Greece introduces deferral of capital gains tax on certain securities transactions

A deferral of capital gains tax on certain securities transactions in Greece is now provided by newly enacted Law No. 5024/2023

Anticipated to offer a strong incentive for the establishment of holding companies in Greece, a deferral of capital gains tax on certain securities transactions will now apply by virtue of recently enacted Law No. 5024/2023, provided certain conditions are met. At the same time, the new Law also amends certain VAT rules that were previously applicable.

More specifically, the new provisions will apply in cases of Greek tax residents who contribute domestic or foreign securities, such as shares, to cover or increase the capital of Greek or foreign legal entities or persons in exchange for securities issued by the recipient in question.

The main conditions that have to be met for the application of this deferral are the following:

• The contributor of the securities must be an individual tax resident in Greece and the sole shareholder/partner of the recipient legal entity;
• The recipient must be established in a tax cooperative jurisdiction (not necessarily in the European Union); and
• The scope of the recipient entity’s business objective must relate to commercial, production or agricultural activities, or the provision of services.

The practical effect of this amendment is that, for those cases meeting the above-mentioned criteria, capital gains taxation will only occur upon the actual transfer of the securities in question in the recipient entity that was acquired in exchange for the contribution, and not at the time of the contribution of the domestic or foreign securities.
This new measure applies from 24 February 2023 onwards and stands as a very welcome development that is expected to render the setting up of Greek holding companies an even more attractive and tax-efficient investment vehicle for high net-worth individuals.

At ECOVIS Hellas Ltd. we have extensive experience and expertise in all aspects of personal and business taxation. Contact us today at athenstax@ecovis.com for any queries you may have and to find out how we can support your investment plans!