Related Parties transactions & New Legal Requirements

The tax office has issued an important circular (Circular 6/2023 – in Greek) with effect from 1 January 2022, introducing simplification measures regarding related parties’ transactions (“controlled transactions”) below the threshold of €750,000 in aggregate per category of transaction per tax year.

Here is a summary guidance (in English) referring to the contents of the aforesaid circular.

Moreover, to simply explain the main changes with effect from 1/1/2022 kindly see below:

1. For related party transactions BELOW the threshold of €750,000 in aggregate per category of transaction per tax year the following applies (see attached circular for more details):
   1. The company should maintain a minimum Transfer Pricing documentation, to support the arm’s length nature of its controlled transactions and submit this documentation to the Tax Department upon request;
   2. The company may elect to adopt simplification measures for specific types of controlled transactions;
   3. A tax adjustment is performed based on standard simplification rates provided by the tax office.
2. For related party transactions ABOVE the threshold of €750,000 in aggregate per category of transaction per tax year the following applies:
   1. A transfer pricing (TP) study needs to be prepared for the controlled transactions with any tax adjustments to be performed on the tax calculation;
   2. Along with the TP study,
      1. A Summary Information Table is prepared and should be submitted by the deadline of submission of the Income Tax Return for each tax year;
      2. A Local File needs to be prepared by the submission deadline of the Income Tax Return for each tax year and should be submitted to the Tax Department upon request;
   3. Considering there is no major change in the controlled transactions then a review of the TP study needs to be performed every 3 years.

Important to note that in case of non-compliance with the above the following apply:

• There are significant penalties;
• There will be a qualification of the audit report due to the possibility of incorrect tax computation (due to the missing tax adjustment resulting from either the simplification rates or the TP study).