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The Impact of New Greek Property and Shipping Tax Laws

Publiziert am 16.März.2014 von Abraam Kosmidis

The Impact of New Greek Property and Shipping Tax Laws

Greek tax laws have undergone major changes over the past year or so as part of the range of measures designed to combat the financial crisis and to meet the obligations of the bailout agreement. This has helped some, but forced others to make some difficult decisions. The removal of the property tax attachment to electricity bills was a popular move that benefitted many. Its replacement by a broader real estate ownership tax and the reduction in the rate of property transfer tax from 8-10% down to 3%, which came into effect in January 2014, has had the desired effect of stimulating movement in the property market, but this has not always been for positive reasons. A large number of property owners have made the decision to divest themselves of their assets to avoid the higher tax burden on ownership. One result of this is that revenues from property taxes in 2014 may be as high as €3.8 billion for 2014, compared to the 2009 figure of only €500 million; another is that property prices have collapsed.

Casualties and beneficiaries

There was much resistance among Greeks to the introduction of the new 3% transfer tax as it removed the tax burden from the few with large landholdings and onto the shoulders of the many – the 87% of the population who are home-owners, who would on paper share the tax burden more fairly but in reality have found it crippling. The new unified property taxes follow the model set by the troika in its €240 billion bailout package, where the tax burden is moved from property transfers to ownership. This applies not only to commercial and residential property, but to farms, sports fields and vacant land. Transfer tax revenue is therefore expected to drop in 2014 to only €2.65 billion, compared to the €2.90 generated under the old law. The government plans to cover this shortfall with cuts in investment spending.

The beneficiaries of this property market slump are the foreign buyers, who are attracted by lower prices as well as by the lure of residence permits, which are now granted to non-EU investors buying property valued at over €250,000; but not all foreign buyers are going for the more expensive properties. Prices at the end of 2013 had already fallen by 32% since 2008, and they are still falling. This is the second steepest property price decline in the EU after that of Croatia. Greek prices are forecast to drop by another 20% in 2014. A Bank of Greece survey shows an average annual rate of change to residential property prices of -29.9%. Homes are generally on the market for 10 months before being sold at 20% below the asking price.

Some Greek real estate agents estimate the decline in property prices to be nearer 50%. With the exception of luxury property and property in the more popular tourist resorts, the quantity of sales has dropped considerably since the market’s peak in 2005. Property analyst Christos Bletas said that in Athens ‘the lack of interest displayed last year… hasn’t been experienced since the second world war.’ Greeks have traditionally seen property as the securest of investments. This is no longer the case, and the sevenfold increase in overall property tax has meant that for many people their home has become a huge financial drain on their diminishing resources.

According to the Hellenic Property Federation (POMIDA), which is ‘fighting against the new burdens place upon real estate property owners due to the debt crisis,’ more than 500,000 people want to sell, but around 300,000 residences remain empty—a golden opportunity only for foreign buyers of holiday homes. The biggest buyers are the British and Russians, closely followed by the Germans, Turks and Chinese. However, the Hellenic Realtors Federation has warned that the new taxes could result in a freezing of transactions that would lead to a collapse of the market.

Shipping news

Greek commercial ship-owners may be among the richest people in the country, but they have traditionally enjoyed special tax concessions on their ships. This is because of the high-risk nature of the business. However, these concessions, which are enshrined in the constitution and have been respected by governments without exception since the 1940s, have now been reviewed as part of the enforced reassessment of the country’s tax laws. Until this year, most of the ship-owners had conformed to an agreement made in 2013 with the Minister of Finance to contribute voluntarily to the country’s finances. Legislation rushed through parliament by Antonis Samaras’ coalition government before Christmas 2013 has now imposed on them a mandatory tripled tonnage tax.

The President of the Union of Greek Shipowners (UGS), Theodoros Veniamis, said this was a ‘constitutional deviation’ and that ‘a negative climate has been created for any type of business investment inGreece.’ The ship-owners have said they are willing to wait for the government to reconsider, although in February 2014 the Merchant Marine Minister, Miltiadis Varvitsiotis, said that the tax was an emergency three-year measure only. This is not good enough for the UGS, which has threatened to move their fleet abroad and to sail under a foreign flag unless the policy is reconsidered.

