I OVERVIEW

i Investment vehicles in real estate

The investment vehicles most commonly used for investing in real estate in Greece are the Greek société anonyme (AE), the limited liability company (ETE) or the private company (IKE), all being referred to as 'corporations' given that as a general rule, and subject to specific exemptions for tax debts, the liability of the shareholders is limited to the amount of their contributions. Institutional real estate investors may also invest through a Greek real estate investment company, which is an entity operating under the supervision of the Hellenic Capital Market Committee (see Section III). From a practical perspective a Greek AE is the most commonly used entity in cases of debt-levered acquisitions. This is because an AE is eligible to issue bond loans under Greek Law 4548/2018 (previous Law 3156/2003), which provides for specific tax exemptions (see Section II.ii, 'Tax framework, Financing of real estate transactions, Indirect taxes on financing').

Furthermore, foreign companies may also directly invest in Greek real estate.

ii Property taxes

Greek taxes are imposed upon acquisition, during the holding period and upon selling Greek real estate (see Section II.iii).The basis for the imposition of most property-related taxes, during the holding period is in principle the objective value of the property.

The objective value system has been in place since 1982 and is used to calculate the market value of real estate in a predetermined manner that is binding both for the tax authorities and taxpayers. Almost every Greek municipality is divided into zones, which are narrower smaller in urban areas and bigger wider in the countryside. The Ministry of Finance sets an initial price per square metre for each zone. To calculate the objective value, the initial zone price set by the Ministry of Finance is adjusted according to special evaluation factors (e.g., the specific street, floor, age, joint ownership, among others), that may increase or decrease the objective value. The Supreme Court has consistently ruled2 that objective values and in particular zone values constitute predetermined values that aim to reflect the fair market value of the property that diligent, well informed and unrelated parties would be willing to accept for the transfer of the property. Relevant objective values, therefore, constitute a rebuttable presumption for computing the market values of real property. Taxpayers have the right to challenge the validity of the objective values and predetermined zone prices if they can prove, based on comparable data, that the objective value is higher than the market value of their real estate.

The zone values are to be reassessed by the Ministry of Finance every two years to confirm that they are aligned with market values, following a review of comparative data on sale and lease transactions, and consultation with various stakeholders, such as the municipalities, valuers, civil engineers, etc. Historically, the statutory values of properties in areas subject to town planning have been lower than the market values, before the joint Eurozone–International Monetary Fund financial rescue package in 2010, which resulted in a significant decline in the Greek economy including the values of residential and commercial properties.3

Notwithstanding the collapse of property values due to the crisis, the reassessment of the objective values was effectively frozen for a period of seven years from 2008. Following taxpayers' appeals, the Greek Supreme Administrative Court4 ordered the Ministry of Finance to readjust the objective values of properties in areas subject to town planning within six months. Following the failure of the Ministry to comply with that deadline, the Supreme Administrative Court ordered5 the readjustment of the statutory values with 21 May 2015 as the effective date of the readjustment. The Ministry of Finance finally readjusted the values in 20166 with retroactive effect as of 21 May 2015.

However, the relevant readjustment applied horizontal reductions of the zone values and the commerciality coefficients, and thus technically failed to comply with the law, which required taking into account comparative data per location and consulting with competent stakeholders. This resulted in further tax disputes and the annulment of the relevant ministerial decision with reference to the zone values of specific locations. The Greek government undertook in the fourth memorandum of understanding between Greece and the European Commission by the end of March 2018 to rationalise and align the objective values to the market values as well as to develop a dedicated team and a permanent IT system for property valuation.7 Finally, in June 2018 the zone prices were readjusted8 with reference to all areas of taxation as of 1 January 2019 and exceptionally with reference to the unified real estate tax (see Section II.iii) as of 1 January 2018. As per the Ministry of Finance, a total of 10,216 price zones were adjusted to reflect market values in areas within town planning. The values of 2,122 price zones were reduced, the values of 3,792 price zones were increased, whereas 4,302 remained stable.9 Further readjustments of the objective values have been scheduled within 2019 and 2020. Furthermore, the electronic Registry of Property Values, where data of real estate transactions is reported, including among others the municipality where the property is located, the type of property, surface and transaction value, was launched within 2017 and is publicly available.10

There are still some areas both within and outside the town planning regime where the objective value system does not apply. Accordingly, the market value of real estate located therein is calculated based on comparative data such as previous sales of real estate in the area.

II ASSET DEALS VERSUS SHARE DEALS

Most inbound real estate investment structures consist of a Greek corporate entity acquiring and holding the real estate, and a non-Greek parent company, usually resident in an EU jurisdiction and qualifying under the Parent Subsidiary and Interest Royalty Directive. In terms of exiting the investment, non-resident corporate sellers usually favour share deals since capital gains earned on the sale of shares in local companies are not subject to Greek taxes. Tax-related considerations relevant to the choice of using share deals include, on the one hand, the exemption of share deals from indirect taxes (VAT and stamp duty), real estate transfer taxes and share transfer taxes (with the exception being the 0.2 per cent sales tax that applies exclusively to transfers of shares admitted for trading in a stock exchange); and on the other hand, restrictions on allocating the purchase value to the underlying assets, depreciating the acquisition value of the shares and deducting business expenses incurred for the acquisition of the shares.

i Legal framework

Acquisition of real estate entities

The acquisition of shares in real estate entities is rather straightforward, given that there are neither formal requirements for the share purchase agreement to be vested in a specific form nor any requirement for registering the relevant agreement with the land registries. Border area permits and restrictions (see below) apply equally in cases of share deals.

Participation in some forms of Greek companies requires the prior registration of the new shareholder with the Greek tax authorities and the issuance of a Greek tax identification number. The relevant procedure requires the filing of legalisation documents and personal data (e.g., a copy of a passport of a private individual) as well as the appointment of a Greek tax representative who needs to be a Greek tax resident individual and has to be authorised to receive any correspondence addressed by the tax authorities to the taxpayer. Having a Greek tax identification number does not necessitate the filing of an income tax return in Greece. Whether a Greek tax return has to be filed depends on the identity of the taxpayer (i.e., corporate entity or individual) and the source of Greek income earned, if any.

In principle, shareholders of Greek corporations are not liable for the debts of the corporations. Exceptionally, shareholders could be held jointly liable with the taxpayer for the special real estate tax (see Section II.iii). Moreover, shareholders holding more than 10 per cent of the share capital of a taxpayer that is dissolved and has tax debts upon its dissolution could also be held jointly liable with the taxpayer with a capped liability that is equal to the profits that have been distributed to them, be it in cash or kind, within the last three years from its dissolution. In any case, prior to the acquisition of shares in a real estate company, a legal and tax due diligence process is highly advisable.

