Greece Taken To Task By EC Over Capital Taxes

by Ulrika Lomas, for LawAndTax-News.com, Brussels

02 February 2009

The European Commission has decided to open a new infringement procedure against Greece regarding domestic legislation on capital duties.

The Commission announced on January 29 that, despite a 2007 European Court of Justice judgment, Greece has not communicated any changes to its legislation on charging capital duty in the event of transfer of the registered office or the effective centre of management of a company and to the general exemption from that duty to maritime companies.

If Greece fails to comply with the letter of formal notice, the Commission may address a reasoned opinion to Greece before bringing the matter to the Court of Justice for a second time, seeking the imposition of penalty payments.

Greece applies capital duty when a company transfers its registered office or place of effective management to Greece. However, a general exemption from capital duty is given to maritime companies. The Commission considers that these rules are contrary to the Directive concerning indirect taxes on the raising of capital which allows member states to subject only the formation of companies, not their transfer, to capital duty and which does not allow for the exemption of companies operating in specific economic sectors, such as shipping companies, from the tax.

In 2005, the Commission referred the case to the European Court of Justice. The Court, in its judgment, declared that: "as a result of its legislation relating to the charging of capital duty in the event of transfer of the registered office or the effective centre of management of a company and to the exemption from that duty of co-ownership of vessels, shipping consortia and any form of shipping company, Greece has failed to fulfil its obligations under the Directive."

Member states are obliged to take the necessary steps to put an end to the infringement and to inform the Commission accordingly. However, the Commission announced that to date, the Greek authorities have not formally communicated any amendments to the legislation at issue.

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