Unemployment in Greece is now 28%, the highest in the EU. Against a background of economic and social marginalisation, after four years of austerity under the bailout agreement, and facing further fiscal shortfalls in 2014, Prime Minister Samaras is sticking to his guns as far as the ship-owners are concerned. He has refused to make further unpopular spending cuts in other sectors that have already made considerable sacrifices. This decision to demand a greater contribution from one of the richest sectors of the economy has drawn praise from Giorgos Stathakis, the opposition Syriza party shadow minister for development, who called it ‘a positive step’.

Vassilis Antoniades, MD of the Boston Consulting Group, which has undertaken a recent study on Greek shipping and the Greek economy, said: ‘The shipping industry is a significant contributor to Greece in terms of jobs, cash and economic activity, and it stands to lose all three if it changes the regime for attracting shipping companies to the country.’ Greek shipping employs around 200,000 people and is estimated to have brought more than €140 billion foreign exchange into Greece over the past decade. The industry accounts for around 7% of the country’s GDP, so there is a real fear of the consequences of the government getting this wrong, even though the policy is justified by the ship-owners wealth and the country’s need.



NEW TAX CODE IN GREECE 2014

Publiziert am 15.Februar.2014 von Abraam Kosmidis

NEW CODE OF INCOME TAXES IN GREECE JANUARY 2014

During 2013 the fundamental tax legislation has changed to an extended degree. In general the most representative characteristics of this reform were the large number of laws and provisions, the repealing of laws and the lack of interpreting circulars. Within the limits of the Code of Income Tax, the following are the main changes for 2014:

 New Code of Income Tax (Law Nr. 4172/2013) that replaced Law Nr. 2238/1994

 The new law on income tax (Nr. 4172/2013), that replaced Law Nr. 2238/1994, applies from 01.01.2014. The main changes and regulations are the following:

 1. The term of ‘tax residence‘ is introduced and clarified (article 4, tax residence). Especially as far as legal persons or legal entities are concerned, they are now considered as tax residents in Greece, if at any period of time within the fiscal year, the ’place, where the actual administration takes place’ is in Greece. In Article 4, par. 4 it is mentioned that the ’place, where the actual administration takes place’ is considered to be in Greece according to the facts of each case. For this purpose the following are taken into account a) the place where the daily administration is exerted, b) the place where important decisions are taken, c) the place of the annual general assembly of the shareholders or the members , d) the place where the tax accrual workpapers are kept, e) the place of the management board meetings or of any other executive body of the administration and f) the residence of the members of the management board or of any other executive body of the administration.

 2. The term of ‘permanent establishment’ is assigned (article 6, permanent establishment) according to the directive guidelines published by the Organisation for Economic Co-operation and Development. A non-exclusive list of examples, which can set up permanent establishment under circumstances  is  following below.

3. The income sources are reduced from six (6) to four (4) [art. 7, taxable income]. The income sources are the following: a) Income from paid employment and pensions, b) income from entrepreneurial activity, c) income from capitals and d) income from capital appreciation due to its transfer.

4. The over-twelve month period is not applying any more (art. 8, fiscal year). The fiscal year coincides with the calendar year. The time when the income is acquired is considered to be the time, when the beneficiary had the right to collect it. Exception is introduced in the case when the not collected accrued income, is received in a later time from the beneficiary of paid employment and pension income. Then the actual time of the receipt is considered to be the time when the income is acquired. The latter is valid only when the actual receipt of this income is clearly stated on the yearly remuneration statement provided to the beneficiary.

Income tax for natural persons

5.  On the income of natural persons there is a new applicable tax table (art 15, tax rate).

6. There is a tax reduction only in the case of medical expenses or donations (art. 18, Tax reduction due to medical expenses and art. 19 tax reduction due to donations, see Ministerial Order 1010/2014).

7. The income deriving from paid employment and pension income, other benefits in kind that exceed the amount of three hundred (300) euro per year are included in the taxable income of natural persons (art. 13, Benefits in kind).  The allotment of a business car, the benefits in kind in the form of credits, the rights to equity option and the house allotment all form part of benefits in kind. The salary payment in advance and regarding over three (3) months salaries is considered to be a credit. The final withholding tax regarding this income will start from 01.01.2015 (Law Nr. 4172, art. 72, par. 21 and art. 60, par. 1).  

8.  The profits from business transactions are taxed as profit deriving from entrepreneurial activity (art. 21, Profits from entrepreneurial activity). The same applies for systematic real estate sale. Every increase in property that derives from illegal or unjustified or unknown source or cause is considered as profit deriving from entrepreneurial activity and the imposed tax rate is 33% (art. 29, tax rate).

