Reduction of Capital Accumulation Tax rate for corporate capital increase

The recent Greek Law 4839/2021 (Government Gazette A΄181/02-10-2021) included important urgent measures to support the Greek economy and entrepreneurship in times of pandemic, with the most important being the generous tax reductions and exemptions. In particular, a new regulation is introduced regarding the reduction of the Capital Accumulation Tax.

Specifically, Article 21 of Law 1676/1986 was amended, and the rate of Capital Accumulation Tax for corporate capital increases is reduced from 1% to 0.5%, for capital increases that will take place from 01.10.2021 onwards. Thus, for example, in case a Private Company wishes to increase its capital by 400,000 euros, whereas under the previous regime it would have to pay a tax of 4,000 euros, under the new regulation it will have to pay a tax of 2,000 euros.

By comparison, it is worth noting that for financing a company with a loan instead of a capital increase, the stamp duty rate is 2.4%, and that the stamp duty rate for financing from a partner’s deposit instead of a capital increase is 1.2%. Therefore, between the options given by the legislator to companies that seek further financing, the capital increase remains the most advantageous. Finally, it is noted that the Capital Accumulation Tax on the establishment of new companies has been abolished, and is therefore only imposed on subsequent increases.