Effective since 1 January 2005, Greek corporate entities listed on the Athens Stock Exchange are required to prepare their interim and annual financial statements in accordance with the International Financial Reporting Standards (IFRS).
It is noted that non-listed Greek companies are also, optionally, entitled to adopt the IFRS.
In that context, the Greek tax legislation and its related provisions represent a key factor to consider in planning and executing an entity’s smooth transition to IFRS.
.
In 2004, certain changes to the Greek corporate legislation, the Income Tax Code and the Code of Books and Records have been enacted, to facilitate the transition to IFRS. To ensure compliance therewith, the following issues need to be examined beforehand.
- Eligible companies may elect as their primary source of tax financial information, either their IFRS books (through certain mandatory reconciliation schedules) or their tax books.
- In case the IFRS books are the only set of financial records to be maintained, the law outlines the format and the content of certain reconciliation schedules, in order to interface the accounting books to the information required by the tax authorities.
- The company should have identified in advance all areas where there are significant differences between the IFRS and the Greek tax law or for matters dealt with in the IFRS for which limited or no specific provisions exist in the Greek tax law.
- The interface between the IFRS books and the amounts representing the tax basis needs to be integrated within the entity’s M.I.S. and IT environment.
- Human resources need to receive appropriate training.
Furthermore, a Ministerial interpretation issued in 2006 set specific rules on the corporate taxation upon distribution of earnings reported only under IFRS.
Taking all the above into consideration, we believe that with timely action may enable companies to achieve:
- Tax compliance for companies adopting IFRS for the first time.
- Smoother transition as far as tax law provisions are concerned.
- Prevention of excessive corporate taxation due to distribution of earnings reported only under IFRS.
- Proper integration of IFRS – tax reporting interface within the company’s IT structure.
- Relatively less additional workload for personnel involved.