9. The provisions about the deductive and non-deductive operational expenditure undergo a fundamental change (art.22, deductive operational expenditure and art. 23 non-deductive operational expenditure). The deductive operational expenditure includes the expenditure for the business interest, that corresponds to actual transaction. These transactions must not be underpriced / overpriced, they must have already been declared in the transaction record book for this period and they can be proven with relevant documents. The interests from debenture and interbank loans were excluded in the end from the provisions regarding deductive operational expenditure. The expenditure concerning scientific and technological research deduct from business gross receipt after its rallonge by 30%. The previous law 2238/1994 had specific provisions about expenses percentage that did not deduct (for example private cars, mobile phones) and it was enriched with many explanatory circulars and court decisions. The new provisions should be as well be explained through detailed circulars, especially in terms concerning the meaning of underpricing/overpricing, how should be the division of expenses that cover personal and business needs (mobile phones, private car etc). 

10. New tax rates concerning fiscal depreciation of capital assets are introduced (art. 24, fiscal depreciation). The depreciation starts the next month from its use. In case of financial leasing the lessee and the owner can equally proceed with fiscal depreciations.

11. The taxpayer is not allowed to use a different valuation method for the next four (4) years after the first tax year from the use of this valuation method (art. 25, valuation of reserve stocks and semi-finished products).

12. Doubtful debts are differently forecasted (art. 26, doubtful debts). For debts to the amount of 1.000 Euro that have not been recovered, the possibility of a relevant forecast can be built up to the percentage of 100% in case all necessary action towards the assurance of the recovery right has been taken. For debts over the amount of 1.000 Euro and for which all necessary action towards the assurance of the recovery right has already been taken, then the forecast percentage is up to 50% for over 12 months of delayed payment, 75% for over 18 months and 100% for over 24 months respectively. In this particular issue it should be clarified what consists ‘necessary action‘, due to the fact that no reference is done in the explanatory report of the law. New restrictions about the forecast of doubtful debts are introduced in cases when the counterparty has a 10% participation at least or it is under insurance or security. At this point  it should be noted that there exists no limitation for the insecurity of debts until 30% in the total debit balance of the account ‘Clients’. Lastly the provisions of the Law 2238/1994, art. 31, par.1, 9th case still apply  for the yet not formed forecasts until 31.12.2013 (non-verificated forecast within five years).   

13. Damage transfer is possible to be put in offset procedure with business profits in the next five (5) years (art. 27, damage transfer). There exists a limitation in damage transfer in case the business ownership has changed more than 33%, unless it can be proven that this change was due to trade or business reasons and not for tax evasion. Moreover there exists no offset for damage caused abroad with profits within national territory. Damage caused abroad can only be in offset procedure with income in other state members of the European Union or the European Economic Area. This income should not be also been already exempted in the provisions of the Double Taxation Agreement that is signed and applied from Greece. 

14. The income can be determined through indirect control methods (art. 28, Income determination method) according to the Income Law (Nr. 4174/2013). In case when the applicable accounting standards are not kept, then the taxation documents are not edited according to the Code of Income Tax. The same applies when the tax accrual workpapers are not submitted, after relevant invitation from the tax administration.

15. Business profits have a taxation of 26% for taxable income until 50.000 Euro and 33% for taxable income over 50.000 Euro (art. 29, tax rate). For natural persons that made their inscription in the tax authorities from the 1st of January 2013 and later, there exists a 50% discount for the next three years, presupposed that the business profits do not exceed the amount of 10.000 Euro.

16.  The capital income obtained by natural persons includes participations, interests, royalties and real estate income (art. 35-40). There exists participation withholding tax 10% and hereafter there is no other tax obligation of the natural persons. At the same time the concept of participation becomes broader according to the Organisation for Economic Co-operation and Development (OECD) guidelines. An interest withholding tax 15% is imposed and hereafter there is no other tax obligation of the natural persons. There is royalties withholding tax 20% and hereafter there is no other tax obligation of the natural persons. The real estate rental income until 12.000 Euro has a tax rate of 11% and thereafter 33%. There exists no provision referring to supplementary income tax for real estate rental. The imputed income from owned or allotted property is calculated on 3% of its rateable value. 

