Greece imposes 2 million euro fine for artificial capital increase

The Greek Tax Authority, through the Directorate for Dispute Resolution (DED), has imposed a tax and penalty exceeding 2 million euros on a single-member private company. The decision follows an investigation into a 149 million euro capital increase conducted by the company in 2020.

During the transaction, the company issued 14.9 million new shares with a nominal value of 1 euro each, but sold them at a price of 10 euros per share. While 14.9 million euros were recorded as share capital, the remaining 134.1 million euros were recorded as a share premium. The company only paid capital concentration tax on the nominal amount, arguing that the share premium portion was not taxable at the time of payment.

Tax authorities determined the transaction was an artificial arrangement designed for tax avoidance. Investigators noted that because the company remained single-member after the increase—with the sole shareholder covering all new shares—there was no commercial or economic necessity to issue shares at ten times their nominal value to balance rights between old and new shareholders. Furthermore, the company was loss-making and its existing shares had essentially zero accounting value at the time.