Opportunities for SMEs in Greece's Upcoming Economic Reforms
In the changing tax landscape of the Greek economy, the first quarter of 2024 marks a pivotal moment, as the Ministry of National Economy and Finance is set to announce a new legislative reform. This reform is poised to reshape operational and tax incentives for mergers and acquisitions, targeting particularly the small and medium-sized enterprises (SME) sector.
Key Features of the New Legislation
The new bill aims to address conflicting provisions from various existing laws, creating a more cohesive and supportive environment for private investments. The ultimate goal is the transformation of Greece's business landscape within 2024, encouraging the growth of small businesses or their integration into larger business entities.
Current Incentives and Upcoming Improvements: According to the current law 4935/2022, SMEs involved in mergers and professionals like farmers enjoy numerous benefits, such as:
- A 30% income tax reduction on profits for nine years, given a minimum cumulative turnover.
- Tax benefits up to €500,000 for business transformations.
- For collaborations, tax incentives up to €125,000 per collaborating entity.
- The ability to transfer losses from transformed businesses to the new company’s balance sheet and offset them with future profits, for turnovers equal to or greater than €450,000.
- Deductions for expenses incurred in acquiring business entities.
- A 50% income tax exemption for collaborations of primary sector farmers.
The 2024 reforms will supplement these incentives, incorporating EU Directive 2009/133 into national law. This will provide a common tax regime for cross-border mergers, divisions, partial divisions, contributions of assets, and exchanges of shares involving companies from different member states, enhancing the functionality of the internal market.
Opportunities for SMEs
Currently, Greece has about 800,000 SMEs, with 95% employing up to 10 people. The government aims to encourage these businesses to expand through mergers, enhancing growth and competitiveness. With the new legislation, many businesses and professionals will explore merger options in response to the revised presumptive tax system, which increases the minimum income declaration to tax authorities.
To facilitate these changes, the Independent Authority for Public Revenue (IAPR) will establish Investment and Entrepreneurship Support Offices. These offices will offer guidance and advice on tax matters, including information on various forms of companies in Greece, their unique characteristics, tax obligations, rates, and incentives for mergers and acquisitions.
As Greece embarks on a transformative journey with its new legislative reforms, the need for strategic corporate transformation becomes more vital than ever for SMEs. Your 'journey' through the new economic reforms should not be merely a path of compliance, but an opportunity for strategic growth and enhanced competitiveness. We are committed to providing you with solutions that minimize tax and administrative costs while maximizing your business’s strategic opportunities.