A breath for thousands of businesses is brought by new legislative intervention by Finance Minister Kyriakos Pierrakakis. The purpose of the arrangement is to resolve a chronic issue that plagues thousands debt A company is seeing their personal property remaining “committed” by the tax administration, even if these corporate debts are in regulation and are regularly repaid.
With this new provision published by the newspaper the First Issue, from now on all managers, consultants, shareholders and members of companies will be able to make sales or parental benefits and donations of their real estate, even when the company they are linked has debts to the State. Although they, under the law, are responsible for these debts with their personal property, they will now be able to receive a tax information certificate to transfer their properties, without imposing any deduction on the price they will receive.
This will apply as long as two terms are met:
- The Company has legally “arranged” all its debts (eg from VAT, etc.), that is, either to have them in the arrangement that must be complied with, or these debts to suspend, under a law or judicial decision or a decision of the Tax Disputes Resolution Department.
- The same persons who want to transfer their own property have no ownership with the company (legal person or entity), or their participation in the company to be extremely limited (below 5%).
The provision will pave the way for real estate transfers even if these natural persons (members of administration or companies) are linked to a ownership relationship of more than 5% to companies owed to the State.
The withholding rate imposed by the State is reduced by up to 90%, to only 7%, instead of 70%applied to date. A basic prerequisite for this is that, in addition to having the company ‘arranged’ its debts, the State will also ask for the payment of the seller to put the seller to another property, the value of which will cover the remaining amount (from 7% to 70%).
Parental Benefits – Donations
The intervention will also cover those who have been trapped in corporate debt as solidarity responsible persons, but there is no price collection for the property they want to transfer, such as If a manager or chief executive wants to donate or parental benefit to his children a property. In practice, the property will be able to be transferred, but if a mortgage is registered with the State.
In other words, the property itself will be able to be given as a guarantee, to ensure that after changing hands, the State can collect the debts if the company ceases to comply with the regulation or lift their suspension.
What will the layout define
The provision is added to Article 12 of the Code of Tax Procedures (Law 5104/2024) and reforms the terms of granting evidence for transfer of immovable property or setting up a right of right, releasing substantially shareholders and current or former business executives.
The new provision, as designed by AADE head George Pitsilis, will provide: complete liberalization for smallholders, management members or company who have no ownership relationship with the company, or have a very limited entry (up to 5%) in the corporate scheme.
In particular, it will be stipulated that ‘if proof of information is requested to transfer immovable property or setting up a right to it, the tax administration confirmed and legalized legal entity or legal entity for the solidarity […] A person requesting the evidence, provided that in the last two years of his term of office he did not in any way participate in the shareholding or corporate composition of the legal entity or the legal entity with a percentage exceeding 5%. “
Reduced withholding
In other words, the Tax Administration will not take into account the confirmed but neat debts of the Company (legal person or legal entity), for which the natural person is considered to be responsible when requesting tax information for transferring a personnel of the property. This will apply provided that the natural person, in the last two years of his term of office, did not participate in the shareholder or corporate composition of the legal person with a percentage exceeding 5% (including any direct or indirect participation of a spouse, a cohabitation member or relatives).
In particular, it is stipulated that “in any way involvement” in the equity or corporate composition of the legal entity or the legal entity is also considered to be direct or indirect participation of a spouse, a cohabitation of a cohabitation or a first and second degree relative of the solidarity of the responsible person “.
Reduced withholding for persons with high participation in the company: If participation exceeds 5% in the shareholder or corporate composition, it will be imposed on the sale price of the property as applicable, but up to 90% reduced, ie up to 7% instead of up to 70% in force today!
Specifically, according to the new provision, ‘if the applicant’s participation in the shareholder or corporate composition of the legal entity or legal entity exceeds 5%, the withholding rate […] limited to 7% on the price […] Provided that the remaining debts referred to in the preceding subparagraph corresponding to the dispute withheld and the amount corresponding to 70% of the price, provided that the debts are set, or 50% of the price, as long as the debts are suspended, secured by guarantees or insults, first mortgage registration. “
Consequently, in order to use the measure, one will be called upon to put a mortgage on another property, which will cover the “remaining debts” to the State as a guarantee and binding security, that is, the difference between the amount withheld under the new system (eg 7%) and the 70% of the taxpayer today – or 50% of the taxpayer.
However, in this case, according to the new provision, the value of the immigrant security provided by the member or shareholder of the company is estimated at 80% of the fair value of the property offered. In particular, it will state that “for the calculation of the security of security, 80% of the fair value of the property offered to provide property is taken into account”.
Especially in the case, however, that a manager or consultant transferred property by putting a mortgage another, while the company’s debt regulation was properly observed, but then withdraws from the company and – with another composition – proved to be inconsistent with the regulation and found in the future, a period that had a property linked to the business and its debts as partly responsible (Article 49 of Law 5104).
To date, the situation for natural persons such as shareholders (regardless of their participation rate), board members, managers, presidents, CEOs, and in some cases their spouses or close relatives, were particularly burdensome in their personal transfer.
Are held in length with the legal entity for the company’s debts to the State (tax office, insurance funds). This solidarity of responsibility meant that the state could automatically turn against the personal property of these persons to meet its claims by the company, even if its debts are served on the basis of regulation.
In practice, the procedure for the transfer or setting up of the right of right also required a tax information certificate for the company’s debt to the tax office or other public bodies, but which was often a Calvary. In essence, the State, in its attempt to ensure the collection of the legal entities of the legal entity, “blocked” the transfer of the personal assets of the solidarity responsible.
Tax information
This meant that even if a cafeteria owner e.g. Or an executive or shareholder held a small percentage in the company, or had an involvement in the past (even for one day), the existence of regulated corporate debts could lead to the withholding of a significant part or even the entire amount of the price from the sale of his personal property.
By law, the tax authorities demanded that it reached 70% of the price acquired by anyone involved in such an adventure, making any transaction unprofitable or impossible, as 70% of the amount was paid directly to the State to pay off the corporate debts. Whereas if not even a price (eg for transferring to a gift) the granting of evidence would be extremely difficult or impossible, fully blocking the transaction.
This practice created distortions and injustices in the market. People who had no real ability to control or left a company’s finances years ago were trapped, unable to manage their personal property. This danger affected their personal economic activity, but also the market in general, as it has discouraged many to take over administrative positions or even acquire equity shares.
The strict measures were imposed when businesses were facing enormous financial difficulties, such as in the Memorandum period, to close the way for those who were massively trying to transfer assets to relatives or third parties (even to “barriers” or “self -governing”).