17. The income deriving from capital gain transfer has a 15% tax rate and includes the income from real estate transfer and the income from securities (art. 41-43, see Ministerial Orders 1004/2014, 1008/2014). In detail, this taxation concerns the increase in value that derives from the onerous contract for real estate or undivided shares on property rights or participations. The latter two cases should raise their value in 50% or more, from real estate or real estate contribution for coverage or capital increase. The tax is withheld from the notary. If a real estate is kept for five years and in this time no other real estate transfers occurred, then a 25.000 Euro non-taxable limit is applicable. Additionally there is a depreciation rate on the appreciation, relevant to the time a real estate is kept. The income from capital gain transfer includes the increase in value from securities transfer, if these transfers do not constitute business activity. The contribution of these securities for the coverage or capital increase is considered as transfer as well. Damage from capital transfer and offset with relevant capital gain are always possible to be transfered.   

Income Tax for legal persons and legal entities

18. The law determines the tax subjects and the tax exempted legal persons (art. 45, 46).  All income obtained by legal persons and legal entities are considered as business profits (art. 47, Business profits). The capitalization and the distribution of profits with no income tax for legal persons and legal entities imposed thereon are considered as business profit. The actual applicable tax rates are as follows (art. 58, Tax rate):

ArticleTax liable legal personsSimple Entry Bookkeeping Double Entry bookkeeping
45αCapital Companies26%
45βPartnerships26% until 50.000 €

33%>50.000 €

26%
45γNon-profit public or private law bodies and institutions26%26%
45δCo-operative societies and their associations26% until 50.000 €

33%>50.000 €

26%
45εCivil societies, civil law partnerships with gainful or non-profit activities, participating enterprises or dormant companies in case they exercise business or profession26% until 50.000 €

33%>50.000 €

26%
45στJoint enterprises26% until 50.000 €

33%>50.000 €

26%
45ζOther legal entities26% until 50.000 €

33%>50.000 €

26%
58 par.2Agricultural associations and producer groups13%13%

19. New restrictions are set regarding the taxation of the received intra-group dividends by a legal person that is tax resident in Greece (art. 48, tax exempted intra-group dividends). The tax exemption prerequisites should exist together. The participation exemption according to the Directive on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States applies for the participations received by a legal person from every subsidiary, regardless of being resident in Greece, in a Member State of the European Union or a third country, with the exemption of non-cooperative States.

 20. The provisions about the undercapitalization change completely (art. 49, Undercapitalization). For the interest discount, the amount of the loans and the net position are not calculated anymore, but instead the amount of the debit interest after abstraction of the credit interest is calculated. Interest expenses up to the amount of 5.000.000 Euro per year are fully deductible (this applies for 2014 and 2015 and from 2016 the amount is reduced to 3.000.000 Euro, art. 72, par. 9 β).  The excessive interest expenses are not recognized as deductible business expenses and they are transferred for discount without time limitation, in case they exceed 60% of the EBIDTA (for 2015 the percentage is 50%, for 2016 40% and from 2017 30%, art. 72, par. 9 α).

 21.   The significance of the connected person is broader (art. 2, par. 7) and the principle of the ‘same distance‘ principle is introduced, as well as the relevant provisions from OECD for intra-group transactions (art. 50, 51) and for business restructuring.

 22. New favourable regulations are introduced. These regulations are in regard to the contribution of assets (activity branch) instead of titles, the exchange of titles, the merger and dissolution of businesses and the statutory seat transfer of a European Company (Societas Europaea – SC) or a European Cooperative Society (ECS) from Greece to another Member State of the European Union, since they have a permanent establishment in Greece (art. 52-55). The benefits described in art. 52-55 do not apply in case the mentioned actions aim at tax abuse or tax evasion (art. 56, non-applicable benefits).

 23. The withholding tax is as follows (art. 64, Withholding tax) and the 300 Euro limit does not exist anymore (see Ministerial Orders 1011/2014 and 1012/2014):

Income (Payments)Withholding Tax RateTax obligation completion
Participations*10%YES
Interest*15%YES
Royalties*20%YES
Remunerations for technical services, administrative remunerations, remunerations for consulting services and other relevant services, independently if they were provided in Greece and the beneficiary is a natural person20%NO
Remunerations received by contractors that undertake any kind of structure and tenants of public, municipal and communal or harbour facilities**3%NO
Annuities paid as a periodical benefit15%YES
Annuities paid in one-off payment until 40.000 Euro10%YES
Annuities paid in one-off payment over 40.000 Euro20%YES
The increase in value from real estate transfer15%YES

 *Notice: According to art. 63 there are exemptions for intra-group payments.

**Notice: From the provisions‘ interpretation it comes as a conclusion  that there is no withholding tax in case of a legal person.

