Innovative changes in the Greek legislative environment
Domna D Mirasyesi
M&P Bernitsas Law Offices
Athens
Domna D Mirasyesi (Bio)
Overwhelmed by the economic crisis of 2010 and 2011, Greece is struggling to cope with its tremendous debt and to stabilise its economy.
Following the initial Agreement with the IMF, the European Commission and the European Central Bank in May 2010, which was ratified by Law 3845/2010, providing for a €110 billion financing package, a vast number of legislative measures were adopted aimed at making the Greek economy more competitive and liberalising the market from long standing bureaucratic hurdles.
However, the unprecedented cuts in salaries in the public sector and pensions, coupled with higher taxation has led to a rampant recession and to deviation from the budgetary goals agreed between Greece and its partners. Not unexpectedly, the figures at the end of the first quarter of 2011 showed that additional corrective measures should be taken.
Medium Term Financial Strategy Framework
The 'Medium Term Financial Strategy Framework 2012 - 2015' (Law 3985/2011) and the 'Urgent Measures' for its implementation (Law 3986/2011), voted by the Greek Parliament on 29th and 30th of June 2011 respectively, provide for the establishment of a new fund, the object of which is the restructuring, privatisation and development of property held by the State and of public companies owned or controlled by the State.
Special procedures for the development of public idle land are provided for, including expedited procedures regarding zoning, town planning regulations and the use of land, the determination of seashore lines, expropriations and building permits.
The proceeds deriving from privatizations will be used exclusively for the repayment of the country's public debt, but it is expected that the whole procedure will also boost the economy.
Fast-Track and Transparency in the Strategic Investments
The most ambitious legislative tool is Law 3894/2010 on 'Fast-Track and Transparency in the Strategic Investments', applying to productive investments of important qualitative and quantitative impact on the overall Greek economy. These investments relate to the construction industry, extension and modernization of infrastructure and networks in industrial sectors, energy, tourism, transport and communications, in the provision of services to the health sector, in waste management and treatment as well as in projects of cutting-edge technology.
The law captures public and private projects with a total investment cost exceeding €200 million or €75 million and creating 200 new employment positions or projects involving an investment of at least €3million every three years in cutting-edge technology and innovation schemes or projects which promote and add value to the environmental protection or add value to the education, research and technology of Greece or, alternatively, projects, which irrespective of the overall cost of investment lead to the creation, in a viable manner, of at least 250 employment positions.
The State entity 'Invest in Greece' has been established for the promotion of foreign investments into Greece, guiding foreign investors through the procedures applicable and implementing the projects qualifying under the law. This entity is the one-stop-shop for speeding up procedures that relate to the approval of environmental terms, deviations from zoning terms and restrictions, the right for using the seashore and coastal land, the facilitation of expropriation, the issue of licences and for granting important tax benefits.
The decision for an investment project to be approved using the Fast Track Procedure is taken by an Interministerial Committee, upon the initiative of the competent Minister, within thirty days from the day a full application has been duly lodged by the investor with 'Invest in Greece'.
Promotion of Private Investment
Furthermore, Law 3908/2011 on the 'Promotion of Private Investments for Economic Development, Entrepreneurship and Regional Cohesion' was enacted, aiming at subsidising private investments into Greece. Investment projects that may be subsidised include the construction, expansion and modernisation of building facilities, the purchase of assets, the acquisition of machinery and equipment and of software as well as the transfer of technology.
Certain economic sectors are exempted from subsidisation, among which the production of electricity using photovoltaic systems, the construction of buildings and port projects, catering, radio and TV as well as education.
The subsidies granted may take various forms. They may consist in exemptions from income tax for a number of years, in the cash subsidisation of part of the investment plan or in the payment, for a minimum period of seven years, of a part of the installments payable under leasing (hire-purchase) contracts for the acquisition of machinery and equipment.
The amount of subsidies granted cannot exceed 50% of the approved cost of investment. For the purposes of this law, Greece is divided into three regions (A, B and C) with separate ceilings for subsidies set depending on the size and nature of the investment.
Tax
The Law 3943/2011 on 'Tax', which completes last year's Tax Law 3842/2010, aims at the rationalisation and improvement of the Greek tax legal framework and the facilitation of entrepreneurial activities, the control of tax evasion and the circumvention of tax legislation, the restructuring of control procedures and the enhancement of collecting mechanisms.
The most important changes concern the reduction of corporate income tax from 24% to 20% (with plans to further reduce to 15%), the taxation of dividends and distributed profits, which are also subject to a 25% withholding tax, the introduction of a new and wider definition of individuals deemed to be Greek tax residents, the introduction of strict criminal sanctions and the institution of a prosecuting officer for financial crimes, the establishment of a Fiscal Arbitration Body for the resolution of tax disputes for amounts exceeding €150,000, the establishment of a committee for the administrative settlement of tax disputes for amounts exceeding €50,000 and, finally, the establishment of a department for International Administrative Cooperation with respect to direct taxation, in an effort to enhance international exchange of information and assistance.
Protection of Free Competition
The Law 3959/2011 on the 'Protection of Free Competition' repeals previous Law 703/1977 and brings Greek competition law in line with EU provisions.
As regards antitrust rules, the notification requirement before the Greek Competition Commission of agreements, decisions and concerted practices is abolished. A system of self-assessment is introduced, in compliance with the guidelines of the relevant EU block exemption regulations. In general, a statutory limitation period of five years to impose sanctions is introduced. More severe criminal sanctions compared to those of the previous law are provided with respect to cartels.
As regards merger control, the post-merger notification requirement is abolished. The deadline for pre-merger notification is extended to 30 days from the signing of the agreement or bid publication or the assumption of an obligation granting control.