Preface to Addendum to 8th Edition

Transcription

1 UPDATES

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3 Preface 3 Preface to Addendum to 8th Edition Numerous amendments have been introduced since the publication of the 8th edition of Investment in Greece at the end of March 2011 and even more fundamental changes are expected by the end of The 9th edition is anticipated to be issued in the first part of 2013 in order to incorporate the next wave of changes as well. In the meantime and due to the number and nature of the various measures introduced over the last year or so (the most important of which we have highlighted in our Tax Newsletters and Newsflashes), this Addendum summarizing the most important interim changes has been issued. The intention for this Addendum, as for the Guide, is for all relevant investment areas to be covered in a succinct and informative manner. However, the information provided can only be general in nature and cannot provide the comprehensive and detailed guidance necessary to formulate specific investment decisions. As stated, relevant legislation and detailed regulations are subject to change. KPMG would be pleased to assist you to evaluate and implement your investment plans. For details on services available and how to contact KPMG in Greece, please see Appendix 5 of the Guide. Every effort has been made to ensure that the information provided in this Addendum is current as of 30 September Addendum to 8th Edition KPMG Certified Auditors AE 30 September 2012

4 4 Investment in Greece Chapter 2 Opportunities for international investors On page 28, under Strategic Investments under Law 3894/2010 the first two bullets and the fourth bullet read are replaced by the following: the investment exceeds EUR , the investment exceeds EUR and at least 120 new employment positions are created, 150 new long term employment positions to be created On page 33, under Mergers the second and third sentences of the first paragraph are replaced by the following: The application of this law was extended indefinitely in Also on page 34, at the end of the second last paragraph, the words and the disadvantage that the absorbing company waives its right to utilize existing tax losses. are deleted.

5 Chapter 4 Business entities 5 Chapter 4 Business entities On page 47, all paragraphs under Formation of an AE are replaced by the following: All actions required for the establishment are carried out by a Notary Public who is considered as a One Stop Authority, including for the purposes of making most payments and submitting all documents and applications to the authorities involved in the establishment. The One Stop Authority interfaces with the other authorities as applicable and short deadlines apply for the completion of the procedures. In general, the following are required: Preparation and signature by the founders before a Notary Public of Articles of Incorporation which must include provisions relating to the: - Corporate name: this must necessarily include the words "Anonymos Eteria". - Duration of the corporation: the length is not prescribed but it usually varies from 20 to 50 years which may later be extended. - Corporate purpose (objects of activity). - Share capital and the number and nature (registered or bearer) of the shares to be issued. - Composition, operation and authorities of the Board of Directors and of the General Meeting of the shareholders. Payment of certain amounts to the One Stop Authority to be further paid to public authorities (capital concentration tax equal to 1% of the capital, etc). Registration of the corporation with the General Commercial Registry. Receiving establishment approval from the Ministry of Regional Development and Competitiveness (only for specific corporations such as Banks, insurance companies etc.). Publication of the establishment in the Government Gazette.

6 6 Investment in Greece The corporation s establishment for corporate law purposes is considered to have been completed upon the registration of the Corporation with the General Commercial Registry. The Articles of Incorporation of an AE can be executed by one or more founding shareholder(s), either individuals or legal entities. If incorporated by more than one shareholders, all its shares may be subsequently held by one shareholder. On page 54, under Compulsory publication the third paragraph is replaced by the following: The balance sheet and the profit and loss account together with the auditors' report (required only when the audited company is obligatorily audited by a certified auditor), must be published in the Government Gazette and in one daily financial newspaper at least 20 days prior to the day on which the general meeting of the shareholders is to be held. Alternatively, the financial statements can be posted on the Company s website (if the Company has notified the supervising authorities of the details of its website). On page 55 under Government supervision the second and third paragraphs are replaced by the following: All other AEs are not subject to government supervision at the time of establishment. Following establishment, government supervision over such AEs is exercised by the General Commercial Registry together with the local Regions (Peripheries). Some aspects of the government supervision exercised over corporations include the following: Actual payment of share capital is certified by the General Commercial Registry s or Region's officials (as applicable). Increases and decreases of share capital, as well as any amendment to the Articles of Incorporation, must be registered with the relevant supervising authority. For companies whose capital is higher than EUR 3 million or for certain categories (banking institutions, insurance companies etc.) amendments to the Articles of Incorporation need approval of the General Commercial Registry or Region. The Ministry or Region may apply to the courts to arrange for a special audit of the corporation under the conditions prescribed by law. On page 56, under Formation of an EPE the first paragraph is replaced by the following:

