Greece: Venture Capital Companies

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Greek venture capital companies (VCC) qualify for special fiscal incentives provided they have the following characteristics:

• The VCC has a minimum paid-up capital.
• The VCC is a PLC whose shares are freely transferable and quoted on the Greek stock exchange.
• The VCC invests in private companies which are not quoted on the stock exchange, and the VCC carries out its investment through the holding of shares in the target company or alternatively through the holding of bonds which can be converted into shares in the target company.

VCC pay the following corporate income tax rates:

• A 20% (at the time of writing) rate of corporate income tax on profits distributed to shareholders.
• No corporate income tax on corporate profits which are not distributed to shareholders but are retained within the company for reinvestment.

A venture capital fund in the Greek legal sense is a closed-end fund operating in line with the provisions of Law 2992/2002. Such funds are managed by dedicated VC fund management firms. Fund capital is preferably invested in companies active in key "new economy" sectors such as telecommunications, IT, e-commerce, biotechnology, new materials, and in companies whose competitive advantage is founded on the application of technology.

Companies established under Law 1775/1988, as amended, are eligible for subsidies of up to 30% of their investments in advanced technology or innovative enterprises. These companies may transfer to a tax free reserve an amount equal to 3% of the value at year-end of guarantees granted to, or securities held in, enterprises undertaking investments in high technology or innovative enterprises. Such tax-free reserve can be reduced without tax implications if the amounts by which it is reduced are recorded in accounts concerning further qualifying investments and guarantees. Interest earned from bonds issued by such companies is not subject to income tax. Any individual or corporation participating together with a Venture Capital company in effecting qualifying investments may deduct 50% of their investment from their turnover for tax purposes. However, only up to 25% of the investment may be deducted in any one year and the amount deducted may not exceed 50% of the total annual turnover.

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