The exemption was introduced in 2019 through Article 20 of Law 4646/2019, which amended the country’s income tax framework. Under the rule, capital gains earned by a company from selling shares in another company are fully exempt from taxation, provided three conditions are met: the seller is a tax resident of Greece, it holds at least 10 percent of the company’s share capital, and it has maintained that stake for a minimum of two years. While designed to encourage investment and corporate restructuring, the provision has in practice enabled large business groups and investment funds to realize substantial profits without any tax liability.
The fiscal impact of the measure is documented in Greece’s annual tax expenditure reports. Forgone revenue reached €59.4 million in 2020, rose to €128.6 million in 2021, and then surged dramatically to €409.47 million in 2022. Although losses fell back to €65.33 million in 2023, they climbed again sharply in 2024 to €597.5 million. Taken together, the figures point to a cumulative revenue shortfall of €1.26 billion between 2020 and 2024 from a single category of income.
These numbers have intensified debate over Greece’s broader tax strategy. Critics argue that the exemption amounts to a de facto redistribution of income in favor of the strongest economic actors, at a time when fiscal policy remains tight in other areas. Measures such as reducing indirect taxes, adjusting income tax brackets for inflation, or expanding social spending have faced constraints, prompting questions about policy priorities. According to this line of criticism, the revenue lost through the capital gains exemption could have supported public healthcare, education, social protection, or infrastructure investment.
When placed in a European context, Greece’s approach stands out for its generosity. In Germany, capital gains from share sales by companies are generally taxable, although a partial exemption applies, with 95 percent of the gain excluded and the remaining 5 percent effectively taxed. France follows a comparable model, taxing a small portion of the gain as a deemed expense rather than granting a full exemption.
Other countries have moved further away from blanket relief. In Italy, exemptions are subject to strict holding and participation requirements, and part of the gain remains taxable in order to limit abusive arrangements. Spain has abandoned full exemption altogether, now taxing 5 percent of capital gains to ensure a minimum fiscal contribution.
Even in jurisdictions known for investor-friendly regimes, safeguards are more robust. The Netherlands applies a participation exemption only where stringent substance criteria are met and where holdings reflect genuine business activity rather than passive investment or tax planning. Similarly, Sweden and Denmark allow exemptions for corporate shareholdings, but clearly distinguish between strategic investments and purely financial transactions, backed by strong anti-abuse rules.
