INTRA GROUP TRANSACTIONS – DEADLINE
THE 15th OF MAY IS THE DEADLINE FOR THE LIABLE (see below) ENTERPRISES TO SUBMIT THE “LIST OF INTRA GROUP TRANSACTIONS” TO THE MINISTRY OF DEVELOPMENT AND COMPETIVENESS.
a) Law 3728/2008 (MINISTRY OF DEVELOPMENT AND COMPETIVENESS)
In order to reduce overpricing as well as to restrain the tax evasion, which is performed through the transfer pricing on intra-group transactions, the Ministry of Development and Competiveness established the rules for the substantiation of transfer prices, based on the provisions of EU Code of Conduct along with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.
Especially by Law 3728/18-12-2008 and the Ministerial Decision A2-8092/31-12- 2008, specific rules for the substantiation of transfer pricing were determined, in order to ensuring the “arm’s length principle” for all intra-group transactions. In other words to ensure that the conditions on intra-group transactions do not differ from those which would be made between independent enterprises.
The basic elements of the law provisions are summarized as follows:
Liable enterprises – exemptions
Liable to comply with the above law provisions, are considered all the enterprises, regardless of their legal type or form, doing business in Greece and having transactions with “associated enterprises”, as they are defined by the article 42e of the commercial Law 2190/20.
Exemptions are provided for:
- enterprises with annual turnover up to 1.000.000€
- intra-group contracts not exceeding 200.000€ per annum
- contracts with individuals
- transactions regarding stocks or shares
- real estate contracts
The liable enterprises, on annual basis and up to the 15th day of the fifth month following the year-end date, have to submit a “List of Intra-Group Transactions” to the Ministry of Development and Competiveness.
Furthermore and upon prior request by the Ministry of Development and Competiveness, the liable enterprises must submit to the Ministry, a detailed transfer pricing file for the substantiation of intra-group transactions, in order to be audited.
Detailed Transfer Pricing File
The detailed file is essentially a complete and standardized transfer pricing study and is distinguished in two categories, depending on the fact that the domestic enterprise is either parent company or a subsidiary. In the former case the parent company should provide a kind of “master file” while on the other hand the Greek subsidiary or branch has to provide a “Greek file”.
The content of the files in both cases are quite similar and includes all the information needed in order to prove that the intra-group transactions were performed in compliance to the “arm’s length principle”.
More specific, the files must provide information about the group in general (such as group structure, strategy, activities, policy for the intra-group invoicing etc.) as well as more detailed information for the liable domestic enterprise (such as analysis of intragroup transactions, nature of the transactions, amounts, method of transfer pricing calculation, contractual terms, comparative figures etc.)
It is noted that as accepted methods for the calculation of transfer prices, are considered the methods adopted by OECD directives.
It is also remarked that during the process of substantiation of transfer pricing, the usage of comparative figures as well as the access to data banks is provided.
In case of non compliance with the above mentioned provisions significant penalties are imposed (such as, self-standing fine 10% on the amount of intra-group transactions, fine 5.000€, penal punishment etc.). It is also noted that in case of non compliance with the “arm’s length principle”, the Ministry of Development and Competiveness notifies the Tax Authorities for additional penalties provided by the Greek Tax Legislation.
b) Art. 39 Greek Income Tax Code (MINISTRY OF FINANCE)
Additionally to the above described Law 3728/2008, the Greek tax legislation includes a transfer – pricing clause (Article 39 of the Greek Income Tax Code) that is aligned with international standards. In addition, Article 39A includes the concept of documentation files that must be maintained by the enterprise.
These Law provisions are more or less similar in respect of the contents of the documentary file.
Nevertheless, the main differences can be summarized as follows:
- 39 refer only to international transactions.
- 39 refers to transactions over 100.000€ per annum, regardless company’s turnover.
- 39 provides penalty 20% on the additional net profits, which is on top of the main tax plus penalties provided by the general tax provisions.