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Holding Company in Greece
Updated on Thursday 08th December 2022 Rate this article
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A holding company in Greece defines a type of business which can be incorporated for non-commercial purposes.
The main characteristic of a holding company is that its main activity is to purchase shares in other companies, with the purpose of establishing a group of entities in which the main company (the holding) has the main managerial rights.
If you want to open a company in Greece as a holding company it is necessary to be aware of the fact that this entity can be taxed following a different tax regime than the one of commercial companies, such as the limited liability company or the public limited company.
However, this company type along with all other legal entities that are available under the Greek law, are liable to taxation.
Our team of consultants in company registration in Greece can provide a presentation concerning the tax system applicable to a holding and can also help investors register this entity with the local authorities.
What is the tax regime applicable to a holding company in Greece?
As said above, the holding company is required to pay various corporate taxes, in accordance with the tax laws applicable in this country.
The company can also enjoy from a special tax regime, which implies that the company can be exempted from the payment of various taxes, as long as specific requirements are met.
Please mind that a holding company in Greece does not need to hold shares only in other companies registered in this country. The holding is entitled to expand beyond the country where the company has its tax residence.
Provided that the holding will hold interest in foreign companies, specific rules will apply, based on the locations where such companies are registered.
For instance, in the case of a holding group that is situated in countries that are members of the European Union (EU), a holding company in Greece can benefit from the provisions of the EU Parent – Subsidiary Directive.
This is because the structure of the holding is basically the one of a company that acts as a parent company and which controls the operations of its subsidiaries which can be located in the same country where the parent is located, or in other countries.
Our team of consultants in company formation in Greece can provide more information on the regulations that derive from the EU Parent - Subsidiary Directive and if you are interested in this, please do not hesitate to address to our team for tax advice.
Below, you can find out some information regarding the taxation system in Greece:
- • tax exemptions can be applied for a Greek holding company under the EU Parent – Subsidiary Directive 90/435/EEU;
- • this will apply if the holding is a EU based company that holds at least 10% of the shares of Greek company;
- • the 10% shareholding has to be maintained for a period of at least 2 years (consecutive years);
- • if all the above conditions are satisfied, then the holding company will not be liable for the payment of the withholding tax and this is applied on the taxation of dividends if the same 10% shareholding is maintained for minimum 2 years;
- • in the case in which the dividends are distributed, then a corporate tax charged at a rate of 15% will apply.
What are the regulations of the EU Parent-Subsidiary Directive?
Investors who will set up a holding company in Greece will have to observe the rules of the EU Parent - Subsidiary Directive, a law which was modified throughout the years for the purpose of implementing better policies concerning the taxation of EU businesses.
Besides the Directive mentioned above, additional regulations can also be derived from the Directive 2003/123/EC.
While the first law, meaning the Directive 90/435, regulated legal matters concerning the ways in which withholding taxes can be paid, as well as the tax exemptions applicable to withholding taxes for companies in EU member states, the 2003 law introduced a more suitable legal environment.
Thus, the 2003 law expanded the definition of the EU companies that are covered under the EU Parent-Subsidiary Directive and, besides that, it also introduced provisions concerning the exemption on the payment of withholding tax on dividends.
If you want to open a company in Greece or in any other EU member state, you must know that the Directive also applies to the following legal entities:
- saving banks;
- certain categories of cooperative companies;
- associations that develop commercial activities;
- mutual companies,
- funds.
Throughout the years, the Directives relaxed the shareholding requirements for the parent company in order for the tax exemptions to be applied.
For instance, in 2006, the law required a shareholding of minimum 20% in order for the Parent - Subsidiary Directive to be applied. After that, up until 2008, the shareholding requirement was reduced to 15% and since 2009, the shareholding requirement has been of only 10%.
There are other conditions to be fulfilled by EU companies in order to benefit from this law. For instance, they have to be incorporated under one of the legal entities that are mentioned in the Parent-Subsidiary Directive.
The company has to be incorporated in one of the EU member states and to abide by the rules and regulations of the country where it is incorporated. Another condition is to also pay the corporate tax.
In order to benefit from the policies of the Directive, these companies can’t be exempted from the payment of the corporate tax. There is also the shareholding requirement, as presented above, as well as the minimum amount of time when the company is obliged to maintain that shareholding.
Please mind that if you want to start the procedure for company formation in Greece for a holding company, and if the holding company is incorporated in Switzerland, other rules will apply.
Switzerland is not a member state of the EU, but there are many agreements between EU and Switzerland which provide favorable tax conditions for Swiss based businesses and EU companies.
Thus, if a Swiss parent company will want to expand in an EU member state, such as Greece, in order for the company to benefit from withholding tax exemptions, other conditions must be fulfilled.
In this case, there are 3 main conditions that have to be fulfilled at the same time. First of all, the company must be incorporated as one of the following legal entities:
- limited partnership with share capital;
- public limited company;
- private limited company.
The company must also meet specific shareholding requirements, as it is the case of EU companies that benefit from the Parent-Subsidiary Directive. However, in this case the minimum shareholding is of 25%.
Thus, the Swiss company can only qualify if it holds at least 25% of the capital of the subsidiary.
A minimum amount of time is also imposed and here, the same rule that is imposed to EU companies is applied – the shareholding threshold has to be maintained for at least 2 years.
If you are interested in knowing more about other policies applicable under this Directive, our consultants in company formation in Greece remain at your service.
What are the accounting obligations of a holding company in Greece?
Investors who will start the process of company formation in Greece will have to comply with a set of accounting procedures. They will also be required to submit specific financial documents, as a part of the reporting laws applicable here. The same is necessary for a holding company in Greece.
According to the Greek laws, a holding company is not required to comply with other accounting and reporting requirements than the ones imposed to commercial companies, and, as long as the company is a tax resident in this country, its obligations will be as required by the applicable accounting law.
For instance, a holding company in Greece needs to develop its daily operations, in accordance with the rules stated in its incorporation documents. The company must appoint a yearly shareholders’ meeting and to maintain the financial documents which attest its daily operations and transactions.
Here, such companies are required to maintain their bookkeeping and, at the end of the financial year, the company should submit information regarding its financial performance. Our team of consultants can provide more details.
If you need accounting services in Greece, you can always rely on our team, where you will find accountants ready to assist in the accounting procedures of all company types (differences can appear based on the company type and the size of the company).
Meet us in Athens
Federico Richardson is our company formation expert in Greece and the founder of Lexidy Law Boutique SLP.
He can assist clients with the entire company registration procedure in Greece.
He can assist clients with the entire company registration procedure in Greece.
Call us now at +302111995654 to set up an appointment with our lawyers in Athens, Greece. Alternatively you can incorporate your company without traveling to Greece.
As a Lexidy Law Boutique SLP client, you will beneficiate from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Greece.
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