Greece has dramatically changed the tax treatment of Contracts for Difference (CFDs), removing value-added tax and other transaction charges on the popular derivative instruments in a move aimed at making the country's financial markets more competitive.
Under a new circular issued by the country's Independent Authority for Public Revenue, payments arising from the settlement of CFDs will no longer be subject to Greece's 24% VAT rate, reversing the tax authority's previous position that gains from over-the-counter derivatives generally fell within the scope of the levy.
The policy change follows a review by the European Union's VAT Committee, which concluded that payments made under CFD agreements do not constitute consideration for a service. Instead, the payments depend entirely on market price movements and other risk factors, placing them outside the scope of VAT.
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CFDs allow investors to speculate on the price movements of assets such as stocks, commodities or currencies without owning the underlying securities. The parties to a CFD agree to exchange the difference between an asset's price when the contract is opened and when it is closed.
For example, an investor who enters into a CFD when a stock is trading at €100 and exits the position after the price rises to €110 would realize a gain of €10 per contract. Under the new rules, that profit would not be subject to VAT.
The Greek tax authority also clarified that settlements arising from CFDs will not be subject to the country's Digital Transaction Fee. In addition, no stamp duty will be sought on CFD transactions carried out before Nov. 30, 2024, when the levy was abolished.
The changes create a significantly more favorable tax framework for CFDs in Greece, lowering transaction costs for investors and potentially boosting demand for derivative products. The new regime could also encourage some investors to shift capital from traditional equity investments toward the CFD market.
