TAX NEWS - January 2010

Greece:
Parliament approves new law for special contribution

The Parliament approved a new law on 8 December 2009 (published 12 December 2009) that introduces a special charge for financial year 2009 (i.e. periods with a financial year end between 1 August 2008 and 31 July 2009). The special contribution applies to legal entities whose net income exceeds EUR 5 million, with the contribution imposed on total taxable profits (i.e. net income after tax adjustments). If the entity publishes IFRS financial statements and the IFRS net profits are higher than the taxable profits, the contribution is imposed on the latter. The contribution is levied at progressive rates:

- 5% for EUR 1 – EUR 10 million;
- 7% for EUR 10,000,001 – EUR 25 million; and
- 10% for amounts exceeding EUR 25 million.

The following restrictions apply:

- The basis on which the contribution is calculated (either IFRS or taxable profits) may not exceed twice the average total profits of the two previous accounting periods.
- Tax adjustments from a future tax audit will not lead to an additional contribution.
- The contribution is to be limited, so that profits remaining after its deduction do not fall under EUR 5 million. Thus, if a company has profits of EUR 5,000,100, the contribution will be limited to EUR 100. This restriction effectively provides an upper cap for the contribution on profits up to EUR 5,263,157.90.
- When income includes dividends from domestic companies whose profits have been subject to the contribution, the part of the contribution corresponding to such dividends will be refunded.
- The contribution is payable in 12 monthly equal installments, each of which cannot be less than EUR 20,000. Lump sum payments enjoy a discount of 3%, provided the total amount due is not less than EUR 20,000.
- The contribution is not deductible for corporate income tax purposes.