Trying to hit the tax evasion, Greece has incorporated in 2016 two important “Instruments”.

With Law 4378, the European Council Directive 2014 / 107 / EU has been incorporated into the domestic legislation, while the Multilateral Competent Authority Agreement on the automatic exchange of Financial Account Information of OECD, have been incorporated into the domestic legislation with Law 4428.

Further, the Common Reporting Standard of OECD is introduced.

These Standards are also mentioned in the aforementioned Directive, so that uniform rules will apply both between the EU – Member States as well as between the Member Countries of OECD.

Greece belongs to the first 53 countries which will implement the first automatic exchange of information in 2017 concerning income received in the year 2016, while 101 countries in total have been committed to implement the Common Reporting Standards. 31 countries will join the first group in the year 2018.

The remaining 17 countries have not signed yet the aforementioned Agreement although they have committed to do so in a later stage.

The Law 4428 / 2016 is effective as of 01.01.2016 and the automatic exchange of information shall take place up to 30.09.2017. 

NOTE: This article does not cover advisory, but only informational purposes, and cannot serve, as a basis for further actions, on the part of   the reader. Reception of specialized advice is required.

Our company does not hold any responsibility for any actions, taken by the readers, based on the present article.

After a long maturing time, with the Law 4399/2016 (Government Gazette 117A'/ 22.06.2016) the new institutional framework has been defined for the aid regulations of private investments of the country’s regional and economic development and for the appointment of the Development Council.

The new law is not contrary to the European Community guidelines for state aid and the General Exemption Regulations (Regulation rules 651/2014 EU).

The law consists of 87 articles. Articles 1 to 69 concern the new development frame of private investments, Articles 70 to 75 concern the formation of the Development Council for the planning and the implementation of the wider development plan of the country, and Articles 76 to 87 contain transitional provisions of the previous investment laws and other provisions.

Of the 69 articles, which concern the new development frame of the law, the Articles 1 to 31 constitute the general part of the development law. The Articles 32 to 69 describe the eight special aid schemes, which will be further specified in the relevant decisions of the regulations to be announced at a later stage.

The new development law aims to the investment restart of Greece.

It is pursued to increase the investment efforts with final goal the reindustrialization, the development of less developed areas of the country, the support for new established and / or already existing partnerships / entities, which will employ or have already employed qualified scientific personnel and will stop the outflow of our country, of highly trained and specialized scientific staff, which leaves the country since nine years because of the current economic crisis for a better future in the developed economies of Europe and North America.

Eligible sectors for aid are the processing industries and branches providing internationally marketable services and products.

It is possible to include all legal forms of business, the existing ones and the ones under formation.

In the aid frame of the new development law, the processing investment in the primary sector is included as well as the tourism industry, among them the medical tourism companies, health tourism, logistics companies, IT companies and communications companies, the marinas, the water airports and the businesses of renewable and alternative energy sources.

The subjected investment projects may relate to the creation of a new unit, the extension of an older one and in the conditional production diversification, the change in the overall production process and the acquisition of all assets belonging to establishments already shut down.

 More specifically:

• The purpose of the new development law, is to promote balanced development with respect to the environmental resources, to support the less favored areas of the country as well as the employment growth, the cooperation improvement and increasing the average size of enterprises, the technological upgrading, the development of a new extroverted national identity (branding), moreover to improve the competitiveness in areas of high added – value and knowledge-intensive sectors, the movement in the value production chain towards the production of more complex products, the saving of natural resources in the perspective of a circular economy, the offer of better services, attracting foreign direct investments and finally to ensure a better positioning of the country in the international division of labor. 

• Beneficiaries of aid schemes of this law are the companies which are established or have a branch in the Greek territory at the time of the beginning of the activities of the investment plan and have one of the following legal forms:

a. Sole partnerships

b. Trading companies

c. Partnerships

d. Social cooperative enterprises, agricultural cooperatives, producers groups, rural corporate partnerships

e. Companies in their establishment- or merging- phase, with the obligation to have completed the publication procedures before starting the activities of the investment plan.

f. Companies operating as a joint venture provided they are registered in the companies register

g. public and municipal companies as long as they provide the conditions foreseen by law.

Not considered as beneficiaries and excluded from the aid schemes are the following:

a) Enterprises declared to be in critical difficulty

b) Enterprises, which have terminated their own or a similar activity within the European Economic Area during the two years prior to the submission of the request for regional investment aid or that, at the time of submission of the request for aid, they have planned to proceed to termination of their activities within a period of maximum two years after the completion of the investment plan.

c) Businesses that implement investment projects which are carried out on the initiative and on behalf of the State, based on a relevant project contract, contract for the services concession or provision.

• Regarding investment plans which are falling under this aid scheme, the following types of aid are provided

• tax exemption,
• subsidy,
• subsidy of leasing
• subsidizing the costs of the created employment,
• stabilizing the income tax rate (tax system)
•  financing of the business risk through participation funds.

