The Greek government announced that group taxation is included in its priorities, with its adoption to be implemented within 2025 and expected to have a significant impact on the country’s business environment.
Taxation in Greece follows a standalone pattern, meaning that each entity is taxed separately, with no possibility of tax offsetting/relief within groups. Nonetheless, there are certain cases in which taxation is considered at group level:
Group activities/transactions are assessed at group level through transfer pricing (TP), with specific provisions introducing neutrality of the TP adjustments, while as of 2023, a higher percentage deduction for excessive borrowing costs (thin capitalization rule) is allowed when the taxpayer is a member of a consolidated group.
Furthermore, recently implemented in Greece, the BEPS Pillar II framework introduces a global minimum corporate tax rate of 15%, which by definition refers to consolidated financial figures of multinational groups and assesses groups’ tax position at country/jurisdictional level.
At the same time, in 2023 the European Commission reintroduced the amended BEFIT proposal for the consolidated tax base of companies at group level, which implies, among other things, cross-border tax losses offsetting within the EU.
Group taxation is an essential next step for taxation in Greece
Group taxation is already in place in several European countries and is increasingly gaining ground at the international level. It seems that the time has now come for Greece too to introduce group taxation. Simply speaking, the framework will allow groups to consolidate for tax purposes, balancing profits and losses between entities and being able to reduce tax burden, improve financial stability, and strengthen their overall financial position, with further positive impact for tax authorities as well as business.
At the level of tax authorities, introducing group taxation will harmonize Greece with European and international trends, removing existing obstacles to groups’ cross-border activity and facilitating the smooth functioning of internal markets, while there will also be opportunities to further simplify the existing framework and facilitate intra-group audits.
At the level of business, introducing group taxation will enhance the competitiveness of Greek companies, provide incentives for the establishment of new businesses in our country, and also support new companies that may not be profitable at the beginning of their activity. Furthermore, it would facilitate the implementation of incentives, such as excess depreciation and excess deductions, which currently may not be fully and substantially utilized due to the negative impact of the five years statute of limitation for carrying forward tax losses.
Additionally, it is worth mentioning that VAT should be also accounted for at group level, which would not only have a positive impact in terms of cash flows and funding but would also reduce the administrative burden for the tax authorities.
Undoubtfully, we have already moved from entity to country and group level, and the competition is fierce. Group taxation is an absolutely essential next step for taxation in Greece and one that we look forward to seeing implemented in fiscal year 2025.