Withholding tax from institutions of the General Government
KindWithholding tax rate
Liquid fuel and tobacco manufactures1%
Other goods4%
Services8%

24. The provisions about non-cooperative and cooperative states in tax matters and about states with privileged tax regime, that consisted art. 51A of the previous Law 2238/1994  are reformulated (art. 65, non-cooperative states in tax matters and states with privileged tax regime).

25. For the first time there are new provisions about not distributed income from subsidiary legal person or subsidiary legal entity, that is tax resident in a non-cooperative state or in a state with privileged tax regime, in order to avoid tax abuse or tax evasion of the parental Greek company (art. 66, Controlled foreign companies).

26. The tax return concerning legal persons and legal entities is submitted until the last day of the sixth month from the end of the tax year. The tax payment is done maximum in eight (8) equal monthly rates. The first rate is paid along with the submission of the tax return and the other seven (7) rates until the last day of the seventh month from this submission. Nevertheless the last payment cannot be done beyond the same tax year. The payment in advance in 80% still applies for legal persons and legal entities (art. 68-71). 

27. The not distributed or capitalized legal persons‘ assets in the way they are formed until the 31st of December 2013 and while not being taxed at their creation due to tax exemption according to the Law 2238/1994 – after the Code of Income Tax publication or its relevant circulars and court decisions – and in case of their distribution or capitalization until the 31st of January 2013, have an independent tax rate of 15%.   By the payment of this tax there is no other fiscal obligation on the part of the legal person and its shareholders or partners. Examples  for the above mentioned assets are: not taxed assets from mutual funds‘ profits or the added value due to their takeover in a higher price from the price when obtained (Law Nr. 2238/1994, art. 103, par. 1, 10th case and art. 6, par. 3, 10th case), tax free assets from sold shares that were registered in the stock market and are worth higher price from the price when obtained and Derivative Transactions at the Athens Derivative Exchange (Law Nr. 2238/1994, art. 105, par. 11 in combination to art. 38, par. 1 and 6) and lastly tax free assets that derive from the one-off income tax payment, according to the administration’s opinion (Ε.5343/29/28.05.1974 und 1072615/1079πε/Β0012/15.04.2004). Referring to it the detailed Ministerial Order 100/2014 was published. From the 1st of January 2014 and on the not distributed or capitalized assets are obligatory in offset procedure with tax recognizable damages that derived from any cause within the last five (5) years and until they are finished. In case of their distribution or capitalization they undergo an independent tax rate of 19%.

After the payment of the latter tax there exists no other fiscal obligation on the part of the legal person and its shareholders or partners. It is not allowed to update a special account for tax free assets regarding balance sheets that close from 31.12.2014 and thereafter, unless there are investment or development laws or special provisions in other laws, that determine differently.

 

DISCLAIMER: The goal of this publication is to give general and brief information. Under no circumstances should the present information form the base of entrepreneurial decisions without prior consultation of an expert.



EC Introduces Further Measures to Boost International Business

Publiziert am 2.August.2013 von Abraam Kosmidis

Lawyers provide a professional source of expertise that will be beneficial to most businesses during their operational lifetimes, whether it is to do with the start-up of their business, employment law related issues, debt recovery or registering a patent or trade mark.

Expert legal advice becomes even more important when a company is looking to conduct business in another country, such as Greece, where the legal requirements may be different from the organisation’s home country and local professional knowledge is essential to avoid falling foul of any of these unfamiliar laws.

Understanding local tax laws

One area that could prove very costly for businesses to get wrong when operating overseas is that of tax law. The rules and regulations relating to business taxes can vary from country to country, and companies can find themselves facing severe financial penalties if they misinterpret their liabilities and fail to pay the correct amount of tax at the required time.

Local expert knowledge is invaluable when it comes to ensuring that national law is complied with. In Greece, the lawyers at Kosmidis & Partners have in-depth working knowledge of Greek tax law and can advise overseas businesses on their tax liabilities for any operations that take place in Greece.

The payment of the correct tax is a concern for all European countries, including Greece, and the European Commission (EC) has recently taken action to tackle the problem of tax evasion and avoidance by setting up its ‘Platform for Tax Good Governance’.

The purpose of the Platform is to track the progress of each Member State in meeting Recommendations set out by the Commission last year, including:

  • Taking a strong stance against tax havens over and above the existing international measures, by identifying existing tax havens and putting them on national blacklists.
  • Aggressive Tax Planning, which suggests ways of blocking off openings used by companies to avoid paying tax, such as strengthening the anti-abuse provisions in bilateral tax treaties and the use of both national and EU corporate legislation. Under this recommendation, Member States are advised to ignore any artificial arrangement put in place by companies for the purposes of tax avoidance and instead to tax these companies based on actual economic substance.

