BRIEFING
UK-Greece Cross-Border Estate Planning ON Monday 9 June 2014, 12.00pm – 2.00pm AT Macfarlanes LLP, 20 Cursitor Street, London, EC4A 1LT HOSTED BY
UK-Greece Cross-Border Estate Planning – 9 June 2014 ________________________________________________________________________________
These Notes are intended to do no more than refresh the memories of those attending the conference of the salient points made. Whilst every care has been taken in preparing the Notes to ensure their accuracy, they cannot be exhaustive and are no substitute for detailed examination of the relevant statutes, cases and other materials when advising clients on particular matters. No responsibility can be accepted by the Society of Trust and Estate Practitioners or the speakers for any loss occasioned to any person acting or refraining from action in reliance on anything contained in these Notes. No part of the Notes may be reproduced in any form without the prior permission of the speakers.
© STEP Conferences 2014
UK-Greece Cross-Border Estate Planning – 9 June 2014 ______________________________________________________________________________
Notes for delegates claiming points under CPD/CPE schemes
Attendance at today’s conference will assist delegates in meeting their structured training commitments as follows:
Society of Trust and Estate Practitioners
The event qualifies for 1 hour towards meeting STEP members’ structured training commitment under the Society’s own Continuing Professional Development Scheme.
The Solicitors Regulation Authority (formerly the Law Society)
The event is accredited with 1 hour under the Solicitors Regulation Authority continuing professional development scheme. Please note, however, that to claim the hours, solicitors must sign the attendance register on the conference registration desk at the end of the conference (in order to confirm their attendance for the whole of the event under the Solicitor Regulation Authorities guidelines). Please quote your roll number, as well as your name and firm. The reference allocated by the Solicitors Regulation Authority to courses run by STEP, which must be quoted on your claim form, is AKZ/STCL.
Bar Standards Board
The event is accredited with 1 hour under the Bar Standards Board continuing professional development scheme. Please note, however, that to claim the hours, delegates must sign the attendance register on the conference registration desk at the end of the conference (in order to confirm their attendance for the whole of the event under the Bar Standards Board guidelines). Please quote your name and firm.
NB In all cases, points/credits are subject to the appropriate claim being made
UK-Greece Cross-Border Estate Planning – 9 June 2014 ______________________________________________________________________________
PROGRAMME
12.00pm Arrival, Registration and Sandwich Lunch
12.30pm Chairman’s Welcome Address Edward Reed, Partner-Private Client, Macfarlanes LLP
12.35pm UK-Greece Cross-Border Estate Planning Yerassimos Yannopoulos, Head of Tax Practice, Zepos & Yannopoulos - Athens, Greece
1.35pm Questions and Answers
1.50pm Chairman’s Closing Remarks Edward Reed, Partner-Private Client, Macfarlanes LLP
2.00pm Conference Close
UK-Greece Cross-Border Estate Planning – 9 June 2014 ______________________________________________________________________________
DELEGATE LIST
Sarah Albury Mishcon de Reya
Geraldine Appert SG Hambros
Andrea Bazzani Titanus Wealth Planning
Nigel Beadsworth Stonehage Law
Bruno Boesch Froriep LLP
Michaela Britton Mishcon de Reya
Helen Bryant Farrer & Co
Susan Cambridge Charles Stanley & Co Ltd
Zoe Camp New Quadrant Partners Limited
Michelle Cartwright HSBC Private Bank
Tim Clarke RBC Wealth Management
Michelle Darko Farrer & Co
Diana Davidson Farrer & Co LLP
Christophe Daviron Citi Private Bank
Kostas Dedes Royal Bank of Canada Investment Management (UK) Limited
Basil Dixon Maurice Turnor Gardner LLP
Andrew Godfrey Penningtons Manches LLP
John Goodchild Pemberton Greenish LLP
Christopher Groves Withers LLP
Alan Hooks Julius Baer International Limited
Susan Johnson Moore Stephens
Nadia Kribi SG Hambros Bank Ltd
George Lassados Union Bancaire Privee
Esther Lee Farrer & Co LLP
Marika Lemos Gray's Inn Tax Chambers
DELEGATE LIST CONTINUED
Paola Lombardi Trident Trust Group
Andrew McErlean Cartlidge Morland
Judith Millar Bircham Dyson Bell
Neil Morton HSBC Private Bank (UK) Ltd.
