Tax Alert - 05 / 16

2017 Fiscal Package

The 2017 Fiscal Package has been approved by the Parliament on 15 December 2016 and published in the Official Gazette on 27 December 2016, except for the changes to Income Tax Law (law no. 8438/1998) which are still to be proclaimed by the President and to be published.

We are highlighting below some of the important changes introduced with this Fiscal Package.

Income Tax (law no. 8438/1998 "On Income Tax")

An additional thin capitalization rule is introduced aiming to limit the financing of taxpayers through debt instead of equity.

Specifically, in case of loans and funding from related parties, the 'net interest expense' will be considered deductible up to 30% of EBITDA (Earnings Before Interest Tax Depreciation and Amortization). Net interest expense means the interest expense less the interest income, within the tax period. The taxpayer has the right to carry forward the non-deducted part of the interest and claim its tax deductibility in the following periods, except when the taxpayer's ownership has changed by more than 50 percent. This thin capitalization rule does not...