„In battling tax evasion, we are battling to protect the fairness of our tax systems, the competitiveness of our economies and the solidarity of our Member States,” explained Algirdas Šemeta, Commissioner for Taxation, Customs, Statistics, Audit and Anti-Fraud.

“There is too much at stake for this battle to be lost. The renewed vigor amongst Member States to take up this fight is more than welcome. It must now be channeled into action,” he added.

Overseas companies operating in Greece are advised to contact the lawyers at Kosmidis & Partners for expert advice on how corporate tax liabilities are affected by both the country’s national laws and European regulations.

Greece improves global rankings

As a country, Greece continues to benefit from direct intervention from Europe that has been designed to boost the country’s trade prospects and wider economy. In June of this year, the European Investment Bank agreed to provide up to €500 million in trade financing to support small and medium sized companies (SMEs) in Greece in their international trade operations.

These interventions, together with internal improvements made by the country’s governing authorities themselves, are having a very positive impact and increasing Greece’s attractiveness as a destination for international business. So much so in fact that the 2013 Doing Business report from the World Bank Group, which tracks the impact of regulatory reform on business in 185 different economies, found that the improvements to its business climate have been so successful that Greece is included in the list of the ten most improved countries globally for 2011/12.

Facilitating the management of business insolvency

Another recent European development that could potentially affect overseas businesses operating in Greece relates to the issue of business insolvency. Member States have very different rules and regulations governing this subject, and this divergence can have a negative impact on cross-border trade and investment.

The EC recognises how difficult it can be for businesses to remain prosperous in these difficult economic times. Figures from the EC show that as many as 200,000 businesses go bust every year across the EU on average, and up to 25% of these bankruptcies involve an element of cross-border operations.

In December 2012 the EC published details of proposals to reform insolvency laws, and committed to look further at the problem of how best to manage business failure across Europe in light of the fact that different national laws were so diverse on the subject.

As a follow up to this commitment, the EC has now launched a consultation on a common European approach to business insolvency, which seeks views on a number of important issues, including:

  • Harmonizing the “time to discharge” (how long it takes to close a business that has failed), which can have a significant impact on whether the business can be restarted. This timing currently varies widely across the EU from four months to as much as six years, and some countries make no provision at all for a failed entrepreneur to ever obtain a discharge.
  • The rules that control the exercise of the profession of liquidators.
  • Whether problems are created by the current rules governing the duties and liability of directors in insolvency.
  • Whether EU rules are required to ensure that fraudulent managers who are disqualified from managing a company in one country are also automatically prevented from doing so in another Member State.

The consultation also asks “whether the legal uncertainty arising from the different conditions under which an act of an insolvent debtor which is detrimental to their creditors can be avoided before national courts has created problems in practice.”

Debt recovery and insolvency is a serious matter in Greece, as with the rest of the EU, and the correct interpretation of the different rules and regulations can have important implications for businesses operating in Greece.

Contact Kosmidis & Partners law firm today for expert professional advice from our English speaking lawyers on any disputes relating to these subjects, or for any other legal issue that might arise through overseas business operations in Greece.



Overseas Businesses Rely on Local Professional Advice in Greece

Publiziert am 17.Juni.2013 von Abraam Kosmidis

The importance of local professional knowledge for businesses looking to expand their operations overseas in countries like Greece has been highlighted in the results of a recent survey carried out in the UK.

The survey, which was carried out by the British Chambers of Commerce (BCC), contacted over 4,500 businesses to gain their views on exporting and overseas trade.

It found that the number of firms that reported carrying out exporting activity is continuing to increase, but that some fundamental barriers existed that were preventing a greater number of businesses from taking advantage of an overseas market. These barriers include business owners lacking the knowledge on how to take their firms’ goods or services to another country, and not enough business owners or managers possessing sufficient foreign language skills.

Kosmidis & Partners are a firm of English speaking lawyers based in Greece that can help firms overcome these obstacles. Our lawyers have all the necessary skills and experience to assist overseas businesses looking to establish trade links with Greece, or set up a base of operations here.

