The legislative initiative of the Ministry of Economy and National Finance foresees the abolition of the Stamp Duty for more than 600 transactions and its replacement by the Digital Transaction Tax for all transactions that will continue to exist. This reform concerns the modernization and simplification of a legislative framework in force since 1931, its complete digitalization and its abolition – whenever necessary -, while at the same time being a commitment of the country and a milestone in the Recovery and Resilience Plan. Chronic issues of ambiguity are also addressed.
In more detail, the proposed law, which must be immediately submitted to public consultation, introduces seven changes:
the Stamp Duty is abolished and replaced by the Digital Transaction Fee,
more than 600 cases of Stamp Duty collection are definitively extinguished,
The transactions to which the Digital Transaction Fee will be applied are explicitly mentioned, the declaration, calculation, certification and collection of which will be done entirely digitally through a special AADE platform,
its imposition on transactions falling within the scope of other indirect taxes is expressly excluded,
it is hereby established that the Tax is imposed on transactions in which at least one of the parties to the transaction is a tax resident in Greece or has a permanent establishment in Greece, regardless of the type and location of the transaction,
it is clarified who is responsible for paying the tax,
a single payment date for the Fee is determined.
Minister of National Economy and Finance Kostis Hatzidakis said: “With the proposed law, we are attempting to further reform the daily lives of citizens, as well as modernise the functioning of the Public Administration. We are leaving the current outdated framework of Stamp Duty dating back to 1931 in the past, where it belongs. And we are taking advantage of new technologies to address decades-old pathologies that have caused confusion for citizens and ambiguity in the application of tax laws. We continue the effort towards the comprehensive modernisation of our tax system and, at the same time, abolishing the obligation to pay this tax for more than 600 transactions that positively affect the pockets of citizens and businesses.”
The Deputy Minister of Economy and National Finance, Christos Dimas, said: “This measure aims to free citizens, professionals, companies and the State from the bureaucratic procedures that have burdened them to this day. The aim of the regulation is to modernise the legislative framework for transaction taxation, simplify and digitalise the process, rationalise the basis for collecting transaction tax, as well as reduce administrative burdens.
Independent Revenue Authority Governor George Pitsilis said: “Replacing the outdated 19th century Stamp Duty with a modern transaction tax that applies to specific transactions, is known in advance to taxpayers and is delivered digitally, is a win-win situation for taxpayers and businesses. It provides legal certainty, eliminating the need for friction with the Tax Administration and appeals to the courts, while at the same time saving taxpayers the hassle of paying the tax quickly and easily, using a digital process. The new Transaction Tax is a very important step in the modernisation of our tax system.”
The problems of the current framework
The current Stamp Duty framework is, to a large extent, complex and often creates application difficulties for traders. Some of the problems with the current framework are as follows:
Stamp Duty is levied on contracts concluded in Greece, so payment of the Stamp Duty can be avoided by traders who simply conclude the corresponding contract abroad.
Furthermore, the current framework does not explicitly mention the types of contracts on which it is imposed, but generally covers all contracts that are not subject to other forms of indirect taxation, which results in a lack of legal certainty as to whether or not a contract is subject to Stamp Duty.
Legal uncertainty is also aggravated by the ambiguity regarding who is responsible for paying Stamp Duty and how the declaration and payment are made.
What changes with the new framework?
From now on, the new Digital Transaction Tax will be imposed on transactions regardless of the place where they are carried out, provided that at least one of the contracting parties has tax residence or a permanent establishment in Greece and there is no reason for exemption for the contracting party. These transactions
a) are expressly mentioned in the law,
b) are not subject to other indirect taxes.
Abolition of Stamp Duty
It should be noted that with the proposed provisions, Stamp Duty is abolished in more than 600 cases of operations:
In more detail, Stamp Duty is abolished on a number of important transactions, such as: public service loans, insurance transactions, incorporation and capital increase of non-profit legal persons/entities, bank credits guaranteed in favour of importers, contractual interest on loans and credits.
Furthermore, it is abolished in more than 100 transactions involving stamps on receipts (e.g. marriage certificates, professional licenses, etc.). Important note: The abolition of Stamp Duty does not imply the abolition of the tax on the transactions in question. However, it leads to a reduction in the final burden.
It is also abolished in more than 500 transactions where a Stamp Duty of 2.4% or 3.6% was imposed on reservations relating to the NPDD or the State (e.g. Stamp on Reservations in favor of the National Medicines Organization (EOF), in favor of TACHDIK (Court Building Financing Fund), in favor of EADISY (Independent Public Procurement Authority) Ms.
Declaration and refund of Digital Transaction Fee
The Transaction Fee for transactions between individuals will be verified with an electronic declaration through a new digital platform that will be put into operation by AADE. The declaration and refund of the Fee must be made by the end of the month following the transaction.
Excluded are cases where there is an obligation to withhold income tax (its certification and payment is made based on the withholding tax deadlines), rents (its payment is made through the submission of the Income Tax Declaration) and the case of a current account (the declaration and statement are made in the first month of the following tax year).
In transactions with the State, the Transaction Fee is paid electronically before the respective act is drawn up or issued.
Digital Transaction Fee Factors
Please note that the Digital Transaction Fee coefficients for transactions between individuals are clarified and defined as follows:
3.60% on all property rents, on invoices for the collection of legal interest compensation and default interest and on transactions or contracts between individuals who do not carry out business activity and individuals who carry out business activity and are hired for acts unrelated to it, as well as in cases where one of the contracting parties is the State, Municipality, NPDD.
2.40% if all contractors or stakeholders engage in business activity, or at least one has the legal form of SA, EPE and IKE.
1.20% if it is for payment of fees to individuals or administrators and for deposits or withdrawals of funds from legal entities and entities.
0.30% on checks presented (“plaques”) to credit institutions.
Digital transaction fee for loans, deposits and withdrawals
Loans subject to Transaction Fee (loans between individuals/companies other than banks) are subject to a maximum Transaction Fee of EUR 150,000 per loan agreement, regardless of where the loan is contracted. This means that there are no longer any reasons to circumvent the legislation. The government will therefore collect the fees it has so far lost as the respective contracts were concluded abroad. The burden for companies and individuals will be kept to reasonable levels.
In more detail, the following are subject to a Transaction Fee:
with a rate of 3.6% for loans between individuals,
with a rate of 2.4% for loans between individuals or legal entities that both carry out business activities or in which at least one of the contractors is a SA, EPE or IKE,
with a rate of 1.2% for accounting entries of legal entities relating to deposits and withdrawals.
with a rate of 2.4% on bond loans under Law 4,548/2018, unless they are traded on a regulated market or multilateral trading mechanism.
Please note that contractual interest on loans is excluded from the Commission.
The respective presentation and list of 100 important cases of Stamp Duty cancellation are attached.