Filippo Noseda Withers LLP
Matthew O'Keefe EFG Private Bank Limited
David Peirson F. W. Smith, Riches & Co.
Andreas Petalas
Alexandra Petalas
Tatiana Petalas
Ed Powles Maurice Turnor Gardner LLP
Beatrice Puoti Burges Salmon
Jacob Scotiniades
Enrique Sibauste Xperta Corporate / Patton Moreno & Asvat
Paul Solon Solon & Co
Elena Tzialli Forsters LLP
Patrick Walsh Hibernian Associates
Richard Wernick CSB Group
STAFF LIST
Richard Clarke Society of Trust and Estate Practitioners (STEP)
Emma Yeats Society of Trust and Estate Practitioners (STEP)
UK-Greece Cross-Border Estate Planning – 9 June 2014 _____________________________________________________________________________
Yerassimos Yannopoulos, Head of Tax Practice, Zepos & Yannopoulos
Yerassimos Yannopoulos heads up Zepos & Yannopoulos’ tax practice group. He was admitted to the Athens Bar in 1991 and joined the firm in 1994.
Yerassimos has extensive experience in advising international clients, including some of the world's largest institutions on Greek tax matters. He regularly advises on international business transactions, including joint ventures, corporate reorganisations, mergers and acquisitions. He also assists clients on tax controversy.
Yerassimos lectured at the Athens School of Economics on International Tax Law (Post-Graduate program on Taxation) from 2003 to 2011. Yerassimos is also the author of several publications including "Interpretation of International Tax Conventions" (Public and Administrative Law Review, 1995); "Tax treatment of inter-company charges within a multinational group of companies", (Accountant's Review, 1996); "Tax treatment of emerging financial instruments", (Accountant's Review, 1996); "Taxation of Principal and Accessory Contracts", (Athens Bar Law Review (Nomiko Vima), 1997); Co-author of the section on Greece of the "International Guide to Mergers and Acquisitions" published by the International Bureau of Fiscal Documentation.
Yerassimos served the Greek Advisory Committee of the Stavros Niarchos Foundation (2005-2009) and is currently a member of the Board of the Benaki Museum, Athens.
Contact details: Zepos & Yannopoulos 75 Katehaki & Kifissias Avenue Athens 115 25 Greece Tel: +30 210 6967000 Fax: +30 210 6994635 Email: [email protected]
Briefing UK-Greece Cross-Border Estate Planning
Cross-Border Estates SIG/STEP London, 09 June 2014
Contents
2
Section 1_Overview of the Greek fiscal landscape in 2014 [slides 3-15] Fiscal Consolidation; Key figures [slides 4-5] Tax Administration & Enforcement [slides 6-15]
Section 2_Rules affecting Greeks in the UK and Brits in Greece [slides 16-45] Tax residence [slides 17-19] Income Tax [slides 20-26] Anti-abuse Rules [slides 27-32] Gift & Inheritance Tax [slides 33-39] Property Taxation [slides 40-45]
Section 3_Special Topics [slides 46-53] The use of “Trusts” [slides 47-49] Shipping Income [slides 50-53]
Section 1_The Greek fiscal landscape in 2014
3
4
Greece; Key figures (source: Eurostat)
2010
2011
2012
2013
Forecasts (Spring 2014)
2014 2015
Debt/GDP ratio (%) 148.3 170.6 157.2 175.1 177.2 172.4
Public debt (billion €) 329.5 355.7 303.93 318.70 349.3
Budget deficit (% of GDP) 10.7 9.4 6.8 5.5 4.6
Unemployment (%) 12.6 17.7 24.3 27.3 26.0 24.0
Economic growth (%) -4.9 -7.1 -7.0 -3.9 0.6 2.9
5
The Fastest Fiscal Consolidation
Greece achieved an annual rate of fiscal consolidation of 4.4 p.p. of GDP on average, the highest in the developed world over the last few decades Source: AMECO * IMF data for CAPB that excludes financial sector support
Tax Administration & Enforcement
6
7