7 Chapter 4 Business entities 7 Similarly to AE companies, all actions required for the establishment of EPE companies are carried out by the Notary Public who is considered as the One Stop Authority, including for the purposes of making most payments and submitting all documents and applications to the authorities involved in the establishment. An EPE is formed by executing the Articles of Incorporation before a Notary Public, payment of the capital concentration tax of 1% and then filing of the Articles with the General Commercial Registry, with the establishment also being published in the Government Gazette. On page 58, all paragraphs under Compulsory publication are replaced by the following: The documents concerning amendments of the Articles of Incorporation and the administrators must be filed with the General Commercial Registry and published in the Government Gazette. Copies of the financial statements, the administrators' report and the auditors' report (where applicable) must also be filed with the relevant supervising authority. The financial statements of an EPE (with the exception of the Notes to the financial statements) and the auditors' report (where applicable) must be posted on the EPE s website and if there is no such website they must be published in the Government Gazette and in one financial newspaper. On page 59, under Branch the first, third and sixth paragraphs are replaced by the following: A branch of a foreign company may be established in Greece through registration with the General Commercial Registry. For this purpose, certain documents must be filed with the General Commercial Registry, including the Articles of Incorporation of the foreign company, a certificate of good standing issued by the foreign company s competent supervising authority, a resolution of the foreign company s competent corporate body approving the establishment of a branch in Greece, a Power of Attorney appointing the branch's legal representative and the person authorized to receive correspondence. The branch is administered by an individual (representative) appointed by the foreign company by virtue of a Power of Attorney. The legal representative's personal data and documents detailing responsibilities must be filed with the General Commercial Registry. If the individual appointed as the legal representative of the branch is not an EU citizen, he must secure a Greek residence permit. The establishment of the branch and certain details concerning its object of activities,

8 8 Investment in Greece registered address at legal representative must be published in the Government Gazette. A branch must file a copy of the financial statements of its head office annually with the General Commercial Registry. Depending on size criteria and/or industry (for example banking and finance institutions, insurance), branches are subject to audit by certified auditors and certain publication requirements. On page 61, under General Partnership - Omorythmos Eteria (OE) the second paragraph is replaced by the following: The Articles of Association of a partnership need not be signed before a Notary Public and may take the form of a private agreement. General Partnerships are established through One Stop Authorities (General Commercial Registry of the Chamber of Commerce etc.) and their Articles of Incorporation are filed with this Registry. Under particular circumstances a summary of OE articles may need to be published in the Government Gazette. At the end of page 62, a new section called Private Capital Company Idiotiki Kefalaiouhiki Eteria (IKE) is inserted as follows: A Private Capital Company (Idiotiki Kefalaiouhiki Eteria) is exclusively liable for its corporate debts, whereas the liability of its partners for corporate debts towards third parties is limited to the amounts specifically mentioned in its Articles of Association. The Articles of Incorporation of a private capital company must take the form of a notary deed only in certain cases; otherwise a private agreement is sufficient. Private Capital Companies are established through the General Commercial Registry of the Chamber of Commerce and their Articles of Incorporation are filed with this Registry. The minimum capital is EUR 1 and can be contributed in cash or in kind, in the form of personal services to the firm, or in the form of guarantees/liability undertaken by the partners towards third parties. The affairs of the company are administered by one or more administrators and the accounting period is the same as that previously described for AEs.

