Introduction

On 17 October 2015 Law 4337/2015 was enacted by the Greek Parliament in order to comply with some of the prerequisites for the implementation of the 3rd Memorandum. This law introduced amendments to Code of Tax Procedure (C.T.P.), the purpose of which was to rationalize the tax policy regarding fines. These amendments relate to issuance of fictitious tax records, amendments in the area of transfer pricing, revised fines upon audit and introduction of new provisions in order to confront tax evasion. These changes are discussed in more details hereunder.

A. Tax Offences regarding the Issuance of Invoices

Under the new provisions, non-issuance or issuance of inaccurate invoices is not anymore considered as a separate procedural infringement, therefore it is not subject to a separate fine. As a result, such offences fall under the general provisions for bookkeeping violations. 

Moreover, it should be stressed that from 17.10.2015 the issuance of falsified/fictitious invoices and the receipt of fictitious invoices are included in the relevant provisions regarding tax evasion, which were added by virtue of the law at issue, and, thus are subject to stricter substantive penalties.

B. Transfer Pricing

Major changes have been introduced to fines for non-compliance with documentation obligations of intra-group transactions. More specifically, under the Greek Income Tax Code, associated entities as well as permanent establishments of foreign entities in Greece are obliged to maintain a Transfer Pricing Documentation File and to submit a Summary Information Table yearly stating their intra-group transactions. Fines for failure to comply with these obligations were calculated up to now as a percentage of the company's gross revenues. Aiming to the rationalization of the Greek tax penalty system, fines from now on will be calculated on the value of transactions subject to documentation requirements and not on company's gross revenues. According to the new provisions, the following penalties apply:

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C. Revised Penalties Imposed upon Audit

Law 4337/2015 revised the existing penalties imposed on a number of violations related to the filing of tax returns, which aimed at enhancing tax collection. In particular, the law at issue reduced those fines, as follows:

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Moreover, the law at issue provides for a special treatment for V.A.T. violations identified upon audit due to the significance of this tax. Therefore, a new article was added to C.T.P., which provides the following fines:

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Furthermore, Law 4337/2015 revised the penalties that are imposed on infringements regarding withholding tax, intended to increase the actual tax collection, as follows:

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It should be stressed that Law 4337/2015 entitles taxpayers to take advantage of the new provisions under B and C with regard to Tax Assessment Acts that are issued from 17.10.2015 and refer to tax obligations and fiscal years that expire on 31.12.2013 or cases after 1.1.2014 for which the previous regime applies, as long as the now existing regime is more favorable. Moreover, these provisions are applicable for pending cases before the Tax Dispute Resolution Directorate and the Administrative Courts, provided that the taxpayer accepts the audit findings. A declaration of acceptance should be submitted in writing within 90 days from the publication of the law at issue or from the notification of the relevant act or decision to the taxpayer. Additionally, in order to claim the benefits of the new law, the taxpayer should pay the total amount that corresponds to the relevant audit at least within two days after the submission of the declaration of acceptance.

D. New Provisions Regarding Tax Evasion

The introduction of provisions to control tax evasion was one of the main purposes of the law at issue. To this end, a new chapter was added to C.T.P. regulating criminal prosecution for tax evasion acts broadly, i.e. acts that aim to avoid payment of taxes. According to the new rules, the following sentences apply:

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Moreover, the new provisions define the persons liable for the aforementioned criminal charges. These persons include presidents of Board of Directors, managing directors, general managers, members of Board of Directors with signature rights, ordinary member of Board of Directors in the absence of the aforementioned persons and any individuals who de facto exercise managing duties.

Finally, under the new provisions, criminal prosecution is not affected by the tax dispute proceedings before the Administrative Courts. However, Criminal Courts are entitled to postpone the hearing until the issuance of an irrevocable decision by the Administrative Courts.