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Greece Asked To End Discrimination Against Non-Greek Partnerships

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

09 January 2007


The European Commission announced on Monday that it has sent Greece a formal request to amend its legislation concerning tax rules under which non-resident partnerships in Greece are taxed more heavily than those resident in Greece.

Under Greek legislation, partnerships having their statutory or real seat in Greece are subject to a lower tax rate than partnerships having their statutory or real seat in other Member States.

Greece acknowledges that there is a minor difference between the tax rates for domestic partnerships and foreign partnerships but argues that this difference is justified due to the fact that a proportion of the profits of a domestic partnership is taxed in the hands of the individual partners.

The Commission considers that this situation does not necessarily entail higher taxation. On the contrary, it may in some circumstances entail an even lower effective rate of tax.

The Commission is of the view that these rules are discriminatory and incompatible with the EC Treaty, which guarantees the freedom of establishment. The request is in the form of a ‘reasoned opinion’ under Article 226 of the EC Treaty. If Greece does not reply satisfactorily to the reasoned opinion within two months the Commission may refer the matter to the European Court of Justice.


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