Tax neutrality and substantial benefits for businesses
For many years, corporate transformations in Greece were approached with caution, mainly due to fragmented tax provisions that created uncertainty regarding the tax treatment of critical issues. Following the practical and interpretative issues of Law 4935/2022, Law 5162/2024 changes this situation and, as its application in practice already shows, comes to reposition corporate transformation at the core of business strategy.
The new law introduces a unified, modern, and more friendly framework of tax neutrality for domestic and cross-border corporate transformations. It applies to all types of transformations, mergers, demergers, conversions, or contributions of individual businesses. In essence, companies can reorganize, consolidate or separate activities, or change their legal form without triggering tax liabilities from capital gains or asset transfers.
Of particular importance was the recent publication of Circular E.2088/2025 by the Independent Authority for Public Revenue (IAPR), which specified and clarified how the provisions of the law should be applied. The circular provides clear guidelines on the eligibility requirements, procedures, and limits of tax incentives, without limiting itself to a general repetition of the law, but proceeding to interpretative clarifications that are of direct interest to entrepreneurs. It explains which actions are considered eligible transformations, when the condition of tax neutrality is fulfilled, and how critical issues such as the transfer of tax losses, depreciation, and the continuation of tax values in the new structures are handled.
The tax incentives do not only apply to “large” mergers, but also to more everyday business decisions, such as the contribution of a sole proprietorship to a company or the restructuring of groups with more than one activity. At the same time, clear limits are set on abusive practices, ensuring that the framework addresses genuine business transformations carried out for legitimate economic reasons.
In fact, the new law, together with Circular E.2088, has increased market confidence. Businesses and advisors now know that there is administrative guidance and a common line of application, which reduces the risk of future disputes with the tax authorities. It is no coincidence that since the beginning of 2025 there has been increased interest in mergers, demergers, and conversions, as well as in more complex cross-border planning within the European Union.
The first signs of the law’s implementation are already visible. Small and medium-sized enterprises are implementing mergers and demergers with the aim of reducing costs, better allocating functions, and strengthening their financial profile. At the same time, there is increased interest in contributions by sole proprietorships to corporate structures, as many entrepreneurs realize that they can now transition to more structured forms of organization without a disproportionate tax burden. At a more developed level, cross-border transformations within the European Union have also begun to take place, mainly by export-oriented or internationally oriented companies, such as the merger of a foreign company with a Greek company or the transfer of a company’s registered seat to and from Greece.
However, the real benefit of Law 5162/2024 is not limited to taxation. It concerns a change in mindset. Corporate transformation is no longer a defensive move but a tool for upgrading, growth, and competitiveness. In an economy that requires flexibility, scale, and speed of adaptation, the new framework offers something extremely valuable: the space and confidence to plan transformations that serve real business objectives. And for those who move quickly and in an organised manner, this could prove to be a decisive advantage.
Completion of the first cross-border conversion from Cyprus to Greece
In this context, pursuant to Law 4601/2019 and Law 5162/2024, the first cross-border conversion of a company from a Cypriot LTD to a Greek P.C. was successfully completed, marking an important step in the dynamic exploitation of new European and national regulations for cross-border transformations.
The conversion was carried out in accordance with the institutional framework for cross-border conversions, which provides for the possibility for a company to change its legal form and at the same time transfer its registered seat to another EU Member State while retaining its legal personality, easily and without tax costs.
In the current legal and regulatory environment, where managing companies from Cyprus to Greece no longer offers the same incentives as before, cross-border conversion to a Greek company is emerging as the most advantageous and practical solution for companies operating or investing in real estate in Greece. It leads to simplification of operations, as all tax, legal, and accounting issues are concentrated in Greece, reduction of expenses by eliminating operating costs in Cyprus, and tax security by avoiding audits from two countries.
The completion of this pioneering conversion is a landmark for Greece and paves the way for even more strategic business structure options between Greece and Cyprus. VDI Law Firm undertook the complete legal planning and implementation of the process, ensuring legal compliance, tax alignment and business continuity for the company.