Alternate Minister of Finance
Deputy Ministry of Finance
Gen. Secr. of Public Assets
Gen. Secretary of Public Revenue
Financial & Economic
Crime Unit
Gen. Secr. of Fiscal Policy
Task Force
KEFOMEP Interregional Audit Centers
Regional Tax Offices
Gen. Secr. of Information
Systems
Audit Center for Big Corporates
Minister of Finance
Council of Economic Advisors
Gen. Secr. of Ministry of
Finance
Greek MoF implodes; The new Secretary General
Redesign of tax agencies; New unit dedicated to HNI’s New “Audit Authority for High Net Worth Individuals” (KEFOMEP); to
audit individuals & real estate companies (Greek & foreign) that do not disclose their UBO. “High Net Worth” based on of assets & living expenditure (annual and one-off); value of assets or volume of living expenditure still to be determined
However, resources hired by such new agencies lack sophistication and proper training
Last but not least, Ministry guidelines interpret tax law in a simplified manner, and sometimes are published 7-8 months after the new law that they are supposed to clarify
8
Tax payers who fall within one or more of the following categories are subject to a full scope tax audit of their unaudited tax cases on a priority basis. The prioritization takes into account
Tax audit priorities (on private individuals)
As regards cases which are close to prescription, selection of the ones to be subject to tax audit shall now be based on: (a) their tax interest, (b) the results from the use of risk assessment analysis methods and (c) the probability to collect the assessed amounts
Important real estate property portfolio
Exporting funds out of Greece during 2009, 2010 & 2011
Featuring in the HSBC (Falciani) list
relatively high amounts of reported expenses
transactions with offshore entities bad track record from previous tax audits inconsistencies among various tax returns
9
Most important tax controversy changes
10
Mandatory administrative appeal to the Dispute Resolution Directorate of the Ministry of Finance (within 30 days) prior to having recourse to the court for any acts or omissions committed by the Tax Authorities (no threshold)
Judicial appeal challenging the negative (explicit or tacit) decision of the Dispute Resolution Directorate before the Court (within 30 days)
Upon filing a mandatory administrative appeal to the Dispute Resolution Directorate 50% of the amount assessed has to be settled i.e. well prior to bringing the case to the court
Assessments exceeding Euro 150K (formerly Euro 300K) are now disputed before the Court of Appeal at first instance
Writ of certiorari (cassation) before the Supreme Court only if no relevant case law of the Supreme Court exists on the subject matter or if the attacked court decision runs contrary to established case law of the Supreme Court
Out-of-court settlement (involving discounts of penalties upon admitting wrong-doing) no longer available with the exception of certain Bookkeeping and VAT penalties committed prior to 01.01.2014
Recourse before the Supreme Administrative Court (Council of the State)
Recourse before the administrative courts (first and/or second instance)
Administrative level – Taxpayer presents his case before the Dispute Resolution Directorate of the Ministry of Finance
Violation of European Law
Individual Claim before
the Commission
Preliminary Reference by the National Court to the
ECJ
Violation of the ECHR
Recourse before the ECtHR,
provided that local remedies
have been exhausted
Local Remedies International Remedies
Recourses available against tax audit assessments
11
Wealth Registry; where do we stand