• The specific aid schemes of development law are summarized as follows:

• Aid for Machinery and mechanical equipment. The goal is the fast inclusion of firms of all kind in the provisions of the law and the payment of the aid for the machinery after a brief audit process.
• General Entrepreneurship. The aim of the scheme is to strengthen businesses of all types, for all the eligible expenditure.
• New established independent small and medium enterprises. The scheme is targeted to support new established independent small and medium enterprises, through increased benefits.
• Aid for Innovative Character of small and medium companies. With this scheme the target has been set of establishing and strengthening of innovative products or processes, with a corresponding commitment of the assisted enterprises towards innovation.
• Synergies and networking (business clusters). This scheme is targeted to enhance the competitiveness of enterprises, which participate in collaborative schemes through defined tasks, related to the production and promotion of products.
• Financial Intermediaries – participation funds. The goal of this scheme is to create a participation Fund, in which the state invests funds by selecting with specific criteria the fund manager, who then will seek the greatest possible leverage of public resources with private sector resources.
• Integrated Territorial and Sector Plans. The aim of the scheme is to increase and to protect the existing employment and regional convergence.
• Investments of major size. The scheme aims to create an appropriate investment environment to attract very big investment plans.

Entry to the provisions of this regime is possible under two cumulative conditions:

• The law provides for the same contribution to the total cost of the investment plan at minimum of 25%. The remaining percentage can be covered by bank funding body or third party, depending on the region of the country, from state aid, to be received by the investor after approval.

NOTE: This article does not cover advisory, but only informational purposes, and cannot serve, as a basis for further actions, on the part of   the reader. Reception of specialized advice is required.

Our company does not hold any responsibility for any actions, taken by the readers, based on the present article.

The dismissal of an employee is possible, either with, or without notice.

The calculation of the severance pay is based on the regular earnings, which the employee (Employee or Worker) received in the last months of his/her employment (Article 5, Paragraph 1, Law 3198/55).

As regular earnings are the Salary and any king of benefits in kind or money considered, which are paid on a regular and permanent basis.

For the calculation of the severance pay, the holiday bonus and the leave allowances do count, which increase the monthly salary or wage by 1/6.

We would like to point out that for the calculation of the severance pay amount, the regular earnings are taken into consideration, however not those of the last month, more specifically, by the amount those exceed eight times the daily wage of an unskilled worker, multiplied with the number 30 (Law 3198/1955, par.1 of article 5).

The severance pay has to be paid immediately, together with the delivery of the document of the employment contract termination of the employee in order for the dismissal to be valid.

If the contract termination takes place with a notice, the employer is obliged to submit a document to the employee, which states that, the employment contract will terminate when the notice period, which is foreseen by the law, is over. The date, the notice period will be over, has to be exactly defined. In this case, that means in the case of the dismissal with notice, the employer has the obligation, on the date which has been defined as the contact termination date (dismissal day), to pay half of the legal severance pay.

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According to the provisions of article 45 of Law 4172/2013 the persons are defined, which are subject to income tax of legal persons and legal entities.  

In particular, the following kind of companies / entities and other forms are subject to the aforementioned tax :

A. the capital companies which were established in the domestic land or abroad,

B. the partnerships which were established in the domestic land or abroad,

C. the non-profit legal persons of public or private law, which were established in the domestic land or abroad, those include any kind of associations and institutions,

D. the cooperative societies and their associations,

E. the civil law societies, the profit seeking or non-profit societies governed by civil law, the participating enterprises or dormant companies, provided that those exercise business activity,

F. the joint ventures, and finally,

Ζ. the rest legal entities, which are not included in the aforementioned cases.

The non-profit legal persons governed by public or private law, are subject to income tax for legal persons and legal entities, with the exception of any kind of income implemented while aiming for their scope. Those kinds of income are no subject of the imposition of income tax.  

There are indicatively kinds of income, such as the contributions (subscriptions) and the registration rights of their members, the income from fund-raising, the public (state) subsidies, the sponsorships of individuals or enterprises, the donations of third parties, the lottery drawings, income from advertisings registered into magazines which are issued and distributed only to their members free of charge, as well as income from the distribution of leaflets and other printed matters of spiritual content of the Sacred Monasteries.

On the contrary, the income which is obtained by the aforementioned non-profit legal persons from activity which does not constitute an exercise of their non-profit scope and mission, is subject to taxation, even in the case that this income is disposed for the fulfillment of their non-profit scope.

Kinds of income, beyond those deriving from capital (interest, income from property etc.) and capital transfer gain, are, for example, also the contributions from third parties non-members, the income from the sale of magazines, books, printed material etc. to third parties non-members, such as income from the advertisements which are entered into those printed materials, the income from the promotional actions printed on T-Shirts of Sports Associations, the income (school fees) from the operation of private schools, workshops etc., the income from the sale of drawing pictures, the  business undertaking of holiday accommodations and radio and broadcasting stations from the sacred monasteries etc.

It is herewith pointed out that, in any case, the finding and determination of the implementation of revenue while aiming for the fulfillment of the scope of the aforementioned non-profit legal persons, is due to the auditing competence of the tax authority which provides the relevant review and judgment based on their dedicated and determined scope, both on the means of acquisition and disposal of their income.

NOTE: This article does not cover advisory, but only informational purposes, and cannot serve, as a basis for further actions, on the part of   the reader. Reception of specialized advice is required.

Our company does not hold any responsibility for any actions, taken by the readers, based on the present article.