Share acquisitions are exempt from indirect taxes (VAT and stamp duty), real estate transfer taxes and transfer taxes, with the exception being a 0.2 per cent sales tax that applies exclusively to transfers of shares admitted for trading in a stock exchange.

Acquisition of real estate assets

In accordance with the law, unless a special licence is required (see below), the mandatory procedure for proceeding with the acquisition of a real estate asset is the filing of the real estate tax return for payment of the real estate transfer tax or VAT (see Section II.iii), the execution of the notarial transfer deed (see Section II.i) and its registration (see Section II.i). Customary legal and technical due diligence reviews prior to acquisition extends to title checks, land use restrictions, permits and restrictions for border areas, islands and forest areas, and archaeological restrictions.

Title checks

According to customary practice, the title check of the ownership titles of the seller and its predecessors goes back to 20 years for the purpose of confirming that the seller has lawfully acquired ownership and that the title is clean and free from any encumbrances, for instance mortgages, prenotations of mortgages, confiscations or other claims of third parties.

The title check search is conducted in the following public registries of the area where the real estate property is located: the Land Registry; and, for regions of Greece where the Cadastre regime has been fully implemented, the Cadastre Office.11 While the Land Registry records are kept on an owner-name basis, the Cadastre records are property-based.

Checks regarding land use restrictions

Another key issue to check is the location of the real estate, as several restrictions apply to different planning zones, depending on whether the property is located within an urban planning zone or outside. Pursuant to Article 24 of the Greek Constitution, urban planning is placed under the responsibility of the state. The relevant constitutional provision is given specific implementation through a set of laws and provisions. Areas outside the urban planning zone were not originally intended to serve for building purposes and therefore constructing a building in those areas is subject to several restrictions. In general, building regulations determine the minimum total surface of the plot, the percentage of coverage of the plot, the minimum distances between buildings, the maximum building coefficient, etc.

Border area permits and restrictions

In the past, the majority of areas that were highly popular with tourists (such as many of the islands) were characterised as 'borderline areas' and real estate transactions involving foreign investors (EU and non-EU) were either prohibited or subject to a series of time consuming pre-approval procedures. Those restrictions applied both to asset (acquisition or long-term lease of land) as well as to share deals (transfer of shares of companies that owned real estate assets in border areas). The present position is that investors (individuals or legal entities) coming from the European Union or from European Free Trade Association (EFTA) countries are fully exempt from any restriction, government scrutiny or prior authorisation, and may thus freely engage in any (direct or indirect) real estate transaction in any borderline designated area. Non-EU/EFTA investors are subject to a review conducted by the competent decentralised administration.

Island permits and restrictions

The acquisition of in rem or contractual rights over private islands or real estate properties situated on private islands, regardless of the islands' geographical location, requires a special licence issued by the Minister of Defence, following the consent of the General Staffs (Army, Navy and Air Force). The main criteria for obtaining the licence are the absence of criminal convictions of the applicant as well as the absence of threats to the country's security and political system from the proposed transaction.

Public islets are not subject to sale but may be leased on the same conditions.

Forest area restrictions and forest maps

Another issue to be examined is whether part or all of the real estate to be acquired is located within a forest area, as special provisions apply for those areas and special certificates need to be collected for the purpose of completing a transfer. The applicable legislation does not allow alteration of the forest nature of such land and thus the construction of buildings is prohibited unless exceptionally permitted under specific frameworks (e.g., the strategic investments framework).12

It is often debatable whether land constitutes forest land and whether it is state or private forest land, since the forest maps registry has not been completed yet. Based on a revised timeframe, it is anticipated to be completed by the end of 2021.13 The work involves the delineation and recording of forests and forestlands in an accurate, transparent and definitive way. The competence for posting the forest maps and all relevant steps up to the ratification of the forest map lies with the competent forest authority of each area, and publishing takes place electronically in a platform operated by the National Cadastre & Mapping Agency SA.14

Archaeological restrictions

Greek law has established a regime of absolute protection of ancient and modern monuments, which is founded in the Greek Constitution. Restrictions apply in relation to the exploitation of real estate properties located within specific areas that are designated zones of special protection owing to their proximity to antiquities or properties that are located close to monuments.

Execution of the notarial deed

According to Greek law, the deed regarding the establishment, transfer, amendment or abrogation of any in rem right on real estate property must be in writing and be vested the form of a notarial deed.

The previous payment by the purchaser of either the real estate transfer tax or VAT (see Section II.iii and Section I.ii) is a prerequisite for the execution of the sale deed before a notary public. Having filed the tax return with the competent tax authority and paid the corresponding tax, a copy of the tax return and the tax payment receipt are attached to the transfer deed. Prior to filing that tax return, the prospective purchaser (i.e., legal entity or individual) should obtain a tax identification number in Greece (see above). A number of certificates need to be attached in the notarial deed. In particular, the tax, the social security and the municipality agencies should certify that the seller does not owe taxes, social security contributions and municipality taxes, and that he or she has accurately reported the real estate for property registry purposes (with the same characteristics with the ones it is described in the notarial deed) and has paid the annual property taxes during the previous five years. Moreover, a certificate executed by a civil engineer should be collected evidencing that no unauthorised constructions exist on the real estate and no unauthorised change of use has occurred.

Furthermore, the issuance of an energy performance certificate, regarding the energy consumption and relevant emissions deriving from the use of the buildings to be transferred, must also be attached to the deed.

The notary public is paid a percentage fee calculated on the higher of either the purchase price or the objective value. That fee may range from 0.8 to 0.01 per cent depending on the value of the real estate or transaction15 (that is the higher between the objective value and the purchase price). Those fees are paid by the buyer of the real estate.

Registration of the notarial deed

Following the execution of the notarial deed, this must be registered with the land registry and the cadastre. The fees for the registration of the notarial deed with the respective Land Registry are between 0.475 to 0.775 per cent on the higher of either the purchase price or the objective value. Land registry fees are borne by the buyer of the real estate. Additional fees are payable in places where the Cadastre operates, the amount of which varies according to whether the Cadastre is fully operational or not.

ii Corporate forms and corporate tax framework

Corporate structures commonly used for real estate investments are AEs, EPEs and IKEs. REICS are regulated entities operating under a special framework and are not as common in Greece (see Section IV). Furthermore, foreign companies may opt to invest directly in Greek real estate.

AE

The AE is the equivalent of a corporation under Greek law, namely it is a stock company governed by Law 4548/2018, which amended the previously applicable law (Law 2190/1920) as from 1 January 2019. The rule is that the liability of shareholders is limited to the amount of their contribution to the share capital, which is represented by shares of stock. Nevertheless, shareholders may be held jointly liable with the company for specific tax debts (see above).

