The recently adopted Joint Ministerial Decision (JMD) under number 39937/2021 set the conditions to activate the provisions on tax exemption introduced by L. 4712/2020. In this context, the JMD makes the application of the tax exemption regime conditional on the affiliation of the person concerned to the concept of “Angel Investor”. To this end, there are certain prerequisites to be fulfilled; namely, the individual must participate in the share capital of a Greek based company, registered with the Elevate Greece web registry (start-up registry), with the purpose of contributing to the latter’s development, provided that he is a Greek or foreign tax resident having a Greek TIN and that he participates in the share capital of the Greek company (whether a Société Anonyme, a Limited or a Private Company) in accordance with the ways described in the newly adopted JMD.

The individual who complies with the above conditions falls within the scope of Angel Investor provisions and, therefore, is entitled to an annual tax deduction equal to 50% of the contributed capital, provided that he has not invested an amount exceeding €300.000 in three different start-up companies (i.e. €100.000/company per fiscal year). The contribution must take place through a capital increase and the respective amount must be transferred from the Angel Investor’s Greek or foreign bank account to a Greek bank account of the beneficiary company evidenced only by the relevant bank documents.

Following the registration of the certification of the share capital increase’s payment with the Greek General Commercial Registry (GEMI), the start-up company undertakes to declare the capital contribution to Elevate Greece by submitting the documentation provided in the JMD.

What should be further pinpointed is that the JMD deals with all Angel Investors’ contributions made as of 29 July 2020, i.e. the date when the tax advantage regime became effective. It follows that every contribution that took place as of the abovementioned date, and for which the certification of payment of share capital increase has already been submitted to GEMI, must also be declared to Elevate Greece until the end of the month following the publication of the JMD. Therefore, the deadline for declaring to Elevate Greece share capital increases completed by 9 April 2021 is set on 31 May 2021.

Furthermore, in order for the Angel Investor to benefit from the tax advantages envisaged by the Law, the amount of the capital contribution must be indicated in the tax return of each respective year, provided that the capital contribution has been completed until the deadline for submission of the respective tax return. In case the capital contribution is eventually completed after the aforementioned deadline, the tax advantage shall apply to the year of completion. In the event the contributed capital is subsequently returned, either in full or in part, a modifying tax return must be filed.

The JMD reserves for the Greek Independent Authority for Public Revenue (AADE) the power to carry out audits regarding the compliance of Angel Investors and start-up companies with the provisions laid down by the JMD, particularly when it comes to the connection between the contribution to a capital increase and the purpose of the development of a start-up company. If such audits prove that the investment was intended solely for the purpose of gaining a tax advantage by the Angel Investor, AADE is entitled to impose a fine to the latter equal to the amount of the tax benefit sought.

To conclude, the JMD firmly seeks to motivate individuals to invest in start-ups and to receive respective tax deductions in return. To the extent it is properly applied, the new regime seems capable of attracting funds tailored to the needs of Greek businesses. For more information on Angel Investors’ regime and implementation thereof, please contact us.