Law 5162/24 lays down the rules for the application of tax incentives, concerning the valuation of assets and shares during transformations, the taxation of goodwill, depreciation, transfer of losses, reserves and provisions.
More specifically, the rules applies to mergers, divisions, conversions or exchanges of shareholdings between companies that are tax residents of Greece or other EU member states or third countries that have concluded a double tax treaty with Greece. Such transformations might not increase the taxable value of the assets contributed unless the partnership interests would be transferred by the shareholders or partners within two years of the completion of the transformation.
Goodwill arising on the merger, division or conversion might not be subject to tax for the transferring or receiving company, except for any cash payment made. For cross-border mergers and divisions, the tax arrangements should be applied on the basis of the procedures laid down by the European Union and the double taxation convention.
The tax treatment of transformations includes the potential application of tax exemptions, such as the exemption from transfer tax on the transfer of real estate upon its contribution to a company, provided, subject to case study, that the real estate is used for the needs of the receiving company for at least two years. Depreciation, losses, reserves and provisions may be transferred from the transferor company to the transferee, provided that the transferee treats them on the same terms as before the transformation.
In addition, these rules may also apply in the case of a contribution by a sole proprietorship or a consortium to an existing or new company, provided that the company or consortium is a tax resident of Greece and has started business at least two years before the contribution.
In essence, the tax rules may provide incentives for corporate transformations, ensuring that tax liabilities for companies and their shareholders are aligned with Greek law, potentially reduced or eliminated, in cases of restructuring of their business activities.
* This analysis represents the personal general views of the author and does not constitute any form of advice. This content is NOT endorsed by or representative of pfintekon company.