An AE may be established from the beginning or subsequently become a single shareholder entity. Depending on the size of the AE, it must have at least three directors. Micro or small AEs16 can have a sole director-administrator, who must always be an individual. The directors need to obtain a Greek tax identification number and non-Greek tax residents need to appoint a tax representative. For non-EU nationals, the person acting as legal representative of the AE has to obtain a work and residence permit if he or she plans to reside and work in Greece.

Formation of an AE is subject to a minimum capital requirement set at €25,000 that has to be paid in full upon incorporation. Contributions are of a capital nature but payment may take place either in cash or in kind (i.e., in other assets, including intangibles). However, in-kind contributions trigger a valuation procedure.

An AE is formed through a simplified, one-stop procedure17 and may be incorporated either by a notarial deed or a private instrument.18 It is deemed to have been formed as of the date of its registration with the General Commercial Registry. A summary of the articles of incorporation of the newly established company is published on the website of the General Commercial Registry.

The historical requirement of state administrative approval has been abolished for most AEs by virtue of Law 3853/2010 and, therefore, an AE is deemed to have been formed following completion of the above procedure, regardless of the amount of its share capital. An administrative approval is only required for companies active in specific business sectors, namely publicly traded companies, banking and credit institutions, insurance companies and sports clubs.

The establishment procedure of an AE is usually completed within 10 to 15 days and entails costs for legal fees, notarial fees and various incorporation fees in the form of taxes, duties and publication expenses.

Limited liability companies

Greek law recognises two distinct types of limited liability companies: the EPE and the IKE.19 They combine features of a partnership and corporation, since as a general rule and subject to special exemptions for tax debts, the liability of the partners is limited to the amount of capital contributed.

The EPE was historically the corporate vehicle of choice for small and medium-sized businesses. However, the IKE has become the preferred legal form,20 following its enactment in 2012, especially with start-up businesses, since it offers a more flexible and informal structure (e.g., in principle there is no requirement for its constitutional documents to be vested in a notarial deed, the registered corporate name of the IKE does not need to include the names of the partners or the objective of the company, and the type of partners' contribution can vary between capital and non-capital contributions).

EPEs and IKEs may be established as or subsequently become a single partner entity. However, the establishment of a single partner EPE is invalid if the sole partner (individual or legal entity) is the sole partner of another single-partner EPE; or if the sole partner of the single partner EPE is another single partner EPE. No similar restriction applies in respect of IKE.

The powers of management and representation in an EPE or IKE are exercised by one or more administrators, which may be foreign individuals. Such individuals, however, must be registered with the competent Greek tax authorities, namely they are required to have a Greek tax identification number. Non-EU nationals have to obtain a work and residence permit, if they plan to reside and work in Greece.

There are no minimum capital restrictions on the formation of an EPE or IKE. Consequently, the partners may freely determine the amount of capital to be contributed. Contributions in IKE may either be of a capital nature (i.e., subject to valuation) and therefore payable in cash or in kind, or non-capital.

EPEs and IKEs are formed through a simplified, one-stop procedure.21 With regard to EPEs, the articles of incorporation are executed before a notary public. The notary public then undertakes to perform all necessary actions for the registration of the company with the General Commercial Registry. As far as the IKE is concerned, the entire process takes place before the General Commercial Registry (one-stop-shop department). Both the EPE and the IKE are deemed to have been formed as of the date of their registration with the General Commercial Registry. A summary of the articles of incorporation of the newly established company is published on the website of the General Commercial Registry.

Branches of foreign companies

If a foreign company has acquired the real estate directly and intends to carry out business activities in Greece in connection with its exploitation, it will need to set up a corporate branch in Greece.

A branch is a financially and legally dependent department of the foreign entity. It does not have a legal personality and its activities are performed in the name and on behalf of the foreign company. It may perform all activities provided for in the articles of incorporation of the foreign company, except that there are limitations on the power of attorney for the establishment of the branch in Greece.

For the branch to be established, it needs to register with the General Commercial Registry, which will publish an announcement regarding the branch's registered seat, objective, name and legal representative.

Additional licensing may also be required depending on the kind of activities performed (e.g., in the case of certain industrial establishments).

The main obligations of branches of foreign companies during their operation in Greece are to submit to the General Commercial Registry:

  1. all changes to the data that has been submitted for their establishment;
  2. a copy of the annual balance sheet of the foreign company; and
  3. a record of the branch's operations in Greece during the financial year of the respective balance sheet.

A branch of a foreign entity is managed by a legal representative, who may be a foreign individual, whose powers are defined by a power of attorney issued by the foreign company.

Tax framework

Corporate income tax rate and tax base

All types of corporations, legal entities and permanent establishments holding Greek properties and earning income from Greek sources, whether or not they have legal personality, are required to maintain fiscal books and are taxed on the basis of the same rules. In general, their income is classified as business income, irrespective of its source, and their taxable profits are determined on the basis of their profit-and-loss account prepared according to the accounting principles applied (either Greek Accounting Standards or International Financial Reporting Standards) as readjusted based on the tax rules of the Income Tax Code (ITC). The nominal corporate income tax rate applicable to corporations (AE, EPE and IKE) and foreign entities operating in Greece, including foreign entities holding Greek real estate, with the exception of credit institutions, for fiscal years from 1 January 2019, is 28 per cent to be gradually reduced over the next three years to 25 per cent. The reduction will take place by one point annually as follows: 27 per cent for fiscal year 2020, 26 per cent for fiscal year 2021 and 25 per cent for fiscal years 2022 onwards. There is a tax prepayment of 100 per cent offset against the corporate income tax due within the next year. Exceptionally for the first three years of newly set-up businesses, tax prepayment is reduced by 50 per cent.

Gross income derived from real estate is reduced by tax deductible expenses to arrive at the net income. In this way, the annual gross income of companies is reduced by the depreciation of fixed assets and by the expenses incurred in relation to their activity (operating expenses). The annual depreciation rate for buildings is 4 per cent. Interest paid for the acquisition of real estate is in principle deductible subject to certain limitations (see below). Furthermore, the ITC provides for specific expenses that are not tax deductible, including expenses in excess of €500 that have not been paid by means of bank wire transfer or bank cheques; bad debts in excess of the bad debt provisions provided in the ITC; penalties and fines; and expenses paid to companies registered in non-cooperating jurisdictions22 or the jurisdiction of a preferential tax regimes,23 unless the taxpayer proves that they have been paid for business purposes and do not result in profit shifting. Under previously applicable provisions property taxes were non-deductible expenses, but under the new rules the unified real estate tax (ENFIA) is deductible for tax purposes.

