The abolition of the Stamp Duty for more than 600 transactions and its replacement by the Digital Transaction Fee for those transactions that will continue to exist is provided for by the legislative initiative of the Ministry of Economy and Finance.

This reform is about modernizing and simplifying a legislative framework that has largely been in place since 1931, fully digitizing it and abolishing it – where necessary – while being a commitment of the country and a milestone in the Recovery and Resilience Plan.

It also addresses chronic issues of ambiguity.

Specifically, the draft law, which is expected to go out for public consultation immediately, promotes seven changes:

– The Stamp Duty is abolished and replaced with the Digital Transaction Fee.

– More than 600 cases of stamp duty are permanently abolished.

– The transactions on which the Digital Transaction Fee will be imposed are explicitly mentioned, the declaration, calculation, confirmation and collection of which will be done entirely digitally through a special platform of the Hellenic Tax Administration.

– The imposition of the tax on transactions falling within the scope of other indirect taxes is explicitly excluded.

– It is stipulated that the tax is imposed on transactions where at least one of the transacting parties is a tax resident of Greece or has a permanent establishment in Greece, regardless of the type and place of the transaction.

– It is clarified who is liable to pay the tax.

– A single time for payment of the tax is established.

The Minister of Economy and Finance, Kostis Hatzidakis, said: “With the proposed draft law, we are attempting another reform of the daily life of citizens and modernization of the operation of the public administration. We leave in the past, where it belongs, the obsolete current framework for the Stamp Duty which dates back to 1931. And we are using new technologies to address decades of pathologies that have confused citizens and ambiguity in the application of tax legislation. We are continuing our efforts to modernize our tax system as a whole while eliminating the obligation to pay this fee for over 600 transactions that positively affect the pockets of citizens and businesses.”

The Deputy Minister of Economy and Finance, Christos Dimas, noted: “It is a cost-cutting measure that aims to relieve citizens, professionals, businesses, and the State from bureaucratic procedures that have burdened them so far. The purpose of the regulation is to modernize the legislative framework for the imposition of transaction tax, simplify and digitize the procedure, rationalize the basis for the imposition of transaction tax, and reduce administrative burdens.”

The governor of the Independent Public Revenue Authority, George Pitsilis, said: “Replacing the antiquated 19th century Stamp Duty with a modern Transaction Tax, which applies to specific transactions known in advance to taxpayers and is assigned digitally, is doubly beneficial for citizens and businesses. It provides legal certainty, eliminating reasons for friction with the Tax Administration and recourse to the courts, and at the same time saves taxpayers from inconvenience, as it is paid simply and quickly, through a digital process. The new Transaction Fee is a very important step in modernizing our tax system.”

The problems of the current framework

The current framework for the Stamp Duty is to a significant extent complex and often creates implementation difficulties for traders. Some of the problems with the current framework are:

– The Stamp Duty is imposed on contracts drawn up in Greece, so that traders who simply draw up the corresponding contract abroad may avoid paying it.

– Furthermore, the current framework does not explicitly mention the types of contracts on which it is imposed but generally covers those contracts that are not subject to other forms of indirect taxation, with the result that there is no legal certainty as to whether or not a contract is subject to the Stamp Duty.

– The legal uncertainty is further compounded by the ambiguity as to who is liable to pay the Stamp Duty and how the declaration and payment of the Stamp Duty is made.

What changes with the new framework

From now on, the new Digital Transaction Fee will be imposed on transactions, regardless of where they are made, provided that at least one party has a tax residence or permanent establishment in Greece and there is no reason for exemption for the parties. These transactions:

a) Are expressly named in the law.

b) They are not subject to other indirect taxes.

Removal of stamp duty

It is noted that the promoted provisions abolish the Stamp Duty in more than 600 transaction cases:

– In detail, Stamp Duty is abolished in a number of important transactions such as: Loans, insurance transactions, establishment and capital increase of non-profit legal entities/entities, letters of credit from banks in favor of importers, and contractual interest on loans and credits.

– In addition, it is abolished in more than 100 transactions involving paper stamps on parafiscal charges (e.g. marriage licenses, professional licenses, etc.). Necessary highlighting: The abolition of the Stamp Duty does not entail the abolition of the stamp duty on these transactions. It does, however, lead to a reduction of 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 the reservations concerning NPAs or the public sector (e.g. Stamp Duty on reservations for the National Organisation for Medicines (EOF), for TAHDIK (Fund for Financing Court Buildings), for EADESY (Independent Authority for Public Procurement), etc.

Declaration and reimbursement of Digital Transaction Fee

The Transaction Fee for transactions between individuals will be asserted by electronic declaration through a new digital platform to be launched by the AADE. The declaration and remittance of the Fee will be made by the end of the following month from the month of the transaction.

Exceptions are cases where there is an income tax withholding obligation (the declaration and remittance is made based on the deadlines for withholding taxes), rental payments (the remittance is made through the submission of the Income Tax Return), and the case of a current account (the declaration and remittance is made within the first month of the following tax year).

For transactions with the State, the Transaction Fee is paid electronically before the preparation or issuance of the relevant transaction.

Components of the Digital Transaction Fee

It is noted that the rates of the Digital Transaction Fee for transactions between individuals are clarified and defined as follows:

1) At 3.60% on all real estate leases, on invoices for the collection of compensation for statutory and default interest, and on transactions or contracts between individuals who do not engage in business activity and individuals who engage in business activity and contract for transactions not related thereto, as well as in cases where one party is the State, a municipality, or a public authority.

2) To 2.40% if all parties or transacting parties are engaged in business activity, or at least one of them has the legal form of SA, LLC, and IKE.

3) At 1.20% if it is a payment of remuneration to natural persons or members of management and a deposit or withdrawal from the financial assets of legal persons and entities.

4) At 0.30% on checks (“pinacs”) presented to credit institutions.

Digital Transaction Fee for loans, deposits and withdrawals

Loans subject to a Transaction Fee (loans between individuals/companies that are not bank loans) are subject to a maximum limit on the Transaction Fee of EUR 150,000 per loan agreement but irrespective of where the loan was taken out. In this way, the reasons for circumventing the legislation will no longer exist. Thus, the State will receive the fees that it has been losing until now, as the relevant contracts were concluded abroad. The burden on companies and individuals will be at a reasonable level.

In detail, they are subject to a Transaction Fee:

– At a rate of 3.6% for loans between individuals.

– At a rate of 2.4% for loans between individuals or legal entities that both engage in business activities or where at least one party is a limited liability company, limited liability company or limited liability company.

– At a rate of 1.2% for entries in the books of legal persons concerning deposits and withdrawals.

– At a rate of 2.4% for bond loans under the Law on the Law on the Law on Bonds. 4548/2018 unless they are traded on a regulated market or multilateral trading mechanism.

It should be noted that conventional interest on loans is exempt from the tax.