Introduction of a Wealth Registry to be maintained by the General Secretariat for Information Systems is pending; Legal framework exists as of 2010 but has not become operating yet due to lack of ministerial decisions
Qualifying taxpayers; Only Greek tax residents need to report their assets; foreign tax residents are now excluded from its ambit
Assets to be reported; Movable property (cars, vessels, aircraft, shares, mutual funds investments and company parts) owned by individual taxpayers
Exempt items; Bank deposits, Greek State bonds, investments in Greek mutual funds, shares of companies owning directly or indirectly vessels operated under L.27/75)
Next steps; Deputy Minister of Finance committed for the application of the Registry within 2014; Bank deposits, Greek State Bonds , investments in Greek mutual funds will most likely need to be reported following further amendments in legislation
12
Swiss (rubik) bilateral tax agreement with Greece
13
Persons covered; Greek resident bank account holders who had a Swiss bank account on November 2012 and still have it at the effective date (to be determined in the Agreement)
What will be the consequences? Options to be defined in the Agreement
• Regularization for the past ─ Either, bank account-related information disclosed to Greece; ─ Or, one-off flat rate tax payment on an anonymous basis (possibly at a rate
ranging from 20% to 40%)
• Impact for the future ─ Either, withholdings on income and gains, unless voluntary disclosure of
information is made ─ Or, inheritance tax withholding upon death unless voluntary disclosure is
made Current Status; Negotiations in “pause” from a technical point of view. No
tangible progress is anticipated within the next 12 months
Automatic Exchange of Information Greece (with 43 other jurisdictions) among the “early adopters” Committed to implement the Common Reporting Standard within the ambitious
timetable agreed:
- New account opening procedures to record tax residence will need to be in place from 1 January 2016.
- The due diligence procedures for identifying high-value pre-existing individual accounts will be required to be completed by 31 December 2016
- The first exchange of information in relation to new accounts and pre-existing individual high value accounts will take place by the end of September 2017
- Information about pre-existing individual low value accounts and entity accounts will either first be exchanged by the end of September 2017 or September 2018 depending on when financial institutions identify them as reportable accounts.
14
Tax Amnesty again; any chance?
15
2003-2011; Four (4) amnesty Laws 2003; Covering periods 1993 -1998 2010; Covering all unaudited years ending on or before 31 December 2009 2011-2012; Revival of 2010 Amnesty Law by two separate set of rules
2004- 2011; Three (3) Laws to favor repatriation of offshore funds 2004 Tax Incentives for the repatriation of funds to Greece (3% tax burden) 2010 Tax Incentives for declaring funds held offshore; applicable to funds
deposited or invested on April 15th 2010 (5% and 8% tax burden for funds repatriated or maintained outside Greece)
2011 Revival & enhancement of 2010 regime; applicable to undeclared funds deposited or invested on April 15th 2010 (8% tax burden)
What should we expect? Greek Government is in favor of new amnesty and repatriation law. Creditors (the Troika) disagree and expect that equal amounts of revenues have to be collected through tax audits
Section 2_New rules affecting private individuals
16
Tax Residence
17
Tax residence in Greece?
