The transfer pricing rules in Greece largely follow the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (The OECD TP guidelines). They are governed by the Income Tax Code (ITC), and administered by the Greek tax authority – Independent Authority for Public Revenue (IAPR).
Arm’s Length Principle
Greece follows the arm’s length principle based on Article 9 of the OECD Model Tax Convention and the OECD Transfer Pricing Guidelines. This principle applies to all transactions and business restructurings between related parties, both within Greece and internationally. Furthermore, the “arm’s length principle” applies to corporate taxpayers, including permanent establishments, that enter into related party transactions or dealings, either for domestic or cross-border transactions.
Related Party Definition
As stipulated in Article 2 of the ITC, an associated (related) person is someone who directly or indirectly takes part in the management, control, or ownership of another related person or entity. This includes anyone holding at least 33% of shares, voting rights, profit rights, or capital in a company. It also applies to multiple entities if a single person owns 33% or more of each. This definition helps enforce fair transfer pricing and prevent tax avoidance.
Transfer Pricing Methods
The methods that can be used to determine the arm’s length price in Greece are:
- Comparable Uncontrolled Price Method
- Resale Price Method
- Cost Plus Method
- Transactional Net Margin Method
- Profit Split Method
Decision No POL. 1097/9.4.2014 prioritizes traditional methods (Comparable Uncontrolled Price, Resale Price, and Cost Plus) for determining transfer prices, as they best ensure arm’s length conditions. However, if reliable comparable data is lacking, transactional profit methods may be used. The decision also aligns with the OECD Transfer Pricing Guidelines.
Comparability Analysis
In Greece, comparability analysis is a key process used to determine if transactions between associated enterprises follow the arm’s length principle, which ensures fair market pricing. To do this, a comparison is made between transactions involving related parties and those between independent companies.
Several factors are considered during this analysis, such as:
- The nature of the goods or services involved, including their quality, reliability, and availability.
- A functional analysis that looks at the roles, risks, and resources used by each party in the transaction.
- The terms outlined in contracts, such as how risks and responsibilities are shared, payment schedules, and any guarantees involved.
- The economic environment includes factors like market size, competition, and labor costs.
- The business strategies in play, such as efforts to expand into new markets or develop new products.
Greece does not use secret comparables. To ensure accuracy, comparative data can be drawn from both internal and external sources. If the analysis results in a price range or profit margin, extreme values are excluded by focusing on the interquartile range (between the 25th and 75th percentiles). The documentation file must include enough detail to prove that the pricing used for the transactions is correct, or else it will be considered incomplete.
Documentation Requirements
Transfer pricing documentation requirements in Greece are based on the three-tiered approach set forth by the OECD. This requires multinational groups to submit the following documentation to the Greek tax authorities:
- Master file;
- Local file; and
- Country-by-Country (CbC) report.
The Transfer Pricing Documentation File, which includes the Master File and the Greek Documentation File, must be prepared by the income tax return filing deadline. This file should be submitted with the Summary Information Table to the Tax Administration by the same deadline.
Companies and permanent establishments must report and document intra-group transactions annually, provided they meet specific monetary thresholds. For businesses with turnover up to €5 million, transfer pricing documentation is required if controlled transactions exceed €100,000 per year. For those with turnover above €5 million, the threshold increases to €200,000 per year.
The Transfer Pricing Documentation File must be kept at the company’s headquarters for the required period. It should be available to the Tax Administration within 30 days if requested. The Master File can be kept in English if it’s a foreign group, but it must be translated into Greek if requested by the tax authority within 30 days.
Country-by-Country Reporting
Greece follows the CbC reporting rules from the OECD/G20 BEPS Project and EU laws. These rules apply to Greek multinational companies with a yearly group revenue of 750 million euros or more. The CbC report must be submitted within 12 months after the end of the fiscal year.
The Country-by-Country (CbC) Report should be submitted to the Tax Administration no later than 12 months after the fiscal year ends. Notifications about the Reporting Entity for the CbC Report must be submitted by the end of the fiscal year.
