September 2026 Monthly Tax Briefing

Until the issuance of Decision 1734/2025, the Council of State had not ruled on whether a domestic company may deduct royalty withholding taxes from its gross revenue when the parties have contractually agreed to a tax-free payment.

By way of Decision 1734/2025, the Council of State held that:

1. if two legal entities agree that a royalty payment to a foreign company is to be net of withholding tax, and 
2. the foreign company adds the corresponding tax to its invoice so that it receives the net agreed-upon fee after the tax is remitted to the Greek government, 

the domestic company may not deduct the excess amount invoiced by the foreign company.

By way of Decision 370/2026, the Second Chamber of the Council of State rejected the appeal filed by the plaintiff company which had received intra-group loans from its affiliate in order to pay dividends to its shareholders, and sought to deduct the interest on those loans from its taxable profits for the respective tax year. 

In line with its previous rulings, the Court confirmed that interest on a loan taken out for dividend distribution is not tax-deductible, because the payment of dividends is not part of the company's business activity but rather relates to its corporate relationship with shareholders. 

The Council of State also confirmed that the provisions of the Income Tax Code on under capitalization and intra-group transactions apply only if it has been previously determined that the respective expenses meet the general criteria set by the ITC regarding the deductibility of expenses. 

By way of Decision 364/2026, the Second Chamber of the Council of State rejected an appeal filed by a general partnership engaged in plumbing installations in relation to the income tax assessed for the 2005 fiscal year arising from the receipt and recording of fictitious and forged invoices. 

The company argued that the government's right to collect the tax had become time-barred because the unified tax administration was aware of the critical facts within the five-year period, and therefore there was no new supplementary evidence that would extend the Statute of Limitations to a decade. 

The Council of State ruled that:

1. the fictitious nature of the invoices was first established by the tax police audit report dated 4 June, 2014 which was after the five-year period had elapsed; and
2. the audit findings of the tax administration responsible for the issuer of the fictitious documents constitute supplementary evidence, even if the audit of the issuer began within the five-year period. 

Individuals transferring their tax residence to Greece up to 2 July of any given year may elect inclusion either for the year of arrival or for the subsequent year.

Conversely, individuals transferring their residence after 2 July may only apply for inclusion with effect from the tax year following their arrival.

Individuals who have already transferred their tax residence to Greece and wish to be subject to the alternative tax regime applicable to foreign-source pension income pursuant to Article 5B, must submit an application no later than 31 October of the year of arrival or of the subsequent tax year.

Individuals may submit the supporting documentation required to complete their application up to 30 November of the tax year in which the application for inclusion in the regime was filed.

The tax is payable annually by the last working day of December, and upon its full payment, all tax obligations relating to foreign‑source income are exhausted. 

This Decision shall take effect upon publication in the Government Gazette¹ and also covers:

1. pending applications filed with the tax administration both before 25 June 2026 and during the period from 25 June 2026 until 24 September 2026; and
2. tax assessment acts issued in respect of 2025 tax year.