Discussing the impact of Europe’s economic crisis on Greece & Cyprus, the consequences pertaining to development of further tax law, and the subsequent challenges of company formation in these countries, is Kostas Kremmydas of Konstantinos Ch. Kremmydas, a boutique law firm based in Greece & Cyprus.
The global economic crisis, the beginning of which was directly related with the Iheman Brothers’ collapsion, also caught Europe totally unprepared, with the governments of southern Europe, and first of all Greece & Cyprus, facing the biggest problem.
The economic crisis was a huge stain on their financial systems, and resulted in the imposition of a “capital controls” measure; in Cyprus, March of 2013 (where this system was abolished in April of 2015), and in Greece in the end of June of 2015, where unfortunately this system is still being applied.
Simultaneously, in Greece the imposition of financial memorandums by our creditors was followed by a huge increase in tax rates on enterprises, and in relevation with the capitals movement’ controls, this created economic suffocation in their viability, as also in their general possibility of further development.
Today, tax rates applied on enterprises in Greece are up to 29% and devidends are taxed at 15%, whereas in Cyprus the tax-rates stand at 12.5% while devidends are not taxable.
Finally, in Greece, centralization of the financial and all other control mechanisms, and moreover the reduction of commercial banks along with the increase of tax and other controls, which refer to earlier than 10 years controls and the rapid rythms of clampdown on preventive measures by authorities (i.e. freezing of funds/accounts commitments), in connection with the multi-law effect in tax cases, intensify the unstable enterpreunership’s development environment.
The situation described above has resulted in the creation of a non-friendly environment for development, both of the already existing and the upcoming enterpreunerships in Greece, and moreover in the phenomenon of enterpreneurs seeking a way for their business ideas to develop in foreign countries.
Research into base of operation, and ways of its development, now takes place both in Cyprus and in Balkan countries (mostly in Bulgary, Romania, Albania), where the tax system is favorable. Simultaneously, our ordinators search for legal support for the enterprises’ incorporation in the countries mentioned above, and moreover for a legal way of avoiding double tax imposition, and legal and tax payment support.
According to all mentioned above, in years to come, the land of development will concern mostly the enterprises in regards to their incorporation and their function (both according to the laws an in the tax section). Tax Law is constantly changing in Greece, as in the same way, continuous and deep changes take place in other legal segments (Urban Law, Commercial Law, Law of Insolvency), and as a result continuous information is requested to be provided to us both as lawyers, and also aimed to the further provision of legal support to our ordinators.
The information mentioned is being succeeded via email analyzing both the upcoming changes in legislation, and the proposals of solutions to future problems. Besides, our intention is not to resolve a case when the problem appears, but to prevent this with action taken before the problem appears.