Lack of knowledge on operating overseas

Areas of knowledge that business owners felt they were lacking and that were preventing them from operating overseas included:

  • A gap in commercial knowledge, such as financing and negotiating bureaucracy in other countries.
  • How to get the product or service to an overseas market. This lack of knowledge was particularly a problem for IT, manufacturing and media firms, according to the survey.
  • Lack of confidence – 58% of firms that were not currently exporting their goods or services said this was because they didn’t feel their product was suitable for export. According to the BCC, this suggests a lack of awareness of the opportunities to be found in a global market.

Lack of language skills

There is no doubt that not being able to speak the language of the country that has been identified as an ideal target market can be a daunting prospect.

The BCC survey found that 62% of businesses that would like to trade internationally feel their lack of ability to speak or understand another language is preventing them from doing so.

Some business owners reported having a degree of knowledge of a foreign language, but not many considered themselves to be proficient enough to conduct business deals in this language.

Local professional advice is available

Although a lack of knowledge and inability to speak the local language can provide a barrier for firms looking to expand overseas, these barriers are not insurmountable. Once an overseas target market has been identified, there will be local professional services such as lawyers and accountants available to help businesses negotiate their way through the rules and procedures of operating in that country.

The benefits to be found in expanding overseas can be invaluable for businesses, both in terms of tapping new and potentially lucrative markets, but also in terms of new contacts and trade links that can be established, even if they don’t immediately lead to increased sales.

“The overseas market may seem daunting to a non-exporter, but the rewards that these companies get in return can be outstanding, as I see first-hand from the successful businesses that I meet every day,” commented John Longworth, Director General of the British Chambers of Commerce.

“It is critical that firms understand the challenges and opportunities attached to the export market. Helping companies forge new connections, through trade promotions and incentives, will help companies to think internationally,” he added.

When it comes to setting up an overseas base of operations, experienced commercial lawyers with local knowledge are essential, as they will be able to advise businesses of the national laws and rules governing business issues such as:

  • Forming a Greek limited liability company
  • Operating branches of an overseas company in Greece
  • Mergers and acquisitions involving Greek companies
  • Tax law
  • Labour law
  • Debt recovery

The English speaking lawyers at Kosmidis & Partners are experienced in all these areas of commercial operations in Greece, and can offer invaluable advice and assistance to overseas organisations looking to conduct business in Greece.

More people are looking to work overseas

It’s not just businesses that are setting their eyes on moving overseas; many people are also looking to move abroad to further their career.

The latest figures from Eurostat, the statistical office of the European Union, have shown that in 2012 there were  in excess of 15 million foreign citizens working in the 27 EU member states, and they accounted for around 7% of all employees in these countries.

These foreign citizens included over 6.5 million citizens of a different European Union Member State and 8.6 million individuals from non-EU nations.

This increased mobility can be very beneficial for businesses because it can provide a much wider pool from which to select the most experienced and best qualified employee.  However, it can also present a number of pitfalls for unwary businesses, as different rules may apply depending on whether a national or foreign citizen is being hired. Local legal knowledge is essential to ensure compliance with the correct labour laws and also to ensure any immigration issues are taken into account.

Greece proactively seeks investment

Greece welcomes foreign firms that are looking to do business overseas and has recently been proactively involved in a series of initiatives to encourage foreign investment.

Most recently, the BBC reports that the country has been involved in a two-day Greek Investment Forum in New York, where representatives from over 20 different companies, including a number of Greece’s biggest banks and energy companies, have been promoting the benefits Greece can offer as an investment destination.

The event has apparently been very successful, with around 400 potential investors already registering their interest – double the number that expressed an interest at a similar event held last year.

Speaking to the BBC, Yanos Gramatidis, president of the American-Hellenic Chamber of Commerce, explained why he thought this year’s event had been so successful. He said that investors „understand that now a Grexit (Greek exit from the eurozone) is not an option, this is the time to grab an opportunity as if we were an emerging country.“

If you are looking to expand your business operations overseas, then Greece must rate highly on any list of potential destinations. Contact the lawyers at Kosmidis & Partners today for expert legal advice on how to go about doing business in Greece.

 



Greece Opens Its Doors to Overseas Business

Publiziert am 27.Mai.2013 von Abraam Kosmidis

Improvements in the European economy and recent internal developments within Greece suggest that now would be a good time for overseas companies looking to set up a business in Greece to start taking steps to bring these plans to fruition.

KPAG Kosmidis & Partners is a Greek law firm with lawyers who specialise in working with English-speaking businesses in Greece. Our lawyers are ideally qualified to help and advise international companies as they go through the process of establishing trade links with Greece, or setting up business operations within the country.

