Tax Audits in Greece
Since the foundation of the TP practice in 2008, Greece has been at the forefront of implementing transfer pricing compliance framework for intra-group transactions. Over the past 16 years, Greece has continually refined its Transfer Pricing regulatory framework, leveraging time and evolving expertise to strengthen tax audit capacities.
Recently, extensive tax audits by the tax authorities have been observed, especially regarding the audit of the transactions among related parties. Moreover, a special dedicated team of tax auditors have been established and exclusively carries out the audit of the benchmarking analysis, as those prepared by taxpayers. Despite disruptions caused by the pandemic, tax authorities have rebounded, imposing substantial fines and tax adjustments in recent years. Since 2021 and up to 2023, fines and tax adjustments traced to Dispute Resolution Directorate publications added up over 30 million Euro (12.4 million Euro in 2021, 9.5 million Euro in 2022 and 10.1 million Euro in 2023), underscoring the importance of full compliance with Transfer Pricing obligations.
The significance of a robust transfer pricing defence cannot be underestimated. Deep understanding of related party functions and risks, coupled with thorough analysis of intra-group transactions, provides the best defence against tax audits and minimizes the risk of non-compliance. With clear guidelines and stringent penalties across compliance spectrums, Greece is setting high standards for Tax Transparency.
We remind here, that Greek Companies and branches of foreign legal entities must submit a Summary Information Table (SIT) electronically to the tax administration within the deadline for the submission of the annual income tax return. More specifically, legal entities operating in Greece with a total value of intercompany transactions of more than €200.000 and their turnover is more than €5 million, and taxpayers with a total value of intercompany transactions of more than €100,000 and their turnover is less than €5 million, are not only obliged to submit the SIT but also to maintain a transfer pricing documentation file that would be available to the Tax Authorities upon request.
Under the three-tiered approach followed by Greece other than the Master File and the Greek local file, the CBC reporting (if the consolidated group turnover exceeds €750.000.000) is also mandated.
Public Country-by-Country Reporting
While OECD CbC Report aimed to prevent tax avoidance with provided information to tax authorities, the goal of Public CbCR is to provide additional transparent information to the general public. The public CbC Reporting is considered fairly a tool, not only to increase transparency but also to re-establish public trust in the tax system.
In line with these developments, the EU Directive 2021/2101 which entered into forced on 21st December 2021, was transposed in Greece by Law 5066/2023 (published on November 2023). The new law includes a public reporting threshold of annual consolidated group turnover of €750 million in the last 2 consecutive financial years. Other than the Ultimate Parent Entity (UPE), the obligations extend also to Individual entities or related parties with those individual entities with presence in Greece, meeting the abovementioned threshold. Furthermore, the obligation applies to branches and subsidiaries in Greece and more specifically to medium and large companies, as those defined in par. 5 and 6 of article 2 of Law 4308/2014 when those entities are controlled by an ultimate parent undertaking (meeting the same threshold of annual consolidated group turnover of €750 million in the last 2 consecutive financial years), which is not governed by the law of a Member State. This new obligation applies to fiscal years starting after June 22, 2024.
For more information regarding the public CbC Report please address your request at tp@privelpartners.gr.