Advance Pricing Agreements (APA) and Mutual Agreement Program (MAP)
In Greece, Advance Pricing Agreements (APAs) are regulated by Law 4174/2013 and Circular POL 1284/2013, overseen by the General Directorate of Tax Audits. APAs help companies set fair transfer prices for future transactions with related parties. They define the pricing method, comparable data, and key market assumptions but do not fix specific prices or profit margins. Once an APA is in place, tax audits focus only on whether the company follows the agreement and if the key conditions remain the same. APAs last up to four years and can be renewed, revoked, or canceled under certain conditions.
Companies can also request a roll-back to apply the APA to past tax years if conditions allow. Having an APA does not prevent businesses from using dispute resolution mechanisms, like Mutual Agreement Procedures (MAP) or EU tax arbitration, later on.
APAs can be unilateral, bilateral, or multilateral, mainly addressing complex transfer pricing issues. Authorities have the discretion to approve or reject applications, and their duration is limited to four years. Having an APA prevents double taxation and removes the need for transaction documentation.
The Mutual Agreement Procedure (MAP) in Greece allows taxpayers to resolve disputes related to double taxation or incorrect application of tax treaties. The MAP process is managed by the Independent Authority for Public Revenue (IAPR) through its International Economic Relations Directorate – Tax Affairs Section. It covers transfer pricing issues, anti-abuse provisions, and foreign tax adjustments.
Taxpayers can request MAP assistance if they believe taxation is not in line with a tax treaty, but they cannot do so if a case has already been resolved by Greek courts. The MAP process involves consultation between Greek tax authorities and foreign tax administrations, intending to reach a mutual resolution. If an agreement is reached, Greece implements it even if domestic time limits have expired. The process does not suspend tax collection, meaning taxpayers must still comply with tax obligations while the case is under review.
Approach to Transfer Pricing Audits
In Greece, the Audit Directorate oversees transfer pricing documentation, while the International Economic Relations Directorate handles consultations with foreign tax authorities. Tax authorities review pricing methodologies to ensure they follow the arm’s length principle and may request additional information or clarifications. Documentation must include historical and projected financial data, and failure to provide it can lead to tax adjustments or penalties.
Taxpayers with pre-approved methodologies must submit annual compliance reports; otherwise, tax authorities may revoke approvals or conduct audits. For cross-border transactions, tax authorities may exchange information with foreign counterparts to prevent double taxation. Non-compliance can result in income adjustments, fines, and retroactive tax corrections.
Penalties
In Greece, there are fines for late, incorrect, or incomplete filing of the Summary Information Table or the TP Documentation File. For the Summary Information Table, a fine of 0.1% of the relevant transactions is imposed for late or incorrect filing, with the fine ranging between €500 and €2,000. If an amended summary table is filed late, the fine only kicks in if the changes also number more than two hundred grand €200,000. Inaccurate filing results in a fine based on the incorrect amount if the inaccuracy exceeds 10% of the total transactions. For the TP Documentation File, a fine of €5,000 is imposed if submitted 31 to 60 days after the request, €10,000 if submitted 61 to 90 days after the request, and €20,000 if not submitted or submitted after 90 days.
If someone does something the same way twice within five years they have done before they have to pay twice as much money as for the first offense. If that offense occurs again at any point after that period no matter how many years go by after that, the next time the fine is for four times the previous fine. For the Country-by-Country Report, failure to file results in a fine of €20,000, while late or incorrect filing results in a fine of €10,000.
Taxation at a Glance
In Greece, the Independent Authority for Public Revenues is responsible for managing and collecting taxes. The main taxes are direct taxes, like income and property taxes (which apply to both individuals and businesses), and indirect taxes, like Value Added Tax (VAT). Taxes are mainly imposed at the national level, and there is no provincial tax system in Greece.
Personal income tax is a schedular tax (calculated on different income types), while corporate tax is a flat rate. In addition to income taxes, there are asset taxes like property taxes.
The official name of the Greek tax authority is the Independent Authority for Public Revenue (IAPR).
The table below provides a summary of the main taxation rates related to businesses:
Tax Type | Tax Rate |
Corporate Tax | 22% |
VAT | 24% |
Withholding tax on dividends to non-residents | 5% |
Withholding tax on interest to non-residents | 15% |
Withholding tax on royalties to non-residents | 20% |
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