A long-awaited legislative initiative recently came into force in Greece. Although primarily aimed at Greek undertakings, it could also interest foreign enterprises considering investing in Greece.
In Greece, the valuation of a company's intangible assets forms part of the company's balance sheet, the rules, requirements and details of which are basically governed by Law 2190/1920, in its various updates through laws and presidential decrees. The rules for assessing the value of goodwill and industrial property rights are set out in Article 43 of this Law. Moreover, a tax of 20% is imposed on all profits or benefits deriving from the transfer of a whole business with all its intangible assets, as well as on all profits or benefits deriving from the separate transfer of IP rights such as patents (Law 2238/1994, as revised by Law 2386/1996).
As a relief to the heavy financial burden involved in developing and carrying out innovative initiatives for a company, especially a small or medium-sized company, Law 3842/2010 entered into force in April 2010. Article 71 of this Law provides that a company's profits from the sale of a product of its own production, which was based on an internationally recognised invention in the name of the company and developed by the same company, is exempt from income tax for three consecutive years starting from the fiscal year within which revenues were obtained for the first time from the sales of the aforementioned product. The exemption is also granted when the products are manufactured in facilities owned by third parties. It also extends to profits deriving from services concerning the exploitation of an invention, which is also internationally recognised. The provisions of this Article have a retroactive effect and apply to sales or services as of January 1 2010.
Joint Presidential Decree 11970/B0012 of December 6 2010 set out the instruments recognising the invention, the conditions, circumstances, procedure and all necessary details for the application of the aforementioned provisions. As internationally recognised inventions are considered: European patents granted by the EPO and validated in Greece, and national patents - but not utility models - granted by the Greek Patent Office (OBI), that have also been filed and granted in another country that has acceded to the European Patent Convention or cooperates in its frame, or is a member of OECD, or is an accession candidate country or an enhanced engagement country. The patents must be in force at least until the last day of the fiscal year for which exemption from income tax is requested. The competent certifying bodies are the General Secretariat of Research and Technology - the receiving authority - and the Greek Patent Office, which after a substantial examination of each application transmits its positive or negative opinion back to the General Secretariat of Research and Technology for issuance of the final decision.
This development comes into force at a critical point for the economy of Greece and could provide a significant incentive for undertakings wishing to expand their inventive activity. However, it is also of significant importance to foreign companies that may wish to establish a presence in the Greek territory.