9 Chapter 5 Business taxation 9 Chapter 5 Business taxation On page 70, under Deductibility of payments to residents of noncooperating countries or of countries with preferential tax treatment the first sentence of the last paragraph is replaced by the following (the underlined words are added): For income tax purposes, an individual or an entity is considered to enjoy a preferential tax treatment in a country outside Greece, if they are not subject to any tax in that country or although subject to tax, are not actually taxed, or are subject to tax at a rate which is equal to or less than 60% of the rate which would be applicable to their income in case they were resident in or had their registered address or a permanent establishment in Greece. On page 71, the second paragraph under the heading Filing of the tax return is deleted and after this heading, a new section called Annual Tax Audit Certificate issued by Certified Auditors is inserted as follows: AE and EPE companies which are obliged to be audited by certified auditors must have an Annual Tax Audit Certificate issued by their certified auditor who verifies the company s tax position after carrying out special audit procedures. The Certificate is submitted by the Auditor to the company within 10 days of the income tax return filing deadline and to the General Secretariat Information Systems (GSIS) of the Ministry of Finance within 10 days of the approval of the Company s accounts by its General Assembly of Shareholders. If the certificate does not include any qualifications then the tax authorities will not carry out a tax audit unless the company falls within the sample of at least 9% of the companies which were audited by Certified Auditors (cases will be selected to be audited by the tax authorities based on criteria set by the Ministry of Finance in accordance with the provisions of Article 80 of Law 3842/2010). Such criteria will include the company s legal form, the category of books, the gross revenues, the place of operations etc. Apart from the companies selected for audit based on the sample above, the Ministry of Finance may conduct regular audits on an

10 10 Investment in Greece additional number of companies in certain cases (such as in case of issuance of fictitious tax records, transfer pricing infringements, criminal proceedings for money laundering actions against members of the Board of Directors etc.). Strict penalties may be applied on both the companies and the auditors for violations and/or non-compliance. On page 77, under Investment income a third paragraph is inserted as follows: The sale of government or corporate bonds at a price higher than their acquisition cost is considered investment income. On page 78, under Interest a new paragraph is inserted as follows: Special tax provisions were introduced in relation to the new bonds received by investors participating in the Private Sector Involvement (PSI) in the course of restructuring Greece s debt, summarized as follows: The new bonds are considered to be a continuation of the bonds surrendered. Therefore, the exemption from income tax on interest is applicable in case the bond holder is a foreign resident. Interest on bonds issued by the European Financial Stability Facility (EFSF) have the same tax treatment as the interest on bonds of Greek State, i.e. they are exempt from income tax for foreign residents. Financial instruments issued by the Greek State within the context of PSI (whose return is linked to the Gross National Product) are considered as derivatives. The loss arising from the exchange of Greek State bonds or corporate bonds in the context of PSI is tax deductible in equal annual installments over the life of the bonds received in exchange. Any withholding tax on interest on Greek State Bonds, Treasury Bills and corporate bonds that has not been recovered and appears in the books of banks in 2010 onwards. On page 79, under Tax on stock exchange transactions the last paragraph is replaced by the following: The sale of listed shares acquired from 1 January 2013 will not be taxed as above and any profits (gains) arising from the sale of listed shares will be taxed according to the general provisions of tax law, and any losses will be tax deductible.

11 Chapter 6 Taxation of individuals 11 Chapter 6 Taxation of individuals On page 85 under Overview the last three paragraphs are replaced by the following: An individual is considered to be resident (domiciled) in Greece if he resides in Greece for more than 183 days in total within the calendar year. Residence (permanent) is assumed to exist unless the taxpayer can prove the opposite. Non-Greek tax residents, need to file with the Non-Greek Resident Tax Office the following documentation: Where the individual is tax resident (i.e., taxed on his/her worldwide income) in a country with which Greece has concluded a Double Taxation Treaty (DTT), the individual should file a tax residence certificate in a form which is determined by the applicable DTT and issued by the competent authorities of the treaty country (an exception exists for the United States and Turkey which issue tax residence certificates of a different type); Where the individual is tax resident (i.e., taxed on his/her worldwide income) in a country with which Greece has not concluded a DTT (a non-treaty country), the individual should file the following documentation with the Greek tax authorities: a) an income tax return filed with the tax authorities of the individual s non-treaty home country (provided that such a filing obligation exists in that home country), or b) a certificate issued by the competent authorities of the non-treaty home country (i.e., tax authorities or municipal authorities, etc.), which should certify the worldwide income of the individual, as well as the permanent residence status of both the individual and his or her family members (i.e., spouse and children), in order to prove that the individual has strong bonds with the non-treaty home country. If the individual wishes to transfer his residence to another country, he is obliged to provide evidence/documentation to be determined by the