Irrespective of the fact that income from immovable property is classified as business income when earned by legal persons, reference to income from immovable property is still of relevance with respect to specific tax compliance obligations of those legal entities (e.g., for imputed income purposes, for special real estate tax purposes, for special reporting of rental or granting of free-use agreements, reporting for income tax purposes). Income from immovable property is either actual or imputed, the latter being earned by persons holding real estates that are occupied either by their owners for the conduct of their business activities or by third parties that have been granted free use. Imputed income is taxable in all cases and is assessed at 3 per cent on the objective value of the real estate. However, for legal entities that use their properties for their own business activities their imputed income is equal to the imputed expense, and therefore from a tax perspective the overall impact is neutral. In addition, investments and enhancements financed by the lessee that remain to the benefit of the owner following the termination of the lease may constitute in kind taxable rent to be taxed either during the term of the lease or upon its termination.

Branches of foreign companies have the same rates and tax base as Greek entities. However, the remittance of their profits to the head office is not treated as a dividend and therefore it is not subject to any withholding tax. Taxation of dividends is analysed under Section II.iv.

Financing of real estate transactions
Interest limitation rules

There are no thin capitalisation rules in Greece. Interest on borrowing to acquire real estate assets are deductible subject to the earning-stripping rules. In particular, net interest expense, if in excess of €3 million, is deductible provided that it does not exceed 30 per cent of the company's EBITDA. EBITDA is assessed under the Greek accounting principles following the readjustments for tax purposes. Net interest is defined as the amount by which interest expenses and other financing associated costs exceed interest revenues. Interest that exceeds the thresholds may be carried forward indefinitely.

There are also restrictions on the deductibility of interest payable to tax residents (individuals or legal entities) in non-cooperative or preferential tax regimes (see Section II.ii, 'Tax framework, Corporate income tax rate and tax base').

Interest on related parties' loans is subject to transfer pricing rules while interest on third-party loans, other than interest on loans by banks, inter-bank loans and corporate bond loans that exceed specific statistical thresholds set by the Bank of Greece is not deductible. For corporate law purposes, the granting of loans to affiliated entities is subject to prior corporate approvals and publication in the Companies Registry.

In the case of share deals, based on the guidelines of the Ministry of Finance, interest on loans for the financing or the acquisition of shares is not tax deductible.

Withholding tax on Greek-source interest

Greek-source interest payments, with the exception of interest payments to banks, are subject to 15 per cent withholding tax based on domestic tax rules. Relevant withholding tax may be reduced on the basis of the applicable double tax treaty between Greece and the country of the beneficiary of the income and eliminated for interest payments qualifying under the Interest Royalty Directive (i.e., interest payments between qualifying entities, holding a minimum participation of 25 per cent for an uninterrupted period of 24 months).

Indirect taxes on financing

Loans agreements signed and executed in Greece, both intragroup and third-party loans, with the exception of bank loans, are in principle subject to 2.4 per cent stamp duty, but there is an exemption for loans granted by Greek and foreign banks, although these are subject to the special bank contribution at 0.6 per cent.24 Bond loans issued by Greek AEs are exempt from both stamp duty and the bank special contribution.

iii Direct investment in real estate

Taxes upon purchase

Real estate transfer tax

Subject to the imposition of VAT on new buildings (discussed in Section II.iii) the sale of real estate is subject to real estate transfer tax. The real estate transfer tax is calculated on the objective value (see Section I.ii) or the actual transfer value agreed, whichever is higher, and it is a payable by the purchaser. It is levied at the rate of 3 per cent. An additional 3 per cent municipality tax is also payable, calculated on the amount of the real estate transfer tax due, with the result that the transfer tax adds up to 3.09 per cent. Reduced rates of real estate transfer tax apply in certain cases, such as divisions, exchanges and mergers.

VAT

The sale of new buildings or parts of new buildings (i.e., buildings that are transferred prior to their first occupation and the building permit for which was issued after 1 January 2006) and the land on which they have been constructed is in principle subject to VAT at the standard rate (currently 24 per cent). The tax base for the calculation of VAT is based on the higher value among the actual sale price, the objective value of the real estate property and the construction cost, as well as the technical, quantitative and financial data included in the respective building permit.

Taxes during the holding period

Unified real estate tax

The unified real estate tax (ENFIA) is an annual property tax that applies as of 1 January 2014 and burdens persons (i.e., both individuals and legal entities) holding in principle in rem rights (ownership, bare ownership, usufruct, etc.) on real estate property located in Greece. Exceptionally, ENFIA may also burden persons having possession over state property.

ENFIA consists of main and supplementary tax and is imposed on the owner of the property on 1 January of each year. The main tax is computed on an asset-per-asset basis, and the same formula is applied both for individuals and legal entities (separate formulas apply for buildings, plots or fields); the amount of tax due ranges from €0.001 to €13 per square metre, readjusted by a number of coefficients (based on floor, age, façade, etc.).

The supplementary tax is imposed for legal entities, including real estate investment companies (see Section IV) on a flat rate (0.55 per cent) on the tax value of the properties. Respective tax value is computed on the basis of a formula which is quite similar to the formula computing the objective value (see above). A reduced flat rate (0.1 per cent) applies to properties that are by legal entities for their own trade, services, agricultural and other business activities. Moreover a reduced flat rate (0.35 per cent) applies for properties held by not-for-profit entities provided that specific requirements are met. Contrary to the flat rates applicable to legal entities, the supplementary tax of private individuals is computed on progressive tax rates that apply per specific taxable bracket ranging from zero per cent for the total values up to €250,000 to 1.15 per cent for total values exceeding €2 million.

ENFIA is assessed electronically by the information technology systems of the Ministry of Finance on the basis of the property registry (i.e., based on a special tax form filed by the taxpayer, the E9 form) that is maintained for each taxpayer.

Special real estate property tax

Special real estate tax (SRET) constitutes a special anti-avoidance rule (SAAR) applicable to legal persons and entities holding Greek real estate on 1 January. SRET is imposed annually at a 15 per cent rate on the objective value of the properties, unless the owners qualify for one of the applicable exemptions.

As per the explanatory report of the Law, SRET was enacted to tackle tax avoidance that was effected by means of offshore companies holding Greek real estate ('because the secrecy surrounding the ownership status of offshore companies obviously enables the real owners of immovable property to stay anonymous and avoid taxes related to their property').25 Furthermore, explanatory reports of the legislative amendments (Article 57 of L. 3842/2010 and subsequent amendments to the SRET law) stated that the amendments of the SRET Law were a result of balancing the facilitation of real estate investments, against the increase of transparency requirements for the structures, with the aim of tackling tax avoidance, and protecting the tax base and the fair allocation of taxes.

The most commonly applicable exemption for properties used as passive income investments and for new set ups or development projects is the disclosure exemption either up to the ultimate beneficial owners (UBOs) (full disclosure exemption) or up to a regulated entity (regulated entity exemption) or up to a company with shares admitted for trading in a regulated market (listed entity exemption). On the other hand, the most commonly used exemption for properties used as instrumental assets for the conduct of business activities, namely tourism activities, is the business income exemption.

