TAX NEWS - 2010

Offshore Tax - Greece: Guidance issued on exemption from offshore tax on real property

The Greek Ministry of Finance issued a circular on 14 June 2010 that sets out the procedure and documentation required for certain categories of legal entities to qualify for the exemption from the special 15% real estate tax on property.

The circular provides as follows:

- An exemption from the real property tax will be available for property owned by EU entities (or by Greek entities held by EU entities) provided the identity of the individual shareholders/partners (domestic or foreign) is disclosed. If the property is also owned by non-Greek individuals, a Greek Tax Identification Number must be obtained to qualify for the exemption. Additionally, the following documents must be furnished:
     . A certified copy of the articles of association or an equivalent document of incorporation or registration of shares, with amendments certified by the relevant government authority that supervises companies;
     . A certificate issued by the relevant authorities evidencing the beneficial owners of the entity, as of 1 January each year (this also seems to apply for 2010 even though the rules did not apply on that date); and
     . A copy of the document evidencing the acquisition of a Greek tax identification number.

These requirements must be fulfilled for each intermediary holding company (provided all holding companies are within the EU).

- The wording of the guidance suggests that the exemption will not be available, on the basis of disclosure, to a non-EU entity that directly or indirectly owns the property, unless otherwise provided in a tax treaty (Greece has not concluded any such agreements).

- The disclosure requirement will not apply when the entity owning the property is:
     . A credit institution, including saving banks and deposits and loans funds;
     . An insurance fund or insurance company;
     . A mutual fund, including a closed-end mutual fund investing in real estate;
     . A company managing mutual funds;
     . A portfolio investment company; or
     . An institutional investor
that operates within an EU Member State, provided the following documents are furnished:
     . A certificate from the competent supervising authority of the member state where the entity has its registered seat, or from the central bank in the case of a credit institution;
     . A certificate from the competent service department, or independent authority in the case of an insurance institution; and
     . A certificate from the stock exchange commission verifying that the entity qualifies as an "institutional investor."

- If the property or the entity owning the property is owned by a listed entity, no further disclosure of the individual shareholders/partners is required. A certificate must be provided from an organized stock market, which should be part of the World Federation of Exchanges and be supervised by an authority assigned to the International Organization of Securities Commissions.

Entities qualifying under any of the above rules are not required to file the special real estate tax return and pay the 15% tax. Documentation supporting the exemption must be maintained for 20 years and furnished at the request of the tax authorities. For 2010, the supporting documentation must be issued by the last day of the extension period for filing the special real estate tax return, i.e. by 30 November 2010; documents issued after that date may not be used to benefit from the exemption.