12 12 Investment in Greece Ministry of Finance (in practice such requested evidence/documentation amongst others is in the form of a tax residence certificate issued by the authorities of respective country). An individual who has been Greek tax resident cannot be considered to have changed his tax residence and become a tax resident of a country included in the list of non cooperating countries issued by the Ministry of Finance. Furthermore, an individual who has been Greek tax resident for five consecutive years and wishes to transfer his residence or usual residence to a country with a preferential tax regime and has in Greece substantial financial interests is considered to be subject to tax in Greece for his global income for a period of five years after the change in residence. This period commences from the filing of the declaration for the change of the residence. On page 86, the second sentence of the last paragraph of the section under Basic Principles is replaced as follows: For other foreign tax resident individuals, the progressive income tax rates commence at 10% and not 0%, while they are not entitled to deductions from taxable income or tax credits available to Greek tax residents. In the same paragraph, the last sentence as follows is deleted: A 1.5% discount or EUR 118 (whichever is lower) is granted if the annual income tax return is filed electronically (through the internet). On page 87 under Determination of the income tax liability all paragraphs under the subheading Deductible expenses are replaced by the following: The following expenses of a personal nature are deductible on condition that appropriate receipts exist: employee s share of obligatory social security contributions paid to social security funds established by law; 10% of the amount of sponsorship to cultural non for profit entities as determined by Law 3525/2007; 20% or 40% (depending on specific conditions) of the amount of investment for film productions. On page 87 all paragraphs under the subheading Tax credits are replaced by the following:

13 Chapter 6 Taxation of individuals 13 The tax payable is decreased by 10% of: Total annual amount of medical and hospital care expenses; up to EUR Annual rent for the primary residence of the taxpayer and his family; up to EUR 100. Annual rent for the accommodation of children attending courses in approved schools; up to EUR 100. Annual expense for the taxpayer and dependent children for private lessons at home or for tuition of any recognized educational level or foreign language; up to EUR 100. Interest on loans granted for the acquisition of a primary residence of up to 120 sq.m. The amount of interest recognized for this purpose is limited to interest payments corresponding to a loan principal of up to EUR Interest on loans granted for the restoration, repair and maintenance of buildings which are considered as preservable or are located in traditional areas, for loans up to EUR ; Life, health and personal accident insurance premiums up to EUR 120 for single taxpayers and EUR 240 for families. Alimony paid to ex spouses; up to EUR The value of medical equipment and ambulances donated to state or municipal hospitals; Cash donations to the State, municipalities and certain other local institutions (religious, philanthropic, educational, medical) which exceed the amount of EUR 100. The amount of expense recognized for this purpose cannot exceed 10% of total taxable income; Cash donations to charitable institutions and non for profit entities which exceed the amount of EUR 100. The total amount of expense recognized for this purpose cannot exceed 10% of total taxable income; Amount of obligatory social security contributions paid by non salaried individuals to funds established by law; Total amount of expenses for the energy upgrading of a building which are made within the framework of the business program Environment Sustainable development according to the provisions of Law 3614/2007 and Law 3661/2007 for the energy inspection of buildings; up to EUR 300.