Greece
UK resident non-dom of Greek nationality
UK
Family still in Greece Child attends Greek school
UK domiciled person
Spends 10 months in Greece working
Spends 10 months travelling around Greece
Yes Yes No
18
Tax residence in a nutshell
19
Tax residence definition has been introduced in the ITC in line with art. 4 of the OECD Model Convention
Triggering events: place of residence, habitual abode or vital interests in Greece
As of March 2011, an individual staying in Greece for more than 183 days within a calendar day is presumed a Greek tax resident and is liable to tax for his/her worldwide income
From March 2011 to December 2013, individuals relocating to non cooperating jurisdictions (e.g. Monaco) were presumed Greek tax residents
From March 2011 to December 2013 Individuals relocating to countries with preferential tax regimes (e.g. UAE) while maintaining material financial interests in Greece were presumed Greek tax residents for five years from their relocation by means of a rebuttable presumption (subject to DTC’s ruling otherwise)
Specific procedure introduced for tax relocation (exiting Greece)
Income Tax
20
Key changes to filings by non-residents
21
Foreign tax residents earning Greek source income are subject to deemed income rules (related to their expenditure in the country)
Foreign tax residents with assets in Greece (e.g. real estate, cars) with no Greek
income are still required to file income tax returns (but are not subject to deemed expenditure rules)
Foreign tax residents earning Greek-source income are required to annually
submit to the competent tax office, either
(i) a tax residence certificate, or (ii) a copy of their tax clearance certificate (in their country of residence), or (iii) a copy of the income tax return (submitted in their country of residence), or (iv) a residence certificate issued by any public or municipal or other
officially recognized agencies
Key changes to filings by residents
22
All income tax returns need to be filed electronically
All adult Greek tax residents have to obtain a Tax ID
The totality of income has to be reported in the tax return even if exempt from income tax
Income Tax rates
Salary & Pensions Business & other income
Investment income (exhaustive)
23
Country Royalties (%) Interest (%) Dividends (%)
France 5 10/12 Accdg to Internal Legislation
China 10 10 5/10
Cyprus 0 10 25
Belgium 5 15/10 15/25
Germany 0 10 25
Luxembourg 5-7 8 38/7.5
Netherlands 5-7 10 5-15/35
UK 0 0 Accdg to Internal Legislation
USA 0 0 Same as above
WHT rates with Greek DTCs
24
Capital gains
Capital gains realized by a Greek tax resident (private) investor from the transfer of real estate and/or securities (i.e. bonds, whether public or private, treasury bills, derivatives) are now subject to a final 15% income tax The gain from the sale of real estate is gradually de-inflated depending on the property holding period; maximum de-inflation rate is 0.61, for holding period exceeding 25 years To be noted that the new tax law provides that “every three similar transactions taking place within a six month period (or, a two-year period for sales of real estate) are considered as a systematic performance of trades” and, thus, as a business transaction triggering a marginal 33% income tax (instead of the 15% tax). Such rule does not apply to sales of listed securities (with some qualifications) The new rule applies on transfers performed as of 01.01.2014
25
“Luxury living” and “solidarity” tax
26
A new “luxury living” tax has been introduced on assets reported in the 2013 tax return and onwards
The “luxury living” tax rates range from 5% to 10% and apply on annual deemed expenditure (due to the ownership or occupation of cars of superior engine capacity, aircrafts, helicopters, swimming pools disclosed in the annual income tax returns)
Such tax applies to Greek and foreign residents earning Greek-sourced income
The special solidarity contribution (in the range of 1% to 4%) initially set until 2014 is anticipated to be further extended
The solidarity contribution applies to the worldwide income (taxable and non taxable) of Greek residents and the Greek-sourced income of non-residents
Anti-abuse Rules
27
Effective management & control [1/2]
BoD/GM
EU/ Non-EU
Greek tax resident
Foreign Co.
Greece
Regular shares Greek
tax resident
28
Effective management & control [2/2]
The new Income Tax Code provides that the “place of effective management” of a foreign legal entity is considered to be in Greece based on certain facts and conditions, considering in particular the following: (i) the place where the day-to-day management is carried out, (ii) the place where strategic decisions are made, (iii) the place where the annual General Meeting of shareholders and/or
the Board of Directors takes place, (iv) the place of residence of the members of the Board of Directors (v) the place where books and records are kept In addition to the above, residence of the majority shareholders may potentially be considered along with the other factors
29
Controlled Foreign Companies (CFC) [1/2]
Non-EU
Greek tax resident
Investment Co
[1. > 50%]
[2. CIT ≤ 13%]
[3. Passive income]
Regular shares
30
Controlled Foreign Companies (CFC) [2/2]
As a general rule, EU entities fall outside the scope of Greek CFC rules, unless the establishment or the financial activity of the legal entity meets the conditions of an artificial arrangement or a series of artificial arrangements essentially created with the purpose of tax avoidance. The requirement of artificial arrangements is in line with the established case law of the Court of Justice of the EU In case a foreign entity is characterized as CFC, its undistributed income would be considered as taxable (business) income of its Greek tax resident shareholder The new CFC rules apply as of 01.01.2014
31
General Anti-Abuse Rule (GAAR)
A GAAR is introduced for the first time, as part of the measures to combat tax evasion. The rule allows tax administration to disregard upon assessing taxes any artificial arrangements set up for tax evasion purposes and results to a tax benefit Arrangements include any agreement, transaction or act put in place by the Greek tax resident, whilst artificial are those arrangements that lack commercial (business) or financial substance.