The full disclosure exemption requires that all UBO private individuals obtain a Greek tax ID and that the interposed entities are registered in cooperative jurisdictions and maintain documents giving evidence to the identity of their shareholders (such as share registers of depository registers).

Greek companies whose corporate objective is to purchase, manage, invest in and exploit Greek real estate must file a SRET return irrespective of whether they are exempt or not from that tax.

Municipal taxes

The following municipal taxes and fees are imposed on real estate property: cleaning and lighting fees, payable by the owners or users of buildings for the collection of waste and the lighting of streets, the amount being based on the size of the building; fees for use of streets, squares and pavements; a general duty (the municipal real estate duty), payable by the owners or users of buildings or spaces supplied with electricity, ranging between €0.02 to €0.07 per square metre; and a tax on building licences and for the expansion or amendment of zoning variances.

A small municipal property tax is levied at a rate ranging between 0.025 per cent and 0.035 per cent on the market value of immovable property located in the territory of a municipality.

Stamp duty and VAT

Payments under a lease agreement attract stamp tax. The tax is calculated on the annual rent, as it has been agreed in the lease contract. Stamp tax is payable at a flat rate of 3.6 per cent. It is payable to the state by the lessor. Nevertheless, the parties may agree that the tax will be only borne by one of them. In practice, the tax is borne by the lessee. Stamp tax is deductible for income tax purposes. Residential leases are exempt from stamp tax.

There is an option for commercial leases to be subject to VAT at 24 per cent (applicable from 1 June 2016). Until 2013, VAT was optional only for commercial leases of stores within shopping centres, as those were defined in the VAT law.

Taxes upon disposal

Legal entities-sellers; corporate income tax

The capital gains realised on a transfer of real estate by corporate taxpayers and by individuals carrying on business are treated as business income and are subject to the standard corporate income tax rate, currently set at 28 per cent, to be reduced to 25 per cent starting from 2022 onwards. In particular, capital gains are added to the company's annual income and, following deduction of allowable expenses and any tax losses, are subject to income tax at the corresponding rate. The capital gains realised upon a disposal of real estate are calculated by subtracting from the transfer value of the property the value of the asset as it is reflected in the accounting books (i.e., the acquisition cost that is increased with any revaluation and reduced by the depreciation effected).

Permanent establishment issues

The Greek Income Tax Code provides for a definition of permanent establishment that is in line with the OECD Model Tax Convention. Treaties for the avoidance of double taxation between Greece and other countries may vary in their definition of a permanent establishment and taxation of foreign residents.

According to the Greek Income Tax Code:

  1. income from immovable property and from other rights connected with Greek immovable property in Greece constitute Greek-source income;
  2. income from immovable property is classified as business income when earned by legal entities; and
  3. business income earned by foreign entities is taxable in Greece only if the foreign entities hold a permanent establishment in Greece and the relevant income is attributable to that permanent establishment.

Pursuant to Ministerial Decision No 1069/2015, foreign entities that are tax resident in states with which Greece has signed a double taxation agreement will be taxed in Greece on the income generated from immovable property situated in Greece. According to the decision, Greece's right to tax in such cases is based on the provisions of the relevant double taxation agreements, which follow the terms of the OECD Model Tax Convention, in relation to the taxation of income from immovable property26 and the taxation of business income,27 stating that there is no need to examine whether the foreign tax resident holds a permanent establishment in Greece.

According to the ministerial decision, foreign legal entities that are tax resident in states with which Greece has not signed a double taxation agreement will be deemed to hold a permanent establishment in Greece if they exploit immovable property situated in Greece and therefore earn Greek-source income. Thus, based on the decision, which is binding on the tax administration, foreign entities holding Greek real estate are effectively subject to Greek taxes for the income from their Greek property and from capital gains upon its disposal, irrespective of whether the facts gave rise to a permanent establishment or not.

iv Acquisition of shares in a real estate company

Taxes upon acquisition

There are no direct or indirect taxes upon acquisition of shares in Greek companies, except for a sales tax at the rate of 0.2 per cent that is levied on sales of shares listed on the Athens Stock Exchange effected on or off exchange.

Taxes on dividends

Subject to applicable double taxation agreement provisions or EU legislation, dividends distributed from 1 January 2019 by Greek legal entities and other legal entities maintaining double entry books are subject to a 10 per cent tax. Profit distributions performed by domestic corporations to their EU parent companies are exempt from any withholding, provided that the Parent-Subsidiary Directive (Council Directive 2011/96/EU) is applicable, namely that the foreign company is subject to corporate tax in the EU, has one of the forms listed in the annex to the Directive and has a minimum 10 per cent shareholding in the subsidiary for at least two years. Profits' remittance by the permanent establishment of foreign entities to their head offices is not subject to withholding tax.

Capital gains taxes

Gains realised from the sale of participations in companies holding Greek properties by tax resident corporate taxpayers or permanent establishments of foreign entities qualifies as business income and is taxed on the basis of the applicable corporate income tax rate (see Section II.ii). On the other hand, gains from the sale of shares by foreign tax residents that do not hold such shares through a permanent establishment in Greece are exempt from Greek taxes until 31 December 2019.

The new Greek Income Tax Code, which has been in force since 1 January 2014, introduced a specific provision for real estate rich companies, namely companies deriving more than 50 per cent of their value from real estate. Under that provision, capital gains from the transfer of shares of such companies are treated similarly to capital gains from the transfer of real estate (see Section II.iii). However, the provision has been suspended from 1 January 2015 to 31 December 2019 and thus no guidelines regarding its application exist so far. Nevertheless, even if such rules applied under domestic rules to non-resident corporations, if the foreign corporation is tax resident in a country that has a double tax agreement with Greece, it would be necessary to review the relevant treatment under the double tax agreement (see Section VI.ii).

III REGULATED REAL ESTATE INVESTMENT VEHICLES

i Regulatory framework

There are two different types of regulated vehicles that may be used for real estate investment in Greece, namely real estate mutual funds and real estate investment companies (REICs). The establishment, licensing, and operational requirements and restrictions in relation to REICs and real estate mutual funds, as well as their supervision, are set out in Law 2778/1999 and relevant decisions and circulars issued by the Hellenic Capital Market Commission (HCMC). Furthermore, Law 4209/2012 on alternative investment fund managers (implementing in Greece the EU Alternative Investment Fund Managers Directive) is concurrently applicable to REICs.

ii Overview of the different regulated investment vehicles

REICs qualify as alternative investment funds managed internally and are in practice the only type of regulated vehicle used for investments in real estate in Greece, since no real estate mutual fund has yet been established in Greece. In view of the fact that no real estate mutual funds have been established in Greece up to now, Greek REICs are set out in more detail below.

iii The Greek REIC in detail

Establishment

REICs are incorporated in the form of an AE following approval by the HCMC, with a minimum share capital of €25 million at the time of incorporation. Its corporate objective is exclusively the management of real estate property investments. The REIC's shares are registered and the company is required to list its shares on Athens exchange within two years from its incorporation. Upon listing, at least 50 per cent of the REIC's share capital has to be invested in eligible investments. The HCMC may grant an extension to the two-year period for the listing of the shares for an additional period of up to three years.