14 14 Investment in Greece an amount equal to 20% of the cash donation for the settlement of the state deficit; an amount equal to twice the amount of rental payment made to certain businesses. Cash donations and sponsorships exceeding EUR 300 must generally be deposited with a bank or the Fund of Deposits and Loans (not applicable for donations to the State). The tax payable is also decreased by EUR 60 for each child for a taxpayer who earns employment income on condition that he offers his services in or resides for at least nine (9) months within the taxable year in certain border areas of Greece. On page 88 under the subheading Income tax scale/tax rates the first paragraph and table are replaced by the following: The income tax scale and corresponding tax rates for individuals (selfemployed/free-lancers as well as employees and pensioners) are as follows for 2012 (amounts in Euro): Income bracket Tax rate Tax per Aggregate Aggregate bracket income tax First Exempt Next % Next % Next % Next % Next % Next % Exceeding % On page 89 the third and subsequent paragraphs are replaced by the following: The amount of receipts required is calculated at 25% of the taxpayer s declared income which is taxable according to the general provisions for income up to EUR (i.e. maximum amount of receipts required EUR per taxpayer). In case the value of submitted

15 Chapter 6 Taxation of individuals 15 expenses (receipts) does not reach the required amount, a tax penalty at the rate of 10% is imposed on the difference. The tax-free amount of the first income bracket is increased by EUR for each of the first two children of the taxpayer, by EUR for each child above two. The Tax-free amount of the first income bracket is increased by EUR which is considered as expenses without supporting documentation if the taxpayer and/or his dependants are disabled, blind, or war victims. A supplementary tax is computed at the rate of 1.5% or 3% on gross rental income from real estate that is taxable. The 3% rate applies where the real estate is used for residential purposes and exceeds 300 square meters or in case of commercial lease agreements. Foreign residents are taxed on the basis of the above income tax scales but they must pay tax at the rate of 10% on the first EUR of their income (except for EU residents earning over 90% of their income in Greece). On page 90 under the heading Return filing and payment procedures a new paragraph is inserted after the first paragraph as follows: For 2012 filing season (for income earned during 2011) electronic filing was obligatory for taxpayers whose total income exceeded EUR The third and fourth paragraphs of page 90 are replaced by the following: A 1.5% discount is granted if the tax assessed is paid in a lump sum within the deadline for the payment of the first installment. An additional discount if the return is filed through the Internet is no longer given. The tax assessment will include an amount equal to 55% of the relevant year's tax payable as an advance against the following year's tax. An exemption from the advance tax applies only if: (a) the amount of advance tax does not exceed EUR 30; (b) the income declared includes only employment income and income arising for the owner occupying his own residential real estate. Also on page 90, all the paragraphs under Illustrative tax computation are replaced by the following: The Illustrative tax computation for income earned in 2012 Assumptions:

16 16 Investment in Greece Salaried residents living in Athens insured for social security purposes after 1992 for the first time, married with two children whose spouse has no taxable income with living expenses enabling them to fully utilize the tax free bracket. Annual salary of EUR For the purposes of this computation no tax has been withheld at source. Euro Gross annual salary Less Social security contributions (16.50%) ( ) Taxable income Calculation of income tax payable: Tax free bracket corresponding to two children of EUR (i.e EUR plus EUR 4 000) Euro Exempt 10% tax on EUR % tax on EUR % tax on EUR % tax on remaining EUR Income tax thereon Income tax payable On page 91 under Income tax withholding on salaries in the second sentence of the first paragraph the rate of tax withholding of 30% is replaced by 45%. On page 92, the second full paragraph is replaced by the following: As of 1 January 2012, remuneration paid to administrators of an EPE and fees paid to Board members of an AE out of corporate profits are subject to a withholding tax at the rate of 25%. The 25% withholding extinguishes the income tax liability of the recipient of the remuneration/fees.

