Greece's Governor of the Independent Public Revenue Authority issued, on 20 December 2017, Circular POL.1209/2017, which restricts the definition of "tax evasion crime" in cases of income tax audit assessments to the extent they result due to book-to-tax or transfer pricing adjustments.

Book-to-tax adjustments

For the submission of a crime notification report to the Prosecutor, tax auditors should examine whether the tax, which is assessed in the course of the audit and corresponds to taxable income, meets cumulatively the following conditions:

• Exceeds the amount of €100,000 per tax or fiscal year (pursuant to article 66 para. 3 (a) of the Tax Procedure Code – "TPC")
• Is not arising due to plain (customary) book-to-tax adjustments (adjustment of expenses for tax purposes) unrelated to the concealment of taxable income

Intra-group invoicing (transfer pricing)

Furthermore, in the case of tax adjustments resulting from profit adjustments by virtue of transfer pricing rules, the conditions of tax evasion are not met and, accordingly, tax auditors should not submit a crime notification report to the Prosecutor.

In distinction to the above, with respect to tax audit assessments resulting from tax adjustments related to the concealment or falsification of taxable income (e.g., fictitious expenses and/or documents), the relevant provisions apply (article 55A, 66 etc. of TPC). Consequently, in such a case, a crime notification report for tax evasion should be properly submitted.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Business Advisory Solutions S.A., Athens

• Stefanos Mitsios
  stefanos.mitsios@gr.ey.com
• Konstantinos Mavraganis
  konstantinos.mavraganis@gr.ey.com

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ATTACHMENT

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