REICS are closely supervised by the HCMC, which should be notified and approve of any amendment to the articles of association and any changes in their share capital. Changes in the shareholding structure of a REIC exceeding 10 per cent of the voting rights or share capital are subject to the approval of the HCMC.

REICS' investments are kept with a custodian bank or other institution that provides custody services and has an establishment in Greece. Rules applicable to listed companies are also applicable to REICs from the moment of their incorporation. Thus, REICs should apply corporate governance rules (including the appointment of executive and non-executive board members, establishment of internal control systems, etc.).

In addition, REICs must comply with the internal organisation and transparency requirements applicable to alternative investment fund managers and must accordingly separate their risk management operation from the rest of their business operations, set remuneration policies compatible with efficient risk management and establish conflicts of interest mechanisms. Finally, REICs are subject to specific transparency obligations, namely the provision to investors and the HCMC of its annual financial report and the provision of specific information to investors in relation to, among others, the investment strategy, internal procedures, structure and liquidity risk management applied by the REICs.

REIC eligible investments

In relation to the business operation of REICs, the Greek legal framework provides specific types of eligible investments.

Investments in real estate property of at least 80 per cent of REICs share capital are permitted, including investments in:

  1. real estate properties located in Greece or in an EU/EEA Member State, used as residential property, tourist facilities and business premises, or for carrying out commercial and industrial activities;
  2. real estate properties under development to be completed within 36 months from specific commencement dates, where development costs cannot exceed 40 per cent of the REIC total investments;
  3. real estate properties located outside the EEA that can be immediately used for the purposes under (a) above and where total investment value does not exceed 20 per cent of the total REIC investments; and
  4. land to be developed within a specific designated timeframe (i.e., a building permit to be granted within five years from acquisition), where total investment value does not exceed 25 per cent of the REIC investments.

Among others, participation in the following schemes also constitutes eligible investments:

  1. real estate special purpose vehicles with minimum holding of 80 per cent;
  2. associated companies with similar corporate objectives for the purpose of the development of a real estate project for at least €10 million with a minimum holding of 10 per cent; and
  3. regulated UCITS,REICs and AIFs exclusively engaged in real estate investments and investing in similar eligible investments with minimum holding of 80 per cent.

Finally, investments on money market instruments of up to 10 per cent of the REIC's share capital are permitted for a reasonable time until the realisation of investments in real estate.

Requirements to access the REIC regime

REICs must obtain an operating licence by the HCMC. The company must submit with its application a detailed description of the investment policy and the uses of the real estate in which the company will invest its assets, including the market data on which its strategy is based and the means it intends to use to achieve its development goals. The HCMC will assess the organisation; the technical and financial resources of the company; the credibility and experience of the managers, especially in the field of real estate investments; the suitability of the founders for securing the sound management of the company; and the existence of corporate governance rules. REIC shares are registered and must be listed on the Athens exchange or any other organised market within 24 months – or within 36 months following special permission by the HCMC – from the company's date of establishment.

iv Tax regime

The framework governing REICs sets forth different tax rules, various exemptions and special provisions that make a REIC an appealing vehicle for significant real estate investments. The majority of those special provisions and exemptions apply also to the real estate subsidiaries of REICs.

REICs are exempt from corporate income tax. They are only subject to tax on the average of the fair market value of their investments, (including cash items) at a rate equal to 10 per cent of the interest rate provided by the European Central Bank for main refinancing operations (MRO increased by one percentage point), which cannot be lower than 0.375 per cent. Relevant tax is paid on a six-month basis and exhausts the tax liability of the REIC and its investors. Special rules apply to income from securities. A REIC also qualifies for tax neutral reorganisations (e.g., mergers, demergers and sector spin offs).

The acquisition of real estate property by a REIC is fully exempt from any tax or duty while any capital gains realised upon disposal of real estate assets are also exempt since the sole taxation of the REIC consists of the tax on its assets including cash items.

REICs are subject to the contribution of Law 128/1975 on loans but they are exempt from special real estate tax (see Section II.iii). However, they are subject to the unified real estate tax (ENFIA) like any other corporate entity holding Greek real estate (see Section II.iii). Real estate mutual funds are afforded the same tax treatment as REICs.

v Tax regime for investors

Dividends distributed by Greek REICs are not subject to dividend withholding tax.

No capital gains tax is imposed on the transfer of non-listed REIC shares based on the REIC Law. Once the shares of the REIC are admitted for trading in the stock exchange, the capital gains tax treatment is to be reviewed taking into account the tax residency status and identity of the seller. Based on the Income Tax Code, no Greek tax is due if the seller is a non-Greek-resident legal entity with no permanent establishment in Greece (see above). In addition, a 0.20 per cent sales tax applies exclusively in case of transfer of shares admitted for trading in a stock exchange.

vi Forfeiture of REIC status

If REICs do not achieve the listing of their shares on the Athens exchange within two years from incorporation or until the lapse of the extension granted by the HCMC (which cannot exceed three years), the latter will revoke the operating licence and the company will be dissolved.

The licence can be also revoked by the HCMC for other reasons, for example if the REIC has not made use of the licence within 12 months or has explicitly resigned from it, has ceased its activities for a period of more than six months, does not fulfil its licence requirements, or has committed serious breaches of the applicable legislation.

In the event of revocation of the operating licence, the tax benefits provided for it, as well as any other favourable tax arrangements provided in other laws, shall be revoked and REICs are obliged to return all the tax benefits received.

IV INTERNATIONAL AND CROSS-BORDER TAX ASPECTS

i Tax treaties

Greece entered into 57 tax treaties between 1953 and 2014. All tax treaties, except for those concluded with the United States and the United Kingdom, follow, in principle, the OECD Model Tax Convention. These treaties define, in general, certain key terms, such as the permanent establishment or place of taxation and provide for certain tax exemptions at source in favour of tax residents of the other country or the special treatment of certain types of income.

The 'real estate rich property clause' (see Section II.iv) is found in the treaties with Azerbaijan, Canada, China, Ireland, Israel, Malta, Morocco, Spain, Switzerland and Ukraine. Greece incorporates the clause in its more recent treaties and those that are renegotiated. Greece has expressed its intention to modify the existing tax treaty articles in line with Article 9 of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). In particular, the article introduces a special anti-abuse clause in relation to the right to tax capital gains earned from the alienation of shares or interests of entities deriving their value principally from immovable property situated in one contracting state (property rich companies). Whether Article 9 will become effectively applicable also depends on the approach of the other above-mentioned contracting states that have implemented a special capital gains provision for property rich companies.