17 Chapter 6 Taxation of individuals 17 Before the section Professional income two new sections called Solidarity contribution and Annual entrepreneurship duty are inserted as follows: Solidarity contribution A solidarity contribution was introduced in 2011 and it is imposed on individuals with annual income exceeding EUR The applicable rates range from 1% to 4% (the highest rate is imposed on income exceeding EUR ). The contribution is imposed on the total income reported not taking into consideration any tax credits or deductions stipulated under Greek tax law. A solidarity contribution at the rate of 5% applies to high ranking state officers (i.e. the President of the Parliament, Ministers, General and Special Ministerial Secretaries). A special contribution is imposed on private cars whose cc s exceed 1,929, on pleasure boats, swimming pools etc. The solidarity contribution is imposed on income earned in financial years 2010, 2011, 2012, 2013 and 2014 (fiscal years 2011, 2012, 2013, 2014 and 2015 respectively). Furthermore, employers are also obliged to withhold and remit to the Greek tax authorities the special solidarity contribution via payroll as of January 2012 onwards. Employers normally calculate the special solidarity contribution corresponding to the total annual remuneration of each employee and then withhold and remit to tax authorities the amount corresponding to the monthly remuneration of the employee. Annual entrepreneurship duty An Annual entrepreneurship duty of EUR 400 is imposed on enterprises and freelancers having their registered seat in a town or village with a population of up to residents. The above annual duty is EUR 500 for freelancers and enterprises having their registered seat in areas with a population exceeding residents. Moreover, an annual entrepreneurship duty of EUR 300 is also imposed on branch operations of such enterprises/freelancers. Exemption from the above duty is provided for freelancers and enterprises having their registered seat in areas with a population of up to 500 residents and on islands with a population of under residents. Moreover, an exemption from the above obligation is provided for sole traders and freelancers for the first five years of their business activity as well as for professionals for three years prior to their retirement. On page 93 all the paragraphs under Dividends are replaced by the following:

18 18 Investment in Greece As of 1 January 2012 a withholding tax of 25% is imposed on dividends of Greek corporations. The 25% withholding extinguishes any further income tax liability. The same treatment applies to dividends received from foreign entities. The 25% withholding tax is imposed on the net amount of the dividend (i.e. gross amount of foreign dividend minus foreign tax paid). On page 94 the first paragraph under Capital gains tax is replaced by the following: Capital gains tax, as discussed in Chapter 5, also applies to individuals except that capital gains on the transfer (sale) of private assets (excluding shares or participations in partnerships or EPEs) are not taxable. Capital gains tax imposed on individuals is a final tax with the exemption of capital gains from the transfer of corporate and Greek state bonds effected as of 29 February 2012, which are subject to a withholding tax at a rate of 20%. Notwithstanding the rates set out in Chapter 5, it should be noted that the transfer of individual enterprises or participations in partnerships between relatives is subject to the following lower capital gains tax rates: On page 96 under Foreign employees the last sentence of the first paragraph is deleted. It reads as follows: For expatriate employees, it has been possible for items such as company provided housing and school fees to be non-taxable reimbursement given that they offset costs of the expatriates due to relocation.

19 Chapter 7 Labor 19 Chapter 7 Labor On page 97, under Wage regulations/labor Agreements the first paragraph is replaced by the following: Minimum rates of pay are set each year (or every two years) by the National General Collective Labor Agreement. However, in accordance with announcements of the Greek government in 2012, the method of determination of the minimum rates of pay is anticipated to be amended as of April Certain industries and trades have established their own Collective Labor Agreements (CLAs) which provide their own minimum wage and salary rates on the basis of the number of years of service (Sectorial or Professional CLAs). However, since February 2012, when major amendments to Greek employment legislation were introduced, the majority of Sectorial/Professional CLAs have expired and no new Sectorial/Professional CLAs have been concluded. Further, Business CLAs, which apply to the employees of a certain business, can also be concluded to provide for the wages to apply in the specific business. In accordance with the legal framework currently in force, neither the Sectorial or Professional CLAs nor the Business CLAs can set rates of pay lower than those prescribed by the National General Collective Labor Agreement, but Business CLAs can set rates of pay lower than those prescribed by the Sectorial or Professional CLAs which would apply to the certain business. On page 98, under Working hours, vacations, and public holidays the first sentence of the first paragraph is replaced by the following: The working week is generally 40 hours over five days although discussions are made for the extension of the working week to six days. On page 99, under Overtime the third paragraph is replaced by the following: During periods of increased demand and following a certain procedure provided for by law, employees working up to 40 hours may be requested to work two additional hours daily with a corresponding

