As part of a broader draft bill to strengthen the country’s capital markets, a key provision will now allow credit institutions involved in mergers to transfer and carry forward tax losses.
Until now, Greek banks undergoing transformations were subject exclusively to the provisions of Article 16 of Law 2515/1997.
These provisions had remained largely unchanged for years, primarily due to the strict regulatory approvals required by the Bank of Greece and the Ministry of Finance. Under the updated framework, the rules are being modernized and expanded. Specifically, a new provision from Law 5162/2024 now applies to bank mergers, granting acquiring banks the ability to carry forward the tax losses of absorbed institutions.
In practical terms, this means that when two banks merge, the surviving or acquiring bank can now inherit the tax losses of the bank it absorbs and offset those losses against its future profits. Previously, those losses were effectively erased in the process, which meant the acquiring bank had to pay full taxes on its earnings, regardless of the financial history of the absorbed entity.
For instance, if Bank A merges into Bank B, and Bank A has accumulated €20 million in tax losses from previous years, Bank B can now use those losses to reduce its future tax liability. If Bank B reports €10 million in profits the following year, it can apply part of the inherited losses to offset the full amount, resulting in no tax due on those profits. Under the previous regime, this would not have been possible—those €20 million in losses would have been lost in the merger.
The law also covers spin-offs. If a bank separates a specific division and transfers it to a new entity, the new company can carry forward losses incurred by that particular division—as long as those losses are directly related to the activity being transferred. This ensures that the provision is not abused to shift unrelated tax losses between companies.
