserves of any nature, has been invested in urban
immovable property (land and buildings) at a percentage of 60% and over. The tax of 5% is calculated on the value of the shares sold as appraised by the tax authorities.
A tax at the rate of 0.3% is imposed on sales of shares listed on the Athens Stock Exchange. This tax is calculated on the sales value of shares as shown in the table prepared by the brokerage company and is borne by the seller (individuals, corporations, other legal entities, and other groups regardless of citizenship, place of permanent residence or permanent establishment) of the shares. This is effective for sales of
shares on the Athens Stock Exchange as from the second day after the publication of the new law in the Government Gazette (February 19,1998).
Mobile telephone subscribers duty/Effective as from February 1,1998 a duty is charged to all subscribers of mobile telephone companies. This duty is calculated monthly and ranges from Dr500 to Dr2,000 per month, depending on the value of the subscriber's account.
Profits of branches of foreign companies are subject to income tax at the rate of 40%. No tax is withheld on profit transfers to the foreign home office. However, if there is a remittance of profits abroad, the taxable profits must be increased by theportion of remitted profits corresponding to tax-free income or income taxed on thebasis ofspeCIAl regulations after being increased by the applicable tax (grossed up).
Inventory valuation/Inventories are stated at the lower of cost or market (replacement value). LIFO, while permitted, is not used in practice.
Conformity is required between book and tax reporting of inventory.
Capital gains/Capital gains derived from sales of any rights connected with the operations of an enterprise (such as the right of leasing or subleasing, trademarks or patents and similar rights, including profits from thesale of passenger cars and trucks) are subject to income tax at 30%, and realized goodwill, including gains on a business sold as a whole
or a branch, is subject to income tax at a 20% rate. Goodwill realized through mergers of domestic companies is not taxable.
Gains on the sale of shares listed on the Athens Stock Exchange are not taxable if they are set aside to cover losses from future sales. Gains on the sale of shares not listed on the Athens Stock Exchange, shares (parts) of limited liability companies (EPEs), partnerships, including percentages of participation in a society of civil code doing business or in a joint venture, are also taxed at a rate of 20%.
Intercompany dividends/Effective for finanCIAl years ending June 30,1992 and thereafter SAs and EPEs are taxed on their annual profit before distributions. Consequently, profits are taxed only at the company level, and there is no withholding on dividends or profits otherwise distributed. If total annual profits of SAs and EPEs include dividends or profits from
participation in other domestic companies (SAs, EPEs, partnerships, and joint ventures), these profits are deducted to arrive at taxable profits of SAs and EPEs.
Foreign income/Resident corporations are taxed on their worldwide income. Foreign income received by a domestic corporation is taxed together with other income. If reated income tax is withhed abroad, a tax credit is available up to the amount of the applicable Greek income tax.
Stock dividends/Stock dividends are treated for income tax purposes as though they were cash dividends.
Other significant items/Interest earned from interest-bearing securities (bonds and Treasury bills) issued on January 1,1998 and thereafter by the Greek state and interest earned from interest-bearing titles issued in Greece on January 1,1998 and thereafter by the European Investment Bank, the International Financing Organization, the International Bank for Reconstruction and Development, the European Bank for Reconstruction and Development, and the Asian Development Bank is subject to a withholding tax of 10% (7.5% for those issued within calendar year 1997). Interest earned on deposits wth banks operating in Greece, as well as on any kind of bonds and other interest-bearing securities issued by private enterprises, is subject to income tax at the rate of 15% (previously 10%), withheld at source. This withholding tax (7.5%, 10% or 15%) terminates the income tax liability for such income.
Interest earned from any kind of deposits in foreign exchange by nonresidents of Greece with banks operating in Greece, the Postal Savings Bank or the Loan and Consignment Fund, including interest from deposits of banks with each other, including their obligatory or nonobligatory deposits with the Bank of Greece (central bank) and interest from depostits of the Postal Savings Bank and the Loan and Consignment Fund with the Bank of Greece, will remain tax free. Interest earned from interest-bearing securities (bonds and Treasury bills) issued up to
December 31,1996 by the Greek state will also remain tax free. Interest earned from interest-bearing titles issued in Greece up to December 31,1996 by the European Investment Bank, the International Financing Organization, the International Bank for Reconstruction and Development, the European Bank for Reconstruction and Development, and the Asian Development Bank will remain tax free as well.
Effective as from January 1,1998, investment companies and mutual fund management companies are required to pay a tax of 0.3%, calculated (1) in the case of investment companies on the average of their investments, increased by their cash and cash equivalents at current prices as they appear in the quarterly investment tables, and (2) in the case of mutual funds on the half-yearly average of their entire net assets. In addition,
income tax is imposed on the returns resulting from contracts or transactions on derivatives of finanCIAl products made by investment companies and mutual funds. This tax is calculated at the rate of 0.3% on the daily average of the "basis" amounts (notional amounts) relating to the transactions or contracts on the above derivatives.
Special taxation of certain tax-free reserves/40% of the tax reserves formed up to December 31,1996 by SAs, EPEs and branches of foreign companies from the sale of securities and trade investments that have not been distributed or capitalized by the publication of the new law in the Government Gazette (February 17,1998) are subject to a speCIAl tax of 17.5%. These legal entities can choose to have the 17.5% tax applied to more than 40% of the reserves, provided they file the relevant tax return
for payment of this tax within the time limits set by the regulations.
The above provisions also apply to reserves in general (except reserves formed undercertain incentive laws or by certain legal entities) that have not been distributed or capitalized and have been formed by the legal entity form profits that were not taxed because of exemptions based on provisions of laws or circular orders.
Tax-free reserves of technical and construction companies that have arisen because of the difference between actual and imputed profits are taxed at 12.5%.
Depreciation and depletion/Depreciation of tangible assets is compulsory for financial years ending after December 30,1997 (not compulsory for finanCIAl years ended within the period form January 1,1992 through December 30,1997). Eixed assets with acquisition value of up to Dr200,000 each may be written off to profit and loss in the year acquir