INDEX

  • Investment of Foreign Capital
  • Repatriation of Foreign Capital
  • Restrictions on International Investment (Exchange Controls)
  • Foreign Currency Earnings
  • Foreign Currency Accounts
  • Travellers
  • Drachmae Bank Accounts of Non-resident
  • Blocked Funds
  • Current Transactions
  • Greek Residents Investing Abroad
  • Restrictions on International Investment (Business Regulations)
  • Trade Practices
  • Anti-Trust Regulations

INVESTMENT OF FOREIGN CAPITAl

Capital movements between Greece and other EU states have been liberalised. Importation of foreign currency is unrestricted. Exportation of foreign currency is also unrestricted except that it must still be effected through the commercial banks which will check the authenticity of the transaction. Under the provisions of Presidential Decrees 96/1993 and 104/1994 concerning the freedom of movement of capital between Greece and foreign countries, the repatriation of capital arising from the liquidation of an investment and the export of profits, dividends, interest etc. by persons residing outside of Greece is permitted.

Since 1994 there is no need to obtain prior approval regarding investments made in Greece by non-residents and there are few restrictions on foreign investment participation. The following are the exceptions where restrictions do apply:

- Ownership of real estate in border areas.
- Ownership of shares in real estate companies.
- Ownership of shares in private radio or TV companies.

There are also limitations for non-EU residents participating in airline companies, shipping interests and mining interests.

REPATRIATION OF FOREIGN CAPITAL

Previously, approval from the appropriate authority had to be obtained prior to the importation of capital funds or prior to effecting a capital transaction in order for profits and/or proceeds of disposal to be transferred abroad at a later date. In accordance with Presidential Decrees 96/1993 and 104/1994, such prior approval is no longer required and all transfers are now effected through the commercial banks in Greece. When approving such transfers abroad, the commercial banks are responsible for investigating the authenticity of transactions and accordingly they request documentation to show that the transaction (including the importation of capital/capital investment) in fact took place and was authentic. For capital movements, it is recommended that a Currency Conversion Certificate (commonly referred to as the "Pