Law 89: Why Multinational Groups Should Opt For Greece For Their Shared Services Centers

• Published date: 19 October 2022
• Subject Matter: Corporate/Commercial Law, Tax, Corporate and Company Law, Income Tax, Tax Authorities
• Law Firm: Eurofast
• Author: Ms Maria Sarantopoulou and Alexandra Theologou

Law 89/67 regime, as amended in 2019 and in force today, offers an attractive solution to Multinational Groups to establish their shared services centers in Greece while benefitting from a stable tax environment.

Services

A foreign company established in Greece under Law 89 shall have the sole purpose of providing the head office and/or its affiliated companies, in Greece or abroad, one or more of the following services: consulting services, central accounting support, quality audit on production, products, procedures and services, drafting studies, designs and contracts, advertisement and marketing, data processing, receipt and provision of information, research and development, software development, computer programming and IT systems support, information filing, storage and management, management of supplier, clients and supply chain without executing transfers by own means, human resources management and education, call center activities and provision of information based on computer. However, to fall under Law 89 regime it is important that the services provided should be auxiliary and/ or supportive to the final product created abroad.

Likewise, a Greek company can establish a Law 89/67 office in Greece if it provides said services exclusively to the company's branches, abroad or to affiliated not established in Greece companies.

From a PE risk perspective, the provision of such services does not trigger exercise of effective management by the mother and/or affiliated companies receiving the services abroad, as Law 89 provides for.

Taxation

This regime's main advantage is the specific and simplified taxation method used to calculate the offices' taxable income. The gross revenue deriving from the services provided is determined by adding a certain profit percentage to the total amount of expenses and depreciations, except the tax income (cost-plus method).

The profit percentage (mark-up) is pre-determined by the Ministerial Decision granting permission of establishment to the office. The mark-up cannot be smaller than 5% and is to be re-evaluated at least every five years.

The above simply means that the office's taxable revenue is determined as a standard percentage of its expenses and all expenses used to...