The new GAAR applies as of 01.01.2014
32
Gift & Inheritance Tax
33
Assets inherited subject to Greek tax
Deceased (Greek national non resident )
Descendants (regardless of nationality
& residence)
Movable assets located in Greece (cars, cash, works of art, shares in Greek Co’s)
Real Estate Property located in Greece
Movable assets located outside of Greece (cars, cash, works of art, shares in foreign Co’s)
Real Estate Property located outside of Greece
YES
YES
NO
NO
[if the deceased was not domiciled in Greece (for at least 10 years prior to her/his demise]
34
What about gifts (from Greek nationals)?
Gifts of foreign movable property (cash, shares, works of art etc) granted by Greek nationals (donors) were and are always subject to Greek gift tax As with inheritance tax, gift tax is independent of the nationality/residence of the beneficiary The tax rates applicable both to inheritance and gift taxes have been subject to several amendments during the last years. The currently applicable marginal rates are quasi identical for transfers between parents, spouses and children (please see following slides)
35
Assets gifted subject to Greek tax
Donor Greek national
non resident in Greece
Beneficiaries (regardless of nationality
& residence)
Movable assets located in Greece (cars, cash, works of art, shares in Greek Co’s)
Real Estate Property located in Greece
Movable assets located outside of Greece (cars, cash, works of art, shares in foreign Co’s)
Real Estate Property located outside of Greece
YES
YES
YES
NO
36
Assets gifted subject to Greek tax
Donor UK national
non resident in Greece
Beneficiaries (regardless of nationality
but Greek residents)
Movable assets located in Greece (cars, cash, works of art, shares in Greek Co’s)
Real Estate Property located in Greece
Movable assets located outside of Greece (cars, cash, works of art, shares in foreign Co’s)
Real Estate Property located outside of Greece
YES
YES
YES
NO
37
Beneficiaries: spouse, parents, children and grand children
Bracket of gift/
inheritance Tax rate of bracket (%) Tax of bracket Total value of
gift/inheritance Total tax
150,000 0 0 150,000 0
150,000 1 1,500 300,000 1,500
300,000 5 15,000 600,000 16,500
Excess 10
Greek inheritance and gift tax scale (1/2)
38
Beneficiaries: other descendants and ascendants, siblings, other relatives of third degree (nephews, nieces and uncles/aunts), foster parents, children from previous marriage of the spouse, sons and daughters in law, etc.
