Capital Gains Tax on Transfer of Securities

Legal Insight

March 2025

Anta Tsogia, LL.M. (mult.)

Summary: Capital gains tax is a fundamental component of the modern tax system, playing a decisive role in economic activity and investments. It affects both individuals and legal entities during the transfer of participation titles. Understanding the relevant provisions is essential for proper application and compliance with the current legal framework, especially amid the modernization of the economic environment, digitalization of transactions, and the emergence of new investment products.

1. Introduction

Capital gains refer to the positive difference between the acquisition price and the selling price of an asset. In the context of title transfers, this gain is subject to taxation under the Income Tax Code (ITC) – Law 4172/2013, as amended and in force. Significant amendments were introduced by Law 4646/2019 and Law 4799/2021, which reduced tax rates. The critical importance of capital gains tax for economic activity and investments is also reflected in the recent OECD report (2024) on tax transparency, emphasizing the effective taxation of capital gains within the digital economy. According to European Commission data, 35% of cross-border transactions now involve digital assets, while cryptocurrency transactions exceeded €2 trillion in 2023, necessitating adjustments to the tax framework.

2. Basic Legislative Framework

A. Taxation of Individuals

According to Article 42 of the ITC, income from capital gains arising from the transfer of securities (e.g., shares, partnership interests, stakes in personal companies, limited liability companies, private companies, joint ventures, bonds, and financial derivatives) is subject to personal income tax unless it constitutes a business activity. The capital gain is taxed at a rate of 15%, as specified in Article 43 of the ITC.

B. Taxation of Legal Entities

For legal entities, income from the transfer of securities is considered business income and taxed at a rate of 22% under Article 58 of the ITC. However, Article 48A, introduced by Article 20 of Law 4646/2019, provides for exemptions under specific conditions to encourage investments and corporate restructuring.

3. Exemption Conditions for Legal Entities

Capital gains from title transfers are exempt from income tax for legal entities if the following cumulative conditions are met (Article 48A ITC, Circular E.2057/2021, and Circular E.2047/2022):

Type and Tax Residency of the Legal Entity: The transferring entity must be included in the types listed in Annex I, Part A of Directive 2011/96/EU and be a tax resident of an EU member state, subject to one of the listed taxes without exemption options.

Minimum Participation Percentage: The transferring entity must own at least 10% of the share capital or voting rights of the transferred entity.

Holding Period: The minimum participation percentage must be held for at least 24 months.

4. Special Cases and Exemptions

Certain transactions are exempt from capital gains tax, including:

Transfer of listed shares through an organized market, except where the seller holds more than 0.5% of the company’s share capital.

Transfer of domestic securities to securitization special purpose entities under Law 3156/2003.

Gains from the sale of shares in a Recreational Shipping Company (N.E.P.A.), which are subject to special tax treatment under Law 27/1975.

Transfers through donation or parental grant, which are subject to gift and inheritance tax under Law 2961/2001.

5. Calculation and Payment of Tax

Capital gains tax is calculated as the difference between the selling price and the acquisition price of the title. According to Circular POL. 1032/2015, acquisition costs include expenses directly related to the purchase or sale (e.g., legal and advisory fees). Negative capital gains (losses) can be carried forward for five years and offset against future capital gains. If securities were acquired through inheritance, donation, or auction, special rules apply.

Taxable transactions must be declared in the taxpayer’s income tax return. For legal entities, non-exempt capital gains are taxed at the corporate tax rate (22% in Greece following the reduction under Law 4935/2022, down from 24%).

6. International Tax Agreements and Taxation of Non-Residents

Foreign investors are subject to the provisions of Double Taxation Treaties (DTTs), which determine the taxing jurisdiction. Generally, capital gains are taxed in the investor’s country of residence unless otherwise provided (e.g., for entities holding Greek real estate). Non-cooperative jurisdiction residents must file an income tax declaration and pay a one-time tax. Greek taxpayers with foreign income may claim foreign tax credit under Article 9 of the ITC.

7. International Developments and Future Trends

Capital gains taxation is a dynamic field undergoing continuous reforms. Recent corporate tax rate reductions aim to enhance Greece’s economic competitiveness. The implementation of the EU’s ATAD 3 directive introduces stricter residency requirements and cross-border exemptions to prevent the misuse of “shell companies.”

Global initiatives focus on hybrid mismatches, controlled foreign companies, and aggressive tax planning. The European Commission and OECD advocate for stricter anti-tax avoidance rules, including a minimum corporate tax and transparency in cross-border transactions. The rise of digital assets, AI-driven financial transactions, and novel investment products presents new challenges for tax authorities. Greece is considering extending the 15% capital gains tax rate to cryptocurrency and NFT transactions by classifying them as financial derivatives under Article 42 of the ITC.

8. Conclusion

Capital gains tax on title transfers is a crucial tax mechanism aimed at taxing investment gains. Taxpayers—both individuals and legal entities—must understand its provisions to comply with the legal framework and benefit from available exemptions. The evolution of capital gains tax reflects the rapid changes in the global economy. Successful adaptation requires modernization of tax procedures and the adoption of new technological tools. Continuous monitoring of developments and compliance with new requirements are key to effective tax management.