20 20 Investment in Greece reduction of working hours in other weeks (the period of increased and reduced employment cannot exceed six months in total during twelve months). Alternatively, it can be agreed between the employees and the employer that the daily working hours during certain periods not exceeding thirty two weeks per year can be increased by up to 256 working hours per calendar year provided that a corresponding reduction in other weeks is also agreed. On page 100, under Termination/Dismissals the last paragraph is replaced by the following: Dismissal of a female employee during the period of her pregnancy as well as for a period of eighteen months after the birth of her child or during her absence for a longer period due to sickness because of the pregnancy or the delivery of the baby is legally invalid, unless the dismissal is for a serious cause and the procedure provided for by the applicable legislation is followed. The above period of protection can be extended to twenty one months under certain conditions. The deterioration of the employee s performance due to the pregnancy itself does not qualify as a serious cause. Termination of employment by the employer during sickness is not prohibited by law. During periods of sickness and for up to one month depending on the employee s term of service, the employer is obliged to pay all or part of the salary to the employee, whereas a sickness benefit is also paid to the employee by the Greek social security authorities provided that the absence from work due to sickness has lasted more than three days (other conditions must also be met). On page 101, under Social security system the last paragraph is replaced by the following: From time to time, incentives are provided to employers in the form of reduced contributions or subsidies for the purposes of maintaining or creating employment positions. Provisions have been introduced obliging employers to make social security contributions on behalf of dismissed employees under certain conditions. On page 101, under Foreign employees the first paragraph is replaced by the following: Foreign employees may, in certain circumstances, be exempt from registering with the Greek social security system. For instance, foreign nationals who are insured in EU countries or in non-eu countries having bilateral Social Security Agreements with Greece may be

21 Chapter 7 Labor 21 temporarily exempt from being insured with a Greek social security fund on the normal condition that they have been seconded to work in Greece by their employers and they continue to be insured in the country of their origin. For persons insured in other EU countries, exemptions can also be provided in other cases based on the provisions of EU legislation. On page 102, under Social Security contributions the table is replaced by the following: The contributions are calculated on the gross salaries or salary ceilings at the following rates: Fund Employer (%) Employee (%) Total (%) IKA ETAM Total Further, under this heading, a new paragraph is inserted as follows: Employer s social security contributions are anticipated to be reduced shortly. On page 103, under Pensions the fourth paragraph is replaced by the following: Following amendments to social security legislation, both the age and the insured working days required for the proportional pension are increased on an annual basis until 1 January 2015 when the general requirements are the 60th year of age and insured working days. Based on a recent announcement of the Greek government, the age limit is expected to rise to the 67th year of age. Also on page 103, all paragraphs under Sickness are replaced by the following: Persons insured with IKA for at least 90 working days (to increase to 100 working days as of 1 January 2013) during the previous calendar year or during the previous fifteen months (not taking into account the last three months of the fifteen-month period in question) are entitled to medical treatment by IKA doctors free of charge and to dental treatment at reduced cost. Medicine prescribed by doctors may generally be obtained at reduced prices and, in some cases, free of charge.

22 22 Investment in Greece In addition, an insured employee is entitled to collect a sickness benefit provided that during the previous calendar year or during the previous fifteen months (not taking into account the last three months of the fifteen-month period in question) he has accumulated at least 120 working days. The sickness benefit is equal to half of the deemed wages of the insurance category within which the insured person falls. In the case of sickness, the employer is obliged to pay up to one month s salary to each employee. However, the amount payable by the employer is reduced by the relevant amount paid by the Social Security Fund.

