The specialist insurance broker, warned earlier this week that while the Greek government recently walked back an announcement that gains derived by non-resident owners of Greek government and corporate bonds are liable to be taxed, should not be viewed as a lucky escape from liability.
Rather, it said, it should be viewed as a “warning shot across the bows.”
Last month the Hellenic Ministry of Finance announced that any gains derived by non-resident owners of government and corporate bonds would have to be declared to the Greek tax authorities and would be subject to a tax rate of 33% for legal entities and 20% for solitary investors. The ministry subsequently cancelled the decision on May 15th, which Baronsmead said fears of immediate implementation. But, it says uncertainty on the issue remains.
According to David Heathfield, partner and general counsel at Baronsmead: “The retroactive tax issue has been a dark cloud on the horizon for a few of years now and continues to create significant financial uncertainties for many of our clients.”
He told Portfolio Adviser that the possibility of such an outcome remains until the government comes out and explicitly says it will not look to pursue outstanding tax liabilities.
“This seems very much like the ministry was dipping its toes into the water to test reactions,” he said.
According to the release issued on Monday, Baronsmead said that such exposure to such a tax liability, not just increase but across Europe remains a genuine threat.
“Tax authorities across Europe have long since been wrestling with whether to pursue outstanding tax liabilities of non-resident funds but the potential for the authorities to impose a retroactive tax remains very real. It is entirely possible that the recent activity in Greece will stimulate other jurisdictions to decide on a path of action which potentially could leave the asset management industry with huge tax liabilities.”
