A significant boost to the business landscape has arrived thanks to a legislative amendment spearheaded by Minister of National Economy and Finance, Kyriakos Pierrakakis. This new law addresses a longstanding issue affecting countless shareholders, company members, and executives who have seen their personal assets “frozen” by tax authorities due to company debts, even when these debts are being repaid under an arrangement.
Per the new provision unveiled by Proto Thema, all company directors, managers, shareholders, and members can now sell or donate their personal real estate—including parental gifts—even if the company they are associated with has outstanding debts to the state. Although these individuals remain jointly liable for those debts, they can now obtain a tax clearance certificate that allows for property transfer without withholding any of the proceeds.
Two conditions must be met for this to apply:
The company must have legally addressed all its debts (e.g., VAT obligations), either by adhering to a repayment plan or if its debts are suspended due to legal reasons, a court ruling, or a decision from the Dispute Resolution Directorate of the Independent Authority for Public Revenue (AADE).
Additionally, individuals wishing to transfer their property must either have no ownership links to the company or must hold a very limited stake (less than 5%).
Transfer with “Mortgage”
The regulation also allows property transfers even when individuals (such as executives or company members) own more than 5% of a company with debts to the state.
In these instances, the withholding rate imposed by the state will be significantly reduced—from 70% to just 7%, representing a reduction of up to 90%. However, to secure this lower rate, in addition to having the company’s debts regularized, the seller must provide another property as collateral to cover the remaining amount (between 7% and 70%) not withheld during the sale.
Parental Donations – Gifts
This regulation will also benefit those facing company debts as jointly liable parties who are not selling for profit—like when a manager wants to donate property to their children. Transfers will be allowed as long as the property being given is mortgaged in favor of the state.
This means the transferred property can serve as collateral, ensuring the state can recover debts if the company fails to comply with its repayment arrangement or loses legal suspension of its debts.
What the Regulation Will Encompass
The provision will be incorporated into Article 12 of the Tax Procedure Code (Law 5104/2024), redefining the criteria for issuing tax clearance certificates for property transfers or establishing property rights. It effectively liberates shareholders and current/former company executives from being held “hostage” due to corporate debts owed to the state.
The new regulation, designed by AADE head Giorgos Pitsilis, will offer:
Full exemption for minority shareholders, company members, or executives with no ownership link to the company or those with a very limited stake (up to 5%).
Specifically, it will state:
“When a tax clearance certificate is requested for real estate transfer or establishing property rights, debts legally registered and settled by the legal entity will not be considered for the jointly liable individual requesting the certificate, provided they did not hold more than a five percent (5%) stake in the company’s ownership or structure during the last two years of their tenure.”
Reduced Withholding
Essentially, the tax administration will only consider the settled debts (not merely confirmed debts) of a company when a jointly liable natural person requests a tax clearance certificate for transferring personal real estate. This applies if they held no more than 5% ownership (including direct or indirect holdings of their spouse, civil partner, or close relatives up to the second degree) in the legal entity during the last two years of their tenure.
Specifically, the provision states that “any participation in the shareholding or ownership structure of the legal entity also covers direct or indirect participation by the spouse, civil partner, or relatives up to the second degree of the jointly liable person.”
Reduced Withholding for Individuals with Significant Ownership
If an individual owns more than 5% of the shares or ownership in a company, withholding on the property sale price will still apply, but at a dramatically reduced rate—up to 90% less than the current rate. Therefore, withholding could be as low as 7% instead of up to 70%, as it currently stands.
According to the new provision:
“If the applicant’s participation in the company exceeds 5%, the withholding rate may be reduced to as low as 7% of the sale price, provided that the remaining debt—representing the difference between the withheld amount and the standard withholding rate (70% if debts are under settlement, or 50% if in suspension)—is secured through guarantees or liens, such as mortgaging an unencumbered property.”
To benefit from this reduction, the individual must furnish collateral, such as a mortgage on another property, to cover the “remaining debt” — the difference between the reduced withholding (e.g., 7%) and what would otherwise have been withheld (e.g., 70% or 50%).
The value of the collateral provided by the shareholder or partner is assessed at 80% of the objective market value of the property offered as security:
“For calculating the real security, 80% of the objective value of the pledged property is considered.”
Protection After Departure
If a manager or board member sells property and uses another property as collateral while the company adheres to its debt arrangement, and later leaves the company, they will not be held liable for any future defaults. This means they will not face claims against their personal assets for debts that arose after their departure (as per Article 49 of Law 5104).
Ending the “Hostage” Situation
Previously, individuals like shareholders (regardless of their ownership percentage), board members, managers, presidents, CEOs, and sometimes even their spouses or close relatives faced severe restrictions when trying to transfer personal real estate.
Jointly liable with the company for public debts (such as tax, insurance, etc.), the state could target their personal assets for claims, even if the company was paying its debts through an established arrangement.
As a result, any property transfer or real right registration required a tax clearance certificate, which was often difficult to obtain. To ensure tax collection, the state prevented the transfer of personal property belonging to those who were jointly responsible.
This situation meant even individuals with minor stakes in a business—like a café owner or a former board member—could have a substantial part or even all of the proceeds from the sale of their personal real estate withheld. In some cases, especially for transactions without consideration (such as gifts), obtaining a clearance certificate was nearly impossible, effectively blocking such transactions.
This created market distortions and injustices. Individuals without actual control over company finances—or who had left the company years earlier—were trapped, unable to manage their personal assets. This threat negatively impacted their finances and discouraged many from taking on managerial roles or becoming shareholders.
These strict measures were implemented during the financial crisis to prevent massive transfers of assets to family members or third parties (sometimes referred to as “straw men” or individuals willing to assume risks) to evade state seizure.
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