Greece vs “Lender Corp”, March 2020, Court, Case No A 638/2020

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“Lender Corp” had received a loan from a related party for repayment of outstanding dividends to its shareholders.

The tax authority disallowed Lender Corp’s interest expenses on the loan. They found that the receipt of the loan was not in compliance with the provisions of paragraph a of Article 22 of Law No. 4172/2013, since the loan capital was not used in the interest of the company. Although the funds were made available for the fulfilment of obligations, they did not contribute to the generation of income or the development of the company’s business.

Hence interest on the loan was considered as a non-deductible business expense.

Lender Corp then filed an appeal.

Judgement of the Court

The court dismissed the appeal of Lender Corp and upheld the decision of the tax authorities.

“As is evident from the information in the file of the present appeal, on 25.06.2015 the General Meeting of the shareholders of the company ” ” decided to distribute a first dividend and an additional dividend from the profits of the fiscal year 2014 and previous ones, totalling € 39,600,000. However, due to a lack of cash to cover the related obligation, the Company obtained loans of €12,300,000 and $23,200,000 during the 2015 tax year from the affiliated company ” ” at interest rates of 3.4% and 4.8%, respectively. The loan amounts were paid on behalf of the Company, by the lending company, directly into the bank accounts of its shareholders in repayment of dividends due to the borrowing company.

Because it follows from the above that the interest paid by the company ” ” on a loan received from a foreign affiliated company to cover the dividend (first and additional) distributed to its shareholders is not deductible from its gross income, since paragraph (a) of Article 22 of Law 4172 is not fulfilled. /2013, since the loan amounts received were not used by the company in its interest, since although they were made available for the fulfilment of the company’s relevant obligation, they did not contribute to the creation of income or the development of its business and, therefore, the applicant’s claim is rejected as unfounded.


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