Greek inheritance and gift tax scale (2/2)
Bracket of gift/ inheritance
Tax rate of bracket (%) Tax of bracket Total value of
gift/inheritance Total tax
30,000 0 0 30,000 0
70,000 5 3,500 100,000 3,500
200,000 10 20,000 300,000 23,500
Excess 20
39
Property Taxation
40
Greek Real Estate Market
41
Greek real estate market has been in recession since the end of 2008 and continues to shrink. The substantial increase of the tax burden on real estate in the past few years, the country’s unstable economic environment and limited financing have negatively impacted the market. The market has been characterized by excessive supply, very low demand and a substantial stock of properties for sale (estimated at around 180,000)
The decline in residential prices (house prices) in urban areas (on an annual basis or since the end of 2008) is depicted in the table below:
2009 2.9% 2010 6.7% 2011 7.5% 2012 11.7% 2013 [Q1, Q2 & Q3] 11.6%, 11.8% and 9.2%
Source: Bank of Greece; Monetary Policy
New Property Tax (ENFIA) The new tax referred to as “uniform tax on real estate property” (“ENFIA”) is effective from 1 January 2014 is replacing the previously applicable property tax regime, namely the Annual Property Tax on Real Estate (“FAP”) and the Extraordinary Real Estate Special Duty (“EETA”). Although initially announced as a unified property tax regime, the new regime actually comprises two taxes, namely:
Main Tax It is computed on an asset per asset basis, and the same formula is applied both for individuals and legal entities (separate formulas apply for buildings, plots or fields); the amount of tax due ranges from Euro 0.001 to Euro 13 per sq.m., readjusted by a number of coefficients (e.g. based on floor, age, façade etc.)
Supplementary Tax It is computed on the basis of a progressive tax scale for individuals and flat rates for legal entities, referring to values determined according to a system that is similar, although not identical, to the currently applicable statutory value system
42
New Property Tax (ENFIA) rates
Applicable tax rates and tax exempt brackets are different, depending on whether the owner of the property is an individual or a legal entity. As regards individuals, the tax free bracket is up to Euro 300,000. Applicable tax rates for values exceeding Euro 300,000 range between 0.1% and 1% over the value of the property. As regards legal entities, there is no tax free bracket and the applicable tax rate is 0.5%. Legal entities are however exempt from the supplementary tax for self-used properties.
43
Statutory values; changes ahead
44
Publicly available information re statutory values is contradictory
The Ministry has formed a Committee (decision Δ6Α 1060696 ΕΞ 8.3.2013) to propose a new system for the automatic readjustment of the statutory values to the market values.
Deputy Ministry declared that changes on the statutory values could go either up or down (depending on the areas involved)
Changes on the statutory values could become effective as of 2016 Greek commitment to international creditors (the troika) for the property
taxes in 2014 amounts to € 3.1 billion
Special Real Estate Property Tax (15%)
45
This tax was introduced on 2003 (applicable rate was 3%) and was significantly amended on 2010 (namely, scope of exemptions was narrowed and the tax rate was increased to 15%)
Gist of the tax is to check whether the UBO can justify the sources of funds of acquisition and holding of the real estate property and to track possible changes in ownership (gift/sale/inheritance) which could give rise to Greek taxes
On October 26, 2013, constitutionality of the 15% SRET was referred to the Supreme Court. However, the appeal was rejected on inadmissibility grounds
Entities engaged in activities such as the purchase, management, investment and exploitation of real estate, file annually the Special Real Estate Tax return irrespective of whether they are exempt or not from the tax. Entities eligible for an exemption are obliged to collect supportive documentation to substantiate the exemption
Exemptions apply -among others- for (a) entities with gross income from business activity higher than real estate income, (b) entities with shares listed on organized markets, (c) EU entities with registered shares that disclose the identity of their shareholders up to the level of individuals having Greek tax ID
Section 3_Special topics (the use of trusts & changes to the Greek shipping regime)
46
The use of “Trusts”
47
The use of “Trusts”
Trust
PTC
Asset Co
Settlor [Greek national]
Settles Asset Co’s shares in Trust
Beneficiaries (Greek tax residents)
48
The use of “Trusts”
Trust
PTC
Asset Co
Settlor [Greek national]
Gift Tax in Greece? Beneficiaries
(Greek tax residents)
Distributions subject to 10% (exhaustive)
Disclosure of beneficial interest to Wealth Registry?
CFC or Effective Management concerns?
