With decision No. 811/2023 by the Hellenic Revenue Authority (ΔΕΔ), it was interpreted that the expenditure for online advertising paid by Greek companies to foreign businesses is considered a payment of royalties and requires withholding and remittance of the prescribed tax rate of 5% – 20%, which is determined based on the Double Taxation Avoidance Agreement (DTAA). Additionally, in cases of non-submission of the declaration, a penalty is imposed as per Article 59 of the Income Tax Code (K.F.D.) which is 50% of the tax or Article 54 of the K.F.D., which is 100 or 500 euros.
Several issues arise here, as the majority of these payments are made to large multinational companies that, for no reason, accept no tax withholding on their fees. This results in the withholding essentially burdening the Greek company. Furthermore, it is practically impossible to safely differentiate which of these payments are indeed royalties and which are advertising expenses. Therefore, Greek businesses will incur additional costs. There is also an administrative aspect that needs to be addressed, as the official location of the company receiving the fees must be determined in order to apply the Double Taxation Avoidance Agreement.
Article written by Christos Triantafyllopoulos
Founder & CEO of Aegean Consulting
The above text is for informational purposes only and it does not substitute specialized advice