OECD MLI

Greece has signed the MLI and has expressed its intention to adopt measures relevant inter alia to the prevention of treaty abuse (the principal purpose test); anti-avoidance rules applicable to property rich companies; the improvement of the mutual agreement procedure; and the introduction of measures related to the arbitration procedure. On the other hand, Greece has not opted into measures relevant inter alia to hybrid mismatches and permanent establishment status. The Greek parliament has not yet ratified the MLI.

EU Anti-Tax Avoidance Directive

On 23 April 2019, Greece enacted Law 4607, modifying its domestic rules in line with the rules of the EU Anti-Tax Avoidance Directive (2016/1164/EU) (ATAD), which provides for measures consistent with the conclusions of the OECD Base Erosion and Profit-shifting project. The law amends the domestic interest barrier rule, the controlled foreign company (CFC) rules and the general anti-avoidance rule (GAAR) have been amended with effect from 1 January 2019.

CFC rules provide that the undistributed income of a low-taxed subsidiary or permanent establishment, the profits of which are not subject to tax or are tax exempt in Greece, shall be re-attributed to the shareholder or the head office and be subject to Greek income tax. A foreign entity is classified as a CFC, if the following conditions are cumulatively met:

  1. The Greek shareholder by itself, or together with its associated enterprises holds directly or indirectly more than 50 per cent rights in the capital of the CFC.
  2. The actual corporate tax paid on the CFC's profits is less than 50 per cent of the corporate tax that would have been charged on such profits in Greece.
  3. Thirty per cent or more of the income before taxes accruing to the CFC falls within the following categories (the passive income approach): interest or any other income generated by financial assets, royalties or any other income generated from intellectual property, dividends and income from the disposal of shares, income from financial leasing, income from insurance, banking and other financial activities, and income from invoicing companies that earn sales and services income from goods and services purchased from and sold to associated enterprises, adding no or little economic value. Income from rent is not included in the list of passive income as it was under the previous rule.

CFC rules do not apply to companies or permanent establishments resident in EU or EEA Member States provided that such entities carry on a substantive economic activity supported by staff, equipment, and assets and premises, as evidenced by relevant facts and circumstances. The tax authorities bear the burden to prove the absence of a substantive economic activity.

The GAAR allows tax authorities to ignore arrangements that have as their main purpose, or one of their main purposes, obtaining a tax advantage that defeats the object or purpose of the applicable tax law, and are not genuine having regard to all relevant facts and circumstances. An arrangement is non-genuine if it is not put into place for valid commercial reasons that reflect economic reality. The Greek law provides for an indicative list of circumstances that tax authorities shall take into account upon the determination of genuine arrangements.

EU parent and subsidiary anti-avoidance rules

Greece has also transposed the amendments to the EU Parent and Subsidiary Directives with regard to the rules against hybrid arrangements and treaty-shopping practices. In particular, as of 1 January 2016, the exemption from Greek corporate income tax on dividends received by Greek legal entities from EU affiliates applies only to the extent that such profits are not deductible by the subsidiary. This amendment targets hybrid loans and aims at preventing situations of double non-taxation resulting from mismatches in the tax treatment of profit distribution between the state of the subsidiary and that of the parent company. Furthermore, the special anti-avoidance rule aims at prohibiting the withholding tax exemption of dividends paid by Greek companies to their EU parent entities, as well as the relief from corporate income tax regarding dividends received by Greek companies by their EU-based subsidiaries in cases of artificial arrangements that are not put in place for valid commercial reasons reflecting economic reality.

ii Cross-border considerations

Generally speaking, there are no specific restrictions regarding direct and indirect investment in Greece.

Restrictions on foreign investment on national security grounds exist as regards land purchases in border regions and on certain islands (see Section II.i).

In terms of the structuring of Greek real estate investments, it is common for foreign investors to incorporate Greek companies that are held by EU qualifying parent companies (see Section IV.i) and financed through debt by their EU parent or affiliate entities that qualify under the Interest Royalty Directive (see Section II.ii). In terms of debt financing, bond loans are most commonly used (see Section II.ii).

A significant consideration for foreign investors is the capital control restrictions that were introduced in Greece as of 28 June 2015 and apply on cash withdrawals and transfers of funds applicable to credit institutions operating in Greece, payment institutions, e-money institutions (as well as foreign institutions' branches and representatives in Greece) and the Consignments Deposits and Loans Fund. The Greek Ministry of Finance in cooperation with the Bank of Greece published in mid-May 2017 a roadmap for the relaxation of the capital controls and ultimately its abolishment without compromising financial stability.

As from 1 October 2018, cash withdrawals from any branch or ATM of credit institutions operating in Greece are permitted without limitation. The opening of new deposit or current accounts, as well as the addition of co-beneficiaries to existing ones, is also allowed without restrictions.

The transfer of funds abroad is in principle not permitted, unless approval has been granted on particular grounds by the Banking Transactions Approval Committee or the competent special sub-committee established in each credit institution operating in Greece; by way of exception, the transfer of funds abroad is freely permitted up to the amount of €4,000 per credit institution per customer per two months and up to a monthly threshold that the Banking Transactions Approval Committee assigns to each credit institution.

The transfer of custody of financial instruments to a custodian outside Greece is not allowed, unless made for the purposes of clearing and settling transactions on those financial instruments. Finally, the transfer of funds that do not exceed the amount of €100,000 per supplier on a daily basis from legal entities and professionals abroad is permitted in the course of their business activities, provided the necessary supporting documentation is submitted to the credit institution and up to the weekly limit assigned by the Banking Transactions Approval Committee to each credit institution for such transfers.

The current capital controls regime includes the following main exemptions from the relevant prohibitions and restrictions:

  1. The repatriation of funds that have been transferred into a deposit account held with a credit institution operating in Greece from abroad from 18 July 2015 and onwards.
  2. The transfer of profits and dividends from funds invested in Greece that have been credited to an account of the beneficiary held with a bank operating in Greece from a foreign account after 18 July 2015. Profits and dividends from those funds can be transferred to a bank account of a beneficiary held abroad, to a value of up to 100 per cent of the invested funds on an annual basis.
  3. The capital control restrictions do not apply to the service of payments relating to instruments and securitisations issued, directly or indirectly, by a credit institution, including coupon payments, repayment of capital for the purpose of complying with contractual obligations or triggering relevant contractual clauses, and payments to legal counsel, trustees and paying agents.
  4. The transfer of funds relating to the management of the liquidity of a Greek credit institution and to payment obligations in the context of managing contracts, in the course of managing the credit institution's own portfolio such as interbank transactions.

iii Locally domiciled vehicles investing abroad

Currently, there are no specially designed tax advantages of seating an investment vehicle investing offshore in Greece. This is because Greece has no special tax regime for holding entities providing for a general dividends and capital gains participation exemption applicable to qualifying subsidiaries.

