Stamp Duty Replaced by a Digital Duty on Transactions in Greece
Xenofon Papayiannis of KLC Law Firm discusses the new digital duty on transactions, which is set to replace stamp duty in Greece.
Xenofon Papayiannis
View firm profileOn 12 September 2024, the Greek Parliament passed Law 5135/2024 (the “DDoT Act”) by virtue of which stamp duty (originally introduced back in 1836 and until now based on legislation enacted in 1931) was replaced by a “Digital Duty on Transactions” (DDoT). DDoT shall apply as of 1 December 2024.
The DDoT Act contains an exhaustive list of transactions (to a large extent coinciding with those that were until now subject to stamp duty) that shall be subject to DDoT provided that the following conditions are met:
- One of the parties thereto is a Greek tax resident or Greek permanent establishment, or the Greek government (or a part thereof).
- They do not fall under the scope of VAT; real estate transfer tax; gift, inheritance and gambling winnings tax; capital duty; the special tax on banking activities; or the motor vehicles transfer duty.
The place where the transaction is concluded, carried out or performed is irrelevant.
DDoT seems to capture eligible transactions entered into by foreign permanent establishments of Greek tax residents. Also, it would seem to capture leases of (non-residential) real estate situated outside of Greece if either the lessor or the lessee is a Greek tax resident or (less likely) a Greek permanent establishment.
“DDoT seems to capture eligible transactions entered into by foreign permanent establishments of Greek tax residents.”
DDoT shall be declared digitally, in most cases on a monthly basis. Where the taxable transaction also triggers withholding tax, DDoT shall be remitted along with the withholding tax. The DDoT Act contains rules stipulating the taxable person and the person liable to remit the DDoT to the authorities.
DDoT paid shall be refunded if:
- the respective contract is not concluded, or
- the transaction is not carried out due to an unpredictable change of circumstances.
DDoT paid shall not be refunded if the transaction is cancelled by the parties or is annulled or found to be null and void by a court.
References throughout the legislation to “stamp duty” shall be deemed to mean the DDoT, while any exemptions from stamp duty provided under special legal provisions shall apply also with respect to the DDoT.
Various points have been identified which need further clarification (some are mentioned herein). Hopefully this will happen with the issuance of the relevant administrative guidelines.
Typical DDOT Transactions and Appliable Rates
The table below contains a non-exhaustive summary of the most common transactions that may fall under the scope of DDoT, relating exemptions and applicable rates:
Notes
Exemptions:
- DDoT is not levied on transactions falling under the scope of VAT; real estate transfer tax; gift, inheritance and gambling winnings tax; capital duty; the special tax on banking activities; or motor vehicles transfer duty.
Loans and credits/loan current accounts:
- Although interest bearing loans granted by VATable persons fall under the scope of VAT (and hence should not be subject to DDoT), it appears that they will trigger DDoT.
- The law refers to credit equivalent to loans and credit cards. The exact scope of this language is unclear and which kinds of credit will fall outside this definition is yet to be determined.
- The applicable rate is levied annually on the highest balance without taking into account the balances brought forward from the previous year.
Rates:
- For loans and credits, current loan accounts, debt recognition, waiver or assumption, assignment of receivables and amicable settlement agreements, the 2.4% rate applies where all parties are engaged in business activities and the transaction pertains to such business activities, and/or where at least one party is a company. In all other cases the rate is 3.6%. Especially in the case of debt recognitions/waivers or assignments of receivables where one of the parties is the Greek State, the rate is 3.6%.
- For cash advances/withdrawals, the 1.2% rate applies where one party is a company. In all other cases the rate is 3.6%.
- For sale of movable goods, grant of usufruct and transfer of the right to exercise usufruct over movables, and transfer and licence to use IP, the 2.4% rate applies (i) to the sale of vessels/watercraft by private individuals, and (ii) where all parties are engaged in business activities and the transaction pertains to such business activities, and/or where at least one party is a company. In all other cases the rate is 3.6%.
- For service/directors fees paid by Greek tax residents or permanent establishments, the 1.2% rate applies to fees paid to directors of corporations, co-operatives, civil law associations (and perhaps also to general partners). In all other cases the rate is 3.6%.
Usufruct:
- Although the grant of usufruct as well as the transfer of the right to exercise usufruct over movables in exchange for consideration made by VATable persons would fall under the scope of VAT (and hence should not be subject to DDoT), it appears that they will trigger DDoT.
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