Assessing the situation two years after the landmark Decisions no. 2163/2020 and 2323/2020 of Greece’s Supreme Administrative Court.
In 2020, with the Decisions no. 2163/2020 and 2323/2020, the Hellenic Council of State (Greece’s Supreme Administrative Court) held that the granting of interest-bearing loans falls within the scope of VAT and therefore said loans are not subject to stamp duty.
Factual background: A Greek company was granted consecutive interest-bearing loans by foreign affiliated undertakings. The loans were granted abroad, but part of the payments took place in Greece in the form of offsetting, manifested in the company’s accounts. The tax administration authorities-imposed stamp duty on these payments, having been taken place in Greece. The company appealed the imposition decision before the administrative court. The appeal, having been dismissed at first and second instance, was upheld by the Supreme Administrative Court’s final decision.
According to the Court, the provision of services in return for consideration, which takes place within the territory of the country, is subject to VAT. The provision of interest-bearing loan is considered as provision of services, with the interest being the lender’s remuneration. Ultimately, the granting of loans is exempt from VAT according to Article 22 of the VAT Code, however, as it falls in principle within the scope of VAT as provision of services, is not subject to stamp duty.
The provision of interest-bearing loans is not subject to stamp duty since the VAT Code was adopted in 1987, establishing that the provision of services is subject to VAT. Nevertheless, the tax administration authorities have been interpreting the law contra legem by imposing stamp duty on all interest-bearing loans granted by non-banking entities.
Despite the courts’ rulings being in principle binding solely between the parties, the Decisions no. 2163/2020 and 2323/2020 of the Supreme Administrative Court showcase the intention for the tax authorities’ practice to be reversed. Following this lead, the Dispute Resolution Directorate adopted the Decisions 4684/2021 and 182-185/2022, revoking the refusal of the tax administration authorities to return the unduly paid stamp duty to the applicant companies.
The Independent Authority of Public Revenue (IAPR) has not yet issued any relevant circular, which would definitively resolve the matter by endorsing the conclusion of both the Supreme Administrative Court’ and the Dispute Resolutions Directorate’s decisions. However, the administrative courts are generally expected to follow the Supreme Administrative Court’s case law.
The impact of these decisions can be proven multiple. To begin with, they pave the way for companies to claim the return of wrongfully imposed and unduly paid stamp duty, therefore facilitating the granting of loans between non-banking entities. Apart from that, they may as well gradually affect the fiscal treatment of other forms of lending, such as cash-pooling (a form of lending used by companies made up of multiple subsidiaries, which centralizes the cash flow management and balances the bank accounts of all the subsidiaries), which is still being considered as subject to stamp duty by the tax authorities.
While still expecting the tax administration’s reaction, we may highlight that the new case law is on the right track, alleviating the companies from a wrongfully imposed financial burden; thus, promoting business activity.
For additional information or assistance, please contact Ms. Maria Sarantopoulou, Chief Tax and Legal Advisor and Ms. Alexandra Theologou, Junior Legal Advisor, at our Eurofast office in Greece, at firstname.lastname@example.org
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Chief Tax and Legal Advisor
Junior Legal Advisor