Tax Updates: March 30th, 2023

The list of countries with preferential tax regime for the fiscal year 2021 was recently published by virtue of Decision Α.1027/2023 of the Independent Authority for Public Revenues, in accordance with the provisions of paragraphs 6 and 7 of article 65 of the Greek Income Tax Code (ITC). The only difference, as compared to the previous list of countries with preferential tax regime for the fiscal year 2020, is that Sri Lanka is not any more included in the list of countries with preferential tax regime for the fiscal year 2021.

The list of non-cooperative countries for tax purposes for the fiscal year 2021 was recently published by virtue of Decision Α.1028/2023 of the Independent Authority for Public Revenues, in accordance with the provisions of paragraph 1 of article 65 of the Greek ITC. We note that, in comparison with the previous list of non-cooperative countries for fiscal year 2020, the list of non-cooperative countries for the fiscal year 2021 also includes Algeria, Vietnam, Belarus and the Republic of Congo, while Oman was removed. Furthermore, Eswatini, Jordan, Namibia and Paraguay are considered non-cooperative countries only for a specific part of fiscal year 2021, which is determined by the said Decision. 

As a reminder, we note that according to the Greek tax legislation, determination of a country as non-cooperative or subject to a preferential tax regime may give rise to adverse tax consequences and in particular to the non-deductibility of costs paid to an individual or legal entity which is tax resident in such country, unless the taxpayer proves that the payments are actual and according to the normal business practice and do not result in the transfer of profit, revenues or capital with the purpose of tax avoidance or tax evasion. We note that the deductibility of costs paid to individuals or legal entities tax resident in a member state of the EU or EEA, which is considered non-cooperative or subject to a tax preferential regime, may be possible as long as the legal basis for the exchange of information between Greece and such member state is in place. Apart from the above, many of the exemptions from the Special Real Estate Tax are likely not to be applicable for legal entities established in non-cooperative countries.