Company Registration Digital Payments

Greece to Introduce Digital Transaction Fee, Ending Stamp Duty

The Greek government is on the verge of rolling out significant tax reforms designed to modernize the nation’s fiscal environment and streamline administrative procedures. A cornerstone of this legislative transformation is the introduction of the Digital Transaction Fee (DTF), a comprehensive overhaul that will replace the longstanding stamp duty.

This shift is seen as part of broader efforts to digitize Greece’s financial and administrative operations, offering a more transparent and predictable tax system for individuals, businesses, and the state alike.

The legislation is officially titled “Digital Transaction Fee and Other Provisions” and introduces a variety of new rules that impact not only private citizens but also businesses and their dealings with the public sector. The law has wide-reaching implications across various types of transactions, including loans, asset transfers, and property rentals.

In this article, we’ll examine the key elements of this law, focusing on its purpose, scope, and impact, as well as what it means for individuals and businesses operating in Greece.

An Introduction to Digital Transaction Fee (DTF) in Greece

The Digital Transaction Fee (DTF) will replace the outdated stamp duty system, which had been in place for nearly a century. The reform, slated to take effect in January 2025, was developed as a means of creating a more transparent and efficient method of collecting taxes on various types of transactions.

Under the new system, taxes will be levied digitally, making it easier for taxpayers and the government to process and track financial dealings. This move aligns with Greece’s broader goals of embracing digitalization, improving tax compliance, and reducing the administrative burden associated with older, paper-based systems.

The law applies to a wide range of transactions, covering both private and public dealings. These include, but are not limited to, leases, loans, sales of goods, and transfers of businesses or properties. By digitalizing the process, the Greek government hopes to eliminate many of the inefficiencies and complications that plagued the previous system, particularly when it came to the collection of stamp duty. The transition to the DTF is expected to offer a more predictable and stable source of revenue for the state while also reducing opportunities for tax evasion.

Scope and Application of the Digital Transaction Fee

The DTF is set to apply to transactions involving both individuals and legal entities, provided that at least one party has a tax residence or permanent establishment in Greece. In particular, the law focuses on a variety of contractual agreements, such as leases of real estate, loans, bank deposits, the sale of tangible and intangible goods, and the transfer of businesses. Notably, the DTF will also cover certain public sector transactions, such as leases involving government entities, compensations paid by or to the state, and subsidies or grants.

Transactions covered by the DTF will be subject to different rates depending on the nature of the agreement. For example, real estate leases that are not subject to VAT will face a rate of 3.60%, while loans and certain financial agreements may incur a rate between 2.40% and 3.60%. The law also specifies exemptions for certain types of transactions, such as those that fall under existing VAT regulations, inheritances, and other specific cases where other tax laws apply.

The fee is designed to be straightforward in its application. Parties involved in eligible transactions will be responsible for declaring and paying the DTF through Greece’s digital tax portal. The timeline for payment will depend on the nature of the transaction, with some fees due monthly, while others (such as real estate leases) will be due annually alongside income tax filings.

Digitalization and Transparency

One of the most important aspects of the new law is the emphasis on digitalization. Under the previous stamp duty system, transactions often required extensive paperwork, manual filing, and in many cases, face-to-face interactions with tax officials. The DTF, in contrast, will be fully digitalized, allowing taxpayers to declare and pay their fees online through a streamlined process. This shift is expected to reduce the administrative burden for both taxpayers and tax authorities, making it easier to track transactions, enforce compliance, and reduce tax evasion.

The digital nature of the DTF also promises greater transparency. Because the fee is calculated and paid electronically, there is less room for error or manipulation. Taxpayers can more easily calculate their obligations, and the government can more accurately track revenues. This shift is especially important given Greece’s long-standing challenges with tax evasion and underreporting of taxable transactions. By modernizing the system, the government aims to close loopholes and ensure that everyone pays their fair share.

Key Transactions Subject to the Digital Transaction Fee

The DTF will apply to a broad range of transactions, including those that occur between private parties, businesses, and even the public sector. Key categories of transactions subject to the fee include:

1. Leases of Real Estate: Real estate leases that are not subject to VAT will incur a DTF of 3.60%. Notably, leases for residential properties are exempt from this fee. The fee will be paid annually, in conjunction with the property owner’s income tax return.

2. Loans and Financial Transactions: The DTF will apply to loans and other forms of credit, including overdraft accounts and credit cards. The fee will range from 2.40% to 3.60%, depending on the nature of the transaction. For example, business-related loans and financial credits will generally incur a lower fee than personal loans or credits.

