New Law regulating the Transfer Pricing 

The      new  tax      law,     L4110/2013,      titled

“INCOME TAX PROVISIONS, ISSUES RELATED TO THE AUTHORITIES OF THE MINISTRY OF FINANCE AND  OTHER REGULATIONS”

includes major modifications regarding the Transfer Pricing Legislation. The new Transfer Pricing provisions are presented within the article 11.

With the article 11 of the L4110/2013, the Ministry of Finance becomes the only governmental authority regulating the issues for TP since that the provisions of Article 26 of Law 3728/2008 (A 258) which was introduced by the Ministry of Development are abolished. The new transfer pricing provisions apply for transactions carried out within financial years commencing as of 1 January 2012 onwards. It is clear that the new provisions for TP are part of the Tax Income Code and thus Group of Companies required to maintain the proper documentation in an annual basis and is subject of the tax audits. Below are summarized the major points of the new legislation.

Major Issues

  • The TP provisions cover all intercompany transactions expanding the set of controlled transactions and not only the sale of goods and the provision of services. Thus the controlled transactions include loan agreements, transfers of shares, transfers of partnership parts and transfers of real estate. In addition, companies’ affiliation criteria are expanded since the potential influence or    involvement    in    corporate governance of physical persons is been considered as an evidence for affiliation.
  • The TP documentation includes all the intercompany transactions and not only for cross border transactions, while the thresholds of the transactions that must be documented are changed. Within this framework intercompany transactions with one or more associated enterprises are exempted from the documentation obligation if they do not exceed the amount of:
    • EUR 100  000  in  total,  if  the  gross revenues of the financial year for all associated enterprises does not exceed the amount of EUR 5 000 000, or
    • EUR 200 000 if the gross revenues of the financial year for all associated enterprises exceed the amount of EUR 5 000 000.
  • The structure and template of the TP documentary folder is not explicitly described. However it is clear that the reference book for documentation is the recent version of OECD Manual. In addition, it is mandatory that the TP folders of the companies are consisted by the “Basic Documentation File” (includes generic information of the Group and the TP policy) and the “Greek Documentation File” (includes the core data and method for the justification of the arm’s length principle). The annual TP Documentation must be prepared before the issuance of the Tax Certificate and in any case within 50 days from the closing date of the financial year of the company. Companies is necessary also

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with the TP documentation folder  to prepare and submit to the TAXISNET (Web Portal of the Greek e-Tax Services) a Summary Information Sheet within the same deadline that is provided for the preparation of the annual TP

Documentation.

  • The Tax Office of Large Incorporations undertakes the responsibility to carry out the respective TP audits.
  • The penalties which are paid one off are based to the provisions of Law 2523/1997. The new penalties are paid within the month following their assessment, while in case of an appeal their assessment is  not suspended. These penalties are (a) Penalty is imposed for late submission of the Summary Information Sheet as well as for late submission of the TP Documentation to the competent audit authority within the 30 days deadline, amounts to EUR 1 000 to EUR 10 000 calculated at a rate of 1‰ on the company recorded gross profits, (b) Penalty is imposed in case the Summary Information Sheet or the TP Documentation File is not submitted to the competent audit authority amounts to EUR 10 000 to EUR 100 000 calculated at a rate of 1% on the company recorded gross profits. In addition, beyond penalties which paid one off, the new legislation imposes major penalties in case intercompany prices are deemed as not documented. In case the controlled transactions do not comply with the arm’s length principle the provisions of Law 2523/1997 apply. Note that the penalties are   determined   by   the   competent   tax authority on the basis of the available data from any available source.
  • The clear cases of transactions which are been regarded             as            not         documented according to the new legislation are the following (a) The non maintenance and the non submission of the TP documentation to the competent audit authority, (b) The maintenance of an insufficient or inaccurate documentation in case the audit authority cannot    verify    the         accuracy               of            the calculations or of the documentation of the prices and which cannot be remedied by the provision of additional information, (c) The non          provision,            or            the         provision             of insufficient,   or            inaccurate           additional information as a result of which the audit authority cannot verify the prices.
  • The new legislation provides the issue of a Ministerial Decision by which all the necessary details regarding the implementation of the respective provisions will be determined. The Ministerial Decision shall be issued within an exclusive one month time period from the publication of the law.
  • New legislation introduces a new article in Tax Income Code, e.g., article 39c, adopting the method of Advance Pricing Agreements (APAs) as a tool assisting companies to deal a-priori the arm’s length principle methodology with the Tax Authorities. The respective provisions regarding APAs apply as of 1 January 2014 onwards.
  • Although the provisions of Article 26 of

Law    3728/2008    (A    258)    which    was

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introduced by the Ministry of Development are abolished upon publication of the new legislation, for intercompany transactions carried out within financial years 2010 and 2011 has to be documented based on the provisions of the abolished law.

  • Especially for financial year 2012 the TP documentation is prepared and the summary information table is submitted to the Ministry of Finance until 10 May 2013.

 

For  detailed  and  explicit  information  referring  to  the  new  TP  legislation  should contact Mr. T. Arkoulis ([email protected]).

THESIS Transfer Pricing Unit, 11.02.2013

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ΤHESIS expertise in the field of intercompany transactions (Transfer Pricing – TP)

THESIS since 2008, when was presented the national institutional framework control for intercompany transactions, is supporting companies in this field. The main services developed in this field by THESIS were the verification and documentation of intercompany transactions relating to:

  1. Consulting services for provisions arising from the National and European institutional framework for the control of intercompany transactions.
  2. Support companies to develop tactical plans to justify intercompany transactions.
  3. Preparation of Transfer Pricing Documentation Files.
  4. Support during the auditing of Transfer Pricing Documentation Files.
  5. Consulting Services to Business Associations & Chambers regarding Transfer Pricing issues.

The following is an indicative list of THESIS clientele, in respect of TP services:

Company / Group Business Sector THESIS Services
G4S Group of Companies Security Services Preparation of TP files for the years 2010 &

2011, for all the companies of the Group

(European Group)

ICTS HELLAS SA Security Services Preparation of TP files for the years 2009,

2010 & 2011

(European Group Transactions)

BASF HELLAS SA Agrochemical and

Construction Chemical

Products

Preparation of TP files for the years 2008,

2009, 2010 & 2011

(European Group Transactions)

DREW MARINE HELLAS

Ltd

Services and Sales support in Shipping Industry Preparation of TP files for the years 2010,

2011

(International Group Transactions)

CANDY HELLAS SA Electrical appliances products Preparation of TP files for the years 2010,

2011

(European Group Transactions)

SAYBOLT HELLAS SA Services in oil industry Preparation of TP file for the year 2011 (International Group Transactions)
ITALTEL HELLAS SA Telecommunication Products & Services Preparation of TP files for the years 2009,

2010, 2011

(European Group Transactions)

UPM HELLAS SA Services support in Paper industry Preparation of TP files for the years 2009,

2010, 2011

(European Group Transactions)

FUCHS HELLAS SA Lubricants Products Preparation of TP files for the years 2009, 2010
Forster Wheeler Hellas S.A. Engineering Services Preparation of TP file for the year 2011
American – Hellenic

Chamber of Commerce

Chamber of Commerce Consulting on TP issues for its members
SOL SA Consulting Consulting Services Preparation of special reports ( Amadeus benchmarks) and consultation for its clients

For more information you may visit our website “www.thesissa.com’’.