Company Incorporation

In Greece since 1923 has been established the personal and joint liability of the management of companies – initially the management of societes anonymes and gradually the rest company forms – for the certified corporate tax liability to the State. Today, the liability is regulated by the provisions of the Art. 50 of the Tax Procedure Code (L. 4174/2013, hereinafter referred to as TPC), according to which, essentially, provisions of the previously in force Art. 115 of the L. 2238/1994 were largely transferred and reformulated, expanding, nonetheless, their subjective and objective scope. A basic differentiation of the current law is the establishment of personal liability for the management of any legal person or legal entity and therefor any company type, in contrast to the exhaustive enumeration of specific company types of the previous legislative regime.

According to the 50 (1) of the TPC, the individuals who are managers, presidents, administrators, managing directors, chief executives to the management and liquidators of the legal persons and the legal entities at the time of their dissolution or merging, bear a personal and joint liability for the tax payment, the interests and the penalties, for which the legal persons and legal entities are liable, along with tax withheld, regardless the time of their assessment. In the eventuality that two legal entities merge, the entity that conglomerates the other or the new legal entity established by the merger bear joint liability along with the aforementioned individuals, for the payment of the liable taxes, as mentioned in the previous paragraph, of the dissolved legal entity, regardless the time of their assessment. Consequently, the above mentioned liability is established initially at the dissolution or the merger of the legal entity. The concept of the winding-up of a company, in line with the settled case-law with reference to the relevant, previously in force, provision of the Art. 115 (1) of the L. 2238/1994, is referred to the dissolution of a company.

Nonetheless, the personal and joint liability of the company management, with regards to the latter’s tax liabilities, is not only restricted to the dissolution or the merger of the company, but it is also established during its operation. Specifically, as defined in the Art. 50 (2) of the TPC, the individuals referred to paragraph 1 are personally and jointly liable for the withholding tax, the VAT and all the attributable taxes, during the operation activity of the legal entity that they represent, as follows: a) If tax was withheld, all the individuals bearing one of the aforementioned positions from the expiry deadline of the tax attribution and after. b) If no tax was withheld, all the individuals, having one of the aforementioned position at the time that there was the obligation of withholding tax.

It is concluded, based on the aforementioned provisions, that, during the dissolution or the merger of a company, the liability of the company management concerns any type of taxes and penalties, as regulated by the TPC, as well as the proportionate interests. On the contrary, the management’s liability, during the operation activity of the company, is limited to the withheld taxes, the VAT and all the attributable taxes, and, consequently, the liability is limited with regards to the objective scope. Essentially, this differentiation has a historical origin, as the Legislator already by 1923 has established the corresponding liability only for the case of the dissolution of the company, justifying it on the need on behalf of the State to ensure, as far as possible, the collection of the legal entity’s tax, before its “disappearance”. In the course of time, the growth of the tax evasion along with the usual inadequacy from the part of the company to cover its tax debts from its own assets, has led to the expansion of the liability of the company management also during its operation, nonetheless, only for the aforementioned types of taxes, which due to their nature are subject to special “punishment”.

In addition to the above, the legal representatives of the companies, liable to single property tax (SPT, in Greek: ΕΝ.Φ.Ι.Α.), but also the liquidator or the temporary manager of the company, which has been wound up or is under mandatory management, are fully responsible along with the liable individuals for the payment of the interests and the penalties due to their actions or omissions (Art. 50 (5) of the TPC)[2]. The aforementioned joint liability of the legal representatives of the companies concerns only the interests and the penalties, resulting from the non-payment or late payment of the SPT (ΕΝΦΙΑ) or other relevant infringements, and it is applied during the operating activity of the company. In contrast, the joint liability for the payment of the SPT (ΕΝΦΙΑ) due by the company, arise at the stage of the dissolution of the company, according to Art. 50 (1) of the TPC. A substantial differentiation of the paragraph 5, in relation to the other paragraphs of the Art. 50 of the TPC, is the additional condition of the causal link between the imposition of the said interests and penalties on the company and the actions or omissions by its legal representatives, liquidator or the temporary manager.

The jointly liable individuals along with the company, may exercise any right that the company would have, against the Tax Administration authorities, according to the aforementioned provisions of the Art. 50 of the TPC. This could be accepted as a case-law, even without the adoption of the aforementioned provision, nonetheless, with this provision it is strengthened and becomes indisputable, a fact of particular importance given the heavy liability established by the provisions said.

With art. 41 (6) of the L. 1640/1919 (“code of laws for the proceeds of taxation”, as it was included to the aforementioned law with its amendment by the art. 19 (1) of the Statutory Order  of the 19^th of March 1923

As this provision was added to the Law with Art. 9 (3) of the L. 4223/2013.