Positive economic picture

There are currently encouraging economic signs across the European Union, with recent figures released by the European Commission (EC) suggesting that the EU economy is starting to come out of the recession that was so dominant and damaging throughout 2012. Predictions are that the economy across Europe will stabilise in the first six months of 2013, with GDP growth starting to turn positive in the latter half of the year and then continuing to gain ground into 2014.

EC initiatives target Greece

As a business destination, Greece has recently been the focus of a great deal of attention from the EC. A recent EC initiative has seen the representatives of more than 138 European companies come to Greece to meet with Greek owners and managers of small and medium sized enterprises (SMEs) about the prospects for future collaborations, including ventures such as trade partnerships, investment, and joint undertakings.

The EC notes that SMEs in Greece have faced a number of difficulties in the last few years; however the Greek government has implemented a number of reforms that have had a positive effect on the Greek economy and business opportunities within Greece.

Greek labour market

One of the areas targeted by reforms is the Greek labour market, which has historically suffered from high unemployment rates, caused in part by a rigid wage structure that was not in line with worker productivity. The Greek Government has attempted to tackle this problem through a number of reforms, including creating opportunities for firm-level pay agreements and reductions in minimum wages.

This improved labour market increases Greece’s appeal as a business destination, but there are undoubtedly a number of challenges involved in employing staff in an overseas country. Therefore, any foreign company looking to operate in Greece is advised to take advice from professional Greek lawyers to ensure they do not fall foul of any employment laws or regulations. Kosmidis & Partners Law Firm has lawyers who are highly experienced in Greek labour law and are available to advise all foreign businesses on any legal obligations with regard to their staff in Greece.

Greece looking to establish trade links

According to EC figures, Greek exports look set for another good year, making 2013 the fourth year in a row where exports have grown. The Greek Foreign Trade Board apparently has over 60 different trade initiatives organised for 2013, including the participation in a number of international trade fairs.

Through these initiatives, Greece is opening its doors to businesses looking to expand their international markets. At Kosmidis & Partners, our lawyers are ready to advise you in all aspects of doing business in Greece, including:

  • Setting up a limited liability company
  • Mergers and acquisitions in Greece
  • Greek competition law
  • Debt recovery, and
  • Tax law

The improving economic situation in Greece has not gone unnoticed. In a recent report produced by the World Bank on doing business in Greece, the country’s ranking improved from 89 to 78, a rise of 11 places, placing Greece in the top ten reformers worldwide.

European right to freedom of movement

As well as continuing to make its own internal reforms to increase foreign and domestic business opportunities, Greece, like all other EU Member States, continues to be subject to new laws and amendments coming from the EC and the European Parliament that are designed to reduce barriers to trade.

The EC has recently proposed a new measure to improve the application of EU law on people’s right to work in another Member State.

According to EC figures, there were 6.6 million EU citizens living and working in a Member State other than their own in 2012. A further 1.2 million people apparently live in one EU country while working in another.

However, people working in another country can face a number of difficulties, and a Eurobarometer poll carried out September 2011 found that around 15% of EU citizens wouldn’t want to work in another Member State because there are too many obstacles to overcome. These obstacles include issues such as:

  • Differing recruitment conditions.
  • Access to certain posts is restricted by nationality conditions.
  • Differing working conditions in practice (such as pay and future career prospects).
  • Non-recognition of professional qualifications and experience acquired in other Member States.

EU legislation already exists to tackle these issues, but is not always adequately implemented in all Member States. The EC’s proposal would address this problem by requiring Member States to take a number of steps to improve the implementation of EU law.

László Andor, Commissioner for Employment, Social Affairs and Inclusion, described the free movement of workers across the EU as a key principle of the EU’s Single Market.

“Labour mobility is a win—win – it benefits both Member States‘ economies and the individual workers concerned,” he explained. “This proposal will help workers to overcome obstacles to working in another EU country.“

Overseas companies that have set up business in Greece will usually have a number of options when it comes to staffing these businesses. One option could be to recruit local staff to work for them, or alternatively, the company could look at transferring staff from other office locations to work in its Greek operations.

The prospect of negotiating another country’s rules and regulations relating to the recruitment and employment of staff can at first appear rather daunting for companies, but using local Greek lawyers can help to make the whole process much more straightforward.

The lawyers at Kosmidis & Partners are highly experienced in all aspects of Greek business and labour law, and will be able to guide overseas businesses through all the necessary steps involved in setting up a local base of operations in Greece and employing the necessary staff.