These systems are global agreements that require countries to share financial information in order to prevent tax evasion. Because of the change, many more companies in Greece may now fall under these rules and will have to report more information to tax authorities.
Until now, Greece determined whether a company qualified as an investment entity by looking at its net income—the money left over after expenses and taxes. Under a new draft bill from the Ministry of National Economy and Finance, the government will instead examine gross income, which is the total revenue a company earns before subtracting any costs. Gross income is almost always higher, so using this measure will result in more companies being classified as investment entities.
Investment entities are companies whose main business involves financial activities such as buying and selling financial products, managing investment portfolios, or handling investment assets. A company can also be considered an investment entity if more than 50 percent of its income comes from investment activities that are managed by another financial institution. These rules are not changing.
What changes is that the government will now use the larger gross-income figure to decide whether those financial activities represent the company’s main source of revenue.
Some organizations will still be excluded, such as certain types of active non-financial businesses that already have exemptions under international standards. These exemptions will continue to apply.
By making this adjustment, Greece is bringing its national rules into line with the standards of the Financial Action Task Force (FATF), the international body that sets guidelines to fight financial crime. Many other countries already use the gross-income method, and Greece’s move is meant to ensure consistency and improve cooperation with international partners.
This change is expected to have a noticeable impact on Greece’s financial and corporate sectors. Companies that were previously outside the CRS and FATCA reporting requirements may now have to share financial information automatically with tax authorities. For many firms, this could mean new compliance obligations and closer monitoring of their financial activities.
