Greece: More tax measures passed in response to financial crisis

On 6 May 2010, the Greek Parliament ratified a draft bill containing measures for the implementation of the financial rescue package agreed by the EU and IMF to assist the Greek economy. The bill includes a number of tax hikes.


Special contribution for enterprises

A special, one-time contribution will be imposed on all enterprises, except sole proprietorships, whose net income for fiscal year 2010 exceeds EUR 100,000. The contribution will be imposed on the total net taxable income, as determined in accordance with the Greek Income Tax Code. If an enterprise publishes its financial statements according to IFRS and the IFRS net profits are higher than net taxable income, the special contribution is imposed on the higher net profits. The special contribution will be calculated according to a progressive scale at rates between 4% and 10%.

Certain limitations apply with respect to the special contribution:

- The special contribution is capped, so that the net profits (according to IFRS) or net taxable income remaining after payment of the contribution do not fall below EUR 100,000.
- The basis for the computation of the special contribution (IFRS profits or net income under domestic law) cannot exceed twice the average total net profits of the two previous accounting periods.
- The special contribution is not deductible for corporate income tax purposes.
- Any tax adjustments resulting from a future tax audit will not result in an additional special contribution or a refund of amounts already paid.
- The part of the special contribution corresponding to profits or income that has been subject to the special contribution under the current law, in the name of another enterprise, will be refunded. It should be noted that there is no provision for a refund of the special contribution paid for profits or income from fiscal year 2009, so there is a risk that the same profits or income will be subject to the special contribution twice (the first time for fiscal year 2009 profits at the level of the subsidiary and the second time for fiscal year 2010 profits at the level of the parent company, even if the profits are dividends received from the subsidiary).

The special contribution will be payable in 12 equal monthly installments of at least EUR 1,000, with the first installment due on 31 January 2011. A 2% discount will apply for lump sum payments of the contribution, unless the total amount of the contribution is due in a single installment.


VAT

The standard VAT rate will be increased from 21% to 23% and the reduced rate from 10% to 11% as from 1 July 2010 (however, the rate on tobacco products is increased as from 3 May 2010).


TV advertising tax

Beginning 1 July 2010, a special tax at a rate of 20% will be imposed on the value of TV advertisements. The advertised enterprise or relevant advertising agency will be liable for payment of the tax (if the invoice is issued in its name). The special tax will be collected by the media and paid to the competent tax office by the 20th day of each month, in respect of advertising revenue generated in the previous month.


Luxury tax on cars

As from 3 May 2010, the rates of the special luxury tax on new passenger cars are increased and applied to the wholesale price of the manufacturer at rates from 10% to 40%.


Excise duties

The excise duties on tobacco and petroleum products are increased and the duties on alcohol readjusted as from 3 May 2010.