3. Sales of Goods and Transfers of Assets: The DTF will apply to the sale of tangible and intangible goods that are not covered by VAT regulations. This includes the transfer of intellectual property rights, such as patents and trademarks, as well as the sale of businesses. The applicable fee will depend on the value of the transaction and the nature of the goods being sold.

4. Public Sector Transactions: Certain transactions involving the government will also be subject to the DTF. These include leases of public properties, compensations paid by or to the state, and financial grants or subsidies. These transactions will be taxed at a rate of 3.60%, in line with similar private sector dealings.

5. Business Transfers: The DTF will apply to the transfer of businesses or business assets. In these cases, the fee will be based on the value of the business being transferred. If the business is being sold as a whole, the fee will apply to the total sale price; if only part of the business is being transferred, the fee will be calculated based on the portion being sold.

6. Settlements and Compensation Agreements: The DTF will also apply to settlements and compensation agreements between private parties, businesses, and the state. For example, if a legal dispute is settled with a financial payout, the DTF will apply to the settlement amount, typically at a rate of 2.40% or 3.60%, depending on the parties involved.

Exemptions and Exceptions

While the DTF will apply broadly across many types of transactions, there are several key exemptions. Transactions that are already subject to VAT will not be subject to the DTF, nor will certain transactions related to inheritances, donations, or parental grants. Additionally, financial institutions and certain government entities will be exempt from paying the fee on transactions that involve the public sector.

Notably, the law also includes specific provisions for the return of the DTF in cases where a transaction does not ultimately take place. For example, if a business sale is cancelled before completion or if a real estate lease is terminated early, the fee may be refunded, provided that the transaction was not finalized.

Impact on Businesses and Individuals

The introduction of the DTF represents a significant change for both individuals and businesses in Greece. For businesses, particularly those involved in real estate, financial services, and large-scale asset transactions, the new fee will require careful planning and management. Businesses will need to adjust their financial models to account for the DTF, especially when entering into new contracts or engaging in large transactions.

For individuals, the DTF will primarily impact those involved in real estate transactions or who engage in business activities. Property owners who lease out commercial real estate will need to ensure that they declare and pay the fee on time, while individuals taking out loans or selling business assets will also need to be aware of their obligations.

While the new system may introduce additional costs for businesses and individuals, it also promises a more transparent and predictable tax environment. By eliminating the complexities of the old stamp duty system, the DTF should make it easier for taxpayers to understand their obligations and avoid unexpected tax liabilities. Moreover, the digital nature of the system will reduce the administrative burden, allowing for faster and more efficient tax filings.

Individuals who are passionate about company registration in Greece must have a thorough understanding of the digital transaction fee. It will help them stay compliant.

The Phasing Out of the Stamp Duty

The phasing out of the stamp duty marks the end of an era for Greece’s tax system. First introduced in 1931, the stamp duty has long been a source of revenue for the state, applying to a wide range of transactions. However, the system has been criticized for its complexity, lack of transparency, and inefficiency. Many transactions were subject to cumbersome paperwork, and calculating the correct amount of stamp duty could be a confusing and time-consuming process.

By replacing the stamp duty with the DTF, Greece is taking a major step toward modernizing its tax system. The digital nature of the DTF eliminates many of the challenges associated with the old system, offering a simpler, more transparent, and more efficient way to collect taxes on transactions. While the transition may take time, the long-term benefits for both taxpayers and the government are expected to be substantial.

To Wrap Up

The introduction of Greece’s Digital Transaction Fee represents a bold move toward a more modern and efficient tax system. By phasing out the stamp duty and replacing it with a fully digitalized transaction fee, the Greek government is positioning itself to better manage its fiscal responsibilities in the digital age. The DTF is expected to provide a more transparent, predictable, and efficient method of collecting taxes, benefiting both the government and taxpayers.

For businesses and individuals, the DTF will require adjustments, particularly for those involved in real estate, financial services, or other major transactions. However, the benefits of the new system, including greater transparency and reduced administrative burdens, are expected to outweigh the initial challenges. As Greece continues to embrace digitalization, the DTF marks a significant step forward in the country’s ongoing efforts to modernize its economy and improve tax compliance.

To get expert assistance in registering your business venture in Greece and meeting compliance needs to run your business in a hassle-free way, visit https://enterslice.com/.

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