The bill on mergers and partnerships of small and medium-sized enterprises and related incentives is about to be submitted to Parliament. The bill is one of five categories of private investment that the Recovery Fund will finance.

The merger incentive package includes tax reductions for three years. Επίσης δάνεια με επιτόκιο 0,35% από το Ταμείο Ανάκαμψης. The bill has been under consultation from September 30 until the end of this week. It will then be submitted to parliament.

The merger expectations are part of the approximately 1,000,000 micro, small and medium-sized enterprises operating in Greece. The goal is to have a helping hand in order to look for the appropriate formula for cooperation. In this way, they will be able to gain access to bank lending and become more competitive in Greece and abroad. For this reason, large companies have been excluded from the incentives. More specifically, the incentives given per category of businesses:

Συγχωνεύσεις μικρομεσαίες επιχειρήσεων μέχρι 250 άτομα

In the case of a business transformation, the new company is given the incentive of exemption from paying income tax on the profits made before tax, at the rate of 30%. The following must be met:

(a) the total average turnover of the undertakings being transformed, taking into account the preceding three years, is at least equal to 150 % of the turnover of the undertaking with the highest average turnover among the undertakings being transformed over the preceding three years, and

(b) the turnover of the new company, that is to say, the sum of the turnover of the last approved and published financial statements of the undertakings being transformed, less the transactions between them, is equal to or greater than EUR 450 000.

Cooperation between persons

In the case of mergers of companies and cooperation of persons, the incentive of exemption from income tax is granted to each cooperating person. The exemption is made on the 30% pre-tax profits made. The following conditions must be met:

a) in the case of cooperation and mergers carried out pursuant to the establishment of a new legal person or another legal entity, each of the cooperating persons must have contributed to the share capital of the legal person or legal entity being established an amount equal to at least 10% of its share capital and the share capital of the new legal person or legal entity may not be less than EUR 150,000,

(b) where the cooperation is carried out under a contract or contract farming agreement, each of the cooperating producers contributes quantities of products equal to at least 40% of the total quantity of identical or similar products of its production.

Sole proprietorships

In the case of conversion of a sole proprietorship into a partnership or any other form of company, or in the case of a merger of sole proprietorships for the purpose of creating a legal person or legal entity, the new company is given the incentive of exemption from the payment of income tax on the profits made before tax, at a rate of 30%. The conditions are as follows:

(a) the sole proprietorship being converted or the cooperating sole proprietorships have been established at least three years before the date of the conversion or the start of the cooperation;

(b) the new company keeps accounting records using the double-entry system, and

(c) in the case of a merger of several sole proprietorships, the turnover of the new company is equal to or greater than 150% of the turnover of the sole proprietorship with the highest average turnover of the transforming companies in the last three years.

How the exemption will be applied

1. The tax exemption in the above cases applies for up to 3 tax years. The validity is set from the next year of the date of completion of the form transformation. At the same time, it also applies from the date of commencement of any form of cooperation.
2. In the case of business transformation and conversion or amalgamation of sole proprietorships, the tax benefit may not exceed EUR 1 000 000 within up to three years from the date of application of the tax exemption.
3. In the case of cooperation between persons, the tax benefit may not exceed EUR 100 000 for each of the cooperating persons. It is calculated on the profits arising from the partnership for each of them. The period shall be up to 3 years from the date of application of the exemption.
4. This does not apply to construction consortia. Also in the transformations and collaborations in which construction consortia participate.
5. Where the partnership is established under a franchising agreement, the incentive for exemption is given solely in favour of the franchisee.

Μεταφορά ζημιάς των επιχειρήσεων μέσα από τις συγχωνεύσεις

Where the liabilities of the persons being transformed have a balance of losses for current or previous financial years, this shall be shown in a separate item in their balance sheet and in the balance sheet of the new company. The loss carried forward to the balance sheet of the new company in an amount which may not be set off against profits existing at the time of transformation shall be set off against the resulting profits of the new company in the current financial year or years, only to the extent that it is recognised for tax purposes in accordance with the general provisions on income tax. The turnover, i.e. the sum of the turnover, must be equal to or greater than 450,000 euros. The amount of the unrecognised loss to be offset may be amortised each year. There will be no right to deduct from gross income or set off against the profits of the new company.