Tax treatment of untaxed goodwill reserves from sale and lease back of properties

March 4, 2020

In cases businesses change their legal form based on clauses of development laws and in the case of sub-leasing of a property that has been leased to a third party, then the issue of taxing the untaxed reserves earned from the sale and the lease back rises.

The MoF has announced with a recent clarification that the exemption granted pursuant to the provisions of par. 3 (g) of Article 28 of Law 2238/1994 shall not be waived:

  1. When businesses change their form in accordance to the provisions of business development laws (L.2166 / 1993 and L.1297 / 1972), as well as to the provisions of L.4172 / 2013 (Articles 52 and 54), provided that such reserves are transferred automatically to the receiving company and appear in a special account in its books and
  2. When the lessee company subleases the property for which it has a leasing contract to another company, and only if subleasing the property does not fall under the Article 28 para. 3 case. Z, which would result to taxation of said reserve.

The aforementioned apply to contracts drafted before 1.1.2014 and are not subject to separate taxation of par. 12 of article 72 of L. 4172/2013.