GREEK LAW DIGEST

198 Is there an advance payment requirement? Greek SAs are required to pay an amount equal to 100% of current year’s income tax as an advance payment against the following year’s tax liability. Credit is given for the advance tax paid in the previous year. In case of newly established SAs, advance tax payment is reduced by 50% for the first three years starting from the entity’s registration in the tax authorities. Upon SAs request, in case of an over 25% decrease of its income, the advance payment may be reduced accordingly. Advance tax payment is not assessed on SAs transformed or merged pursuant under cer- tain provisions of L. 1297/1972, L. 2166/1993, L. 2190/1920, L. 4172/2013 or according to other special law provisions. How is taxable income calculated? Which expenses are deductible? Greek SAs maintain double entry accounting books of the Greek Accounting Standards 3 . Annual gross income is reduced by the depreciation of fixed assets, provisions for bad debts and expenses incurred. Only the expenses that meet three exclusive conditions 4 and are not included in an exhaustive list of non-deductible expenses may be deducted. Expenses may also be disallowed on grounds of formality without recourse to the substance on the basis of the rules included in the Greek Accounting Standards. Taxable income is calculated by deduction from net profits of carried-forward losses, spe- cific tax-free reserves 5 , tax-free income or income taxed in a special way to the extent al- lowed. Losses of a Greek SA incurred abroad may not be offset against business profits derived domestically if such losses are incurred through its permanent establishment abroad under specific conditions. By virtue of a recently issued Ministerial Decision, losses abroad shall be offset only with the profits derived in the same jurisdiction. Expenses paid to companies – tax residents of non-cooperative tax jurisdictions or pref- erential tax regimes are non-tax deductible, unless it is proven that these expenses refer to real and usual transactions and they do not have as an object the transfer of profits or income or capital for tax avoidance or tax evasion purposes. How are tax losses treated? Tax recognized losses may be carried forward for five subsequent years provided that such losses are declared no later than the end of the financial year in which they arise. Carry back of losses is not permitted. As for losses incurred abroad, please see above. If, during a tax year, direct or indirect holding of a company’s share capital or voting rights is changed by more than 33% of its value or number and there is a change of SA’s activity in a percentage 3. L. 4308/2014. 4. a) They are incurred for the benefit of the business or in the course of its ordinary commercial transac- tions, b) they correspond to real transactions and their value is not considered lower or higher than the market value, and c) they have been appropriately recorded in the company’s accounting books and are evidenced by proper documentation. 5. From January,1st 2015, maintenance of tax free reserves is no longer permitted.