49
Shipping Income
50
Shipping dividends Pursuant to Law 27/1975 (law governing taxation of income derived from the operation of Greek flagged ships or foreign flagged ships managed by a Law 27 office), profits derived from the exploitation of ships and distributed in the form of dividends by ship owning companies or their holding companies of any tier are exempt at the level of the Greek individual shareholder from any Greek tax, duty or contribution (with the possible exception of the marginal 4% solidarity tax).
Special reference is made to article 35 of Law 814/1978, a stand-alone provision dealing (also and in parallel with Law 27/1975) with the exemption of shipping income distributed by holding companies only, which stipulates that the above exemption applies to companies holding “exclusively”, directly or indirectly, shares in shipping companies.
Rules on CFC, effective management and the Wealth Registry (as in force) do not apply to shipping structures of Law 27/1975
51
Shipping dividends (for resident shareholders) Individual
Ship Owner
Holding Company
Ship Owning
1
Ship Owning
2
Treasury Company
100% 100% 100%
Ship Owning
3
Not
suggested: As per
Greek law, the Hold
co should hold
exclusively shares in
ship owning
companies
Non-Greek flagged ship
Greek flagged ship
Non-Greek flagged ship
Portfolio bankable/ liquid assets
Regular shares Management Agreement (tax requirement for non-Greek flagged ships)
Dividend. Greek laws apply; tax exemption available provided that the profits derive from shipping activities
Dividend. Out of scope of Greek laws
Management Company
L.27 office
100% 100%
52
Taxation on transfer of “shipping” shares
Transfer of shares of Greek or foreign ship owning companies (irrespective of whether they own Greek or foreign flagged ships) or of their holding companies of any tier are exempt from any tax regardless the nature of the transaction, i.e. gift, inheritance or sale (no explicit provision on exemption of capital gains realized from the sale of shares)
53
Thank you – Any questions ?
Yerassimos Yannopoulos Corporate and International Tax Tax Controversy
Zepos & Yannopoulos is one of Greece's largest and longest established (since 1893) law firms, providing tax and legal assistance to private clients and international companies.
Our aim is to offer our clients top quality comprehensive legal and tax solutions through efficient and practical advice.
The firm's tax practice is widely recognized as having one of the most specialized private client practices in the country. We are advising entrepreneurs, family offices, trusts, foundations and private banks on tax & estate planning, tax compliance, trust & estate administration, real estate, migration and philanthropy.
Zepos & Yannopoulos is consistently ranked Greece’s No. 1 Tax Practice by Chambers; European Legal 500, Tax Directors Handbook and Practical Law.
54
The STEP Cross-Border Estates Group (C-BEG) was founded in 2004 at the instigation of Richard Frimston of Russell-Cooke LLP. Its area of reference is the domain of estate planning and the administration of estates/successions across
national borders. It focuses on reconciling divergent inheritance rules between civil code jurisdictions, between a civil code approach and a common law approach and
between such systems and others such as Shari 'a.
This Special Interest Group has to date focused on providing seminars on both tax and 'civil' topics surrounding such conflicts of law issues, touching on marriage,
death, divorce and property law questions. C-BEG continues to follow the Brussels legislation process and the passage of the proposed Brussels III and Brussels IV
Regulations. Visit the Cross-Border Estates Special Interest Group web-pages: www.step.org/cross-border-estates www.step.org/SIGs Join the LinkedIn group: Cross Border Estates Planning Special Interest Group www.linkedin.com/groups/Cross-Border-Estates-Planning-Special-4039028 Become a Member: Membership of STEP’s Special Interest Groups is open to STEP members and non-members alike and there is currently no fee to join. If you wish to become a member of the Cross-Border Estates group and receive updates about their news, events and activities, please visit www.step.org/SIGs. Alternatively you can complete a joining form at today’s registration desk.
Cross-Border Estates Special Interest Group
Society of Trust and Estate Practitioners (STEP) Artillery House (South)
11-19 Artillery Row London, SW1P 1RT
United Kingdom
Tel: +44 (0)20 7340 0537 Fax: +44 (0)20 7340 0501
Email: [email protected]