23 Chapter 8 Acquisition of real estate/other tenure forms 23 Chapter 8 Acquisition of real estate/ Other tenure forms On page 106, under Ownership the third sentence of the first paragraph is replaced by the following: For real estate owned by individuals, this tax is levied at progressive rates ranging from 0.2% to 1% of the objective value whereas the tax free threshold is EUR per owner. Also on page 106, after Ownership a new section called Special duty on buildings which are supplied by electric power is inserted as follows: A special duty in favor of the State is imposed on buildings which are supplied by electric power and used for residential or commercial purposes and which are subject to real estate tax on 17 September of each year. For the calculation of the special duty, the surface area s price zone and age of the building as these are mentioned in the utility bill issued by the Public Power Corporation or by the alternate distributors of electric power, are taken into consideration with the rates ranging from EUR 0.5 per sqm. to EUR 16 per sq.m. depending on the price zone. The lowest bracket concerns persons who are disabled or who have three or more children (under certain conditions) who own buildings in areas with price zones up to EUR whereas the highest rate of EUR 16 concerns buildings in areas with price zones of higher than EUR Also, there is a surcharge rate which corresponds to the age of the building (from 1 to 1.25). The amount of the special duty is calculated by multiplying the following: the surface area in sq. meters of the buildings on which the duty of par. 1 of article 24 of Law 2130/1993 (Real Estate Duty) was calculated by the Public Power Corporation (or the alternate distributors of electric power), the rate of the special duty which corresponds to the price zone of the building and the surcharge rate which corresponds to the age of the building. The special duty burdens the owner of the building and in case of usufruct, the user. Ιn cases of joint ownership, the duty burdens the

24 24 Investment in Greece joint owners in proportion to the percentage ownership of each owner. The user of the building is liable for paying the special duty, which is payable with the utility bill for the consumption of electric power. In case the user is a lessee, the payment of such duty by the lessee is considered to set off any due or future rents. Any different agreement between the parties is not valid. The special duty is collected by the Public Power Corporation or the alternate distributors of electric power. In case the special duty is not paid, the Public Power Corporation and the alternate distributors of electric power must disconnect the supply of electric power and will reconnect it until the duty is paid. Certain exemptions from the special duty are provided for buildings which belong to the Greek State, State Owned companies, Municipal and Communal Authorities and municipal enterprises, religious legal entities exclusively for buildings which are used for pursuing their worship, educational, religious and charitable purposes, recognized foreign religious entities for buildings which are used exclusively for pursuing their religious, church, charitable, educational, art or public beneficiary purposes, foreign states in case such buildings are used for the establishment of embassies and consulates on condition of reciprocity etc. Also, the following are exempted: common or public areas of apartment buildings and hotels, and buildings which are characterized as perceivable and are not owner occupied or do not provide income as well as buildings which are characterized as historical or archaeological monuments. Finally, buildings used exclusively for agricultural or animal-breeding or small industry or industrial purposes are exempted. The special duty is not deductible for income tax purposes.

25 Appendix 3 Summary of Company Law requirements 25 Appendix 3 Summary of Company Law requirements Appendix 3 on page 117 is replaced by the following: Formation/Founders Branch AE EPE Minimum number of founders Residence requirements No No No Articles No Yes/Before Yes/Before One Stop Authority One Stop Authority Registration Yes Yes Yes Publication Yes Yes Yes Shareholders Minimum number Residence requirements Meetings - Annual within Annual within 6 months 3 months of year end of year end Board of Directors/ Administrator(s) Minimum number Residence Yes Yes Yes requirements (for at least one) (for at least one) (for at least one) Meetings - - -

26 26 Investment in Greece Branch AE EPE Shares/Units Minimum value - EUR 0.30 EUR 30 Maximum value - EUR 100 None Capital Minimum None EUR EUR Accounts Audit Yes Yes Yes (in selected cases) Publications No (certain Annual Annual filing requirements only)

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28 For further information please contact: KPMG 3 Stratigou Tombra Street Aghia Paraskevi, Athens , Greece Telephone: Fax: Β Μesogeion Ave Aghia Paraskevi, Athens , Greece Τel: N. Kountouriotou Street Thessaloniki , Greece Telephone: Fax: postmaster@kpmg.gr kpmg.com/gr 2012 KPMG Certified Auditors AE, a Greek Societe Anonyme and a member firm of the KPMG Network of independent member firms affiliated with KPGM International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. Printed in Greece. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.