V YEAR IN REVIEW

In 2019, the Greek Cadastre initiated the process of cadastral surveys regarding the remaining 63.40 per cent of the Greek territory that had not been surveyed yet to facilitate town planning, the effective protection of property rights and thus real estate investment. During this process, the beneficiaries of property rights located in those regions must declare those rights before the compe­tent Cadastral survey offices, as per Law 2308/1995, under specific deadlines. The Ministry's plan is to have the entire territory of Greece registered with the Cadastre until 2022.

The harmonisation of objective values with market values also continues (see Section I.ii). In view of the fact that many areas within Greece have not yet been included in the objective value system, it is expected that by the end of June 2019 an additional 2,000 districts across the country will be included in the system. The objective is to include the whole of Greece by the end of the first quarter of 2020, which means a total of some 7,500 districts will be incorporated. That development is expected to lead to the increase of the prices in those areas, as well as to a sharp rise in the taxes property owners or buyers will need to pay.

Furthermore, in April 2019 the new law for strategic investments was enacted.28 The relevant law provides for tax incentives for investments that are characterised as strategic ones for the country. Relevant incentives include: (1) the stabilisation of the corporate tax rate; (2) the tax exemption of profits by the creation of a special reserve; and (3) the acceleration of depreciations of the assets that have been included in the specific investment scheme.

Following the recent amendments of the Income Tax Code on 23 April 2019 in line with the rules of the EU Anti-Tax Avoidance Directive (2016/1164/EU), it is anticipated that the tax administration will focus more on the tax payers' compliance with substance and genuine business activities requirements. In this context, it is anticipated that the business rationale behind Greek real estate holding structures will be more closely reviewed.

In particular, the Independent Authority of Public Revenues, which was established on 1 January 2017 in line with international standards regarding tax administration autonomy,29 has announced that its target for 201930 is the launch of 25,000 tax audits and the assessment of €2.6 billion. Out of these audits, 100 will relate to intragroup transactions where it is expected that €25 million in taxes will be assessed. Another 850 tax audits will relate to high networth individuals, related party transactions with individuals and foreign companies holding real estate. The audits to foreign entities holding Greek real estate companies usually focus on the intragroup financing and its compliance with the arm's-length principle as well as to SRET (see Section II.iii).

VI OUTLOOK

In 2018, the volume of real estate transactions increased by 42 per cent compared with 2017.31 In particular, in 2018 alone the Greek REICs invested approximately €500 million in real estate acquisitions and the private real estate funds approximately €200 million.32 In 2019, it is expected that the figures will reach €1 billion coming mainly from REICs, private funds and high networth individuals, focusing mainly on hotel, commercial and residential properties.

In addition, the pressure on banks to reduce non-performing loans and non-performing exposures, and the anticipated disposal of loan portfolios secured on real estate have attracted the attention of international financial investors and funds that have started looking more closely to Greek real estate opportunities since 2018. Alpha bank and Eurobank are going to sell non-performing loans of approximately €4.7 billion, while in 2019 the Greek banks are planning to sell non-performing loans of a total value of €16.5 billion. Therefore, a significant volume of the real estate transactions in 2019 and the following years will result from the Greek banks' real estate and non-performing loans portfolios disposals.


Footnotes

1 Marina Allamani is partner and Myrto Stavrinou a senior associate at Zepos & Yannopoulos.

2 Greek Supreme Administrative Court judgments No. 4003/2014, No. 3833/2014, No. 2563/2015, No. 1357/2018).

3 As per the Monetary Policy – Report 2014 released by the Bank of Greece on June 2014, property prices fell during years 2009-2013 by 30 per cent to 38 per cent depending on the location and use. http://www.bankofgreece.gr/BogEkdoseis/NomPol20132014.pdf at page 50.

4 Judgment No. 4003/2014.

5 Judgment No. 4446/2015.

6 Circular POL. 1009/2016.

8 Ministerial decision POL. 1113/12 June 2018.

12 According to Law 3894/2010 on strategic investments, as currently applicable, an investment qualifies as a strategic investment if it is considered to have a positive impact on the overall national economy and captures investments in the tourism sector, in energy, transports and communications, healthcare services, etc.

15 Ministerial decision 111376/2012, published in Government Gazette issue B 13/11 January 2012 and 72386/2015 published in Government Gazette issue B 2170/2015 sets out the range of fees.

16 According to Article 2 of Law 4308/2015, micro AEs are those that meet at least two of the following three criteria: a total balance sheet value of less than €350,000; a net turnover of less than €700,000; and 10 employees or fewer. Small AEs are those with a balance sheet of less than €4 million; a net turnover of less than €8 million; and 50 employees or fewer. Newly established companies, until the first balance sheet, are considered to be 'micro' and 'small' if they have capital of less than €100,000 or €500,000 respectively.

17 Law 3853/2010.

18 If the AE is established through a private instrument, it is mandatory to follow the model articles of association (Minister of Economy and Development Decision No. 31637/2017 or Article 9 of Law 4441/2016).

19 The EPE is governed by Law 3190/1955 while the IKE is governed by Law 4072/2012.

20 Based on the statistical data of the General Corporate Registry within 2018 55.34 per cent of the companies that were incorporated had the form of an IKE: https://www.naftemporiki.gr/story/1458749/xaraktiristika-kai-pleonektimata-ton-ike.

21 Law 3853/2010.

22 According to Article 65, Paragraph 3 of Law 4172/2013, non-cooperating jurisdictions are those that are not part of the European Union; their status regarding transparency and change of information on tax matters has been reviewed by the OECD and has not been characterised as 'conforming to a great extent'; they have not entered into and do not enforce an agreement for administrative assistance in tax matters with Greece or have not entered into the OECD and Council of Europe Convention on Mutual Administrative Assistance in Tax Matters; and have not committed to the automatic exchange of financial account information beginning as of year 2018 at the latest.

23 According to Article 65, Paragraph 6 of Law 4172/2013, an individual or legal entity is considered to be subject to a preferential tax regime if it is not subject to taxation or if subject, not actually taxed, or is subject to tax on profits, revenues or capital at a rate that is equal to or lower than 50 per cent of the corporate tax rate that would be due from Greek tax residents.

24 Law 128/1975.

25 Explanation report of Law 3091/2002, comments to Article 15.

26 Article 6 of the OECD Model Tax Convention.

27 Article 7 of the OECD Model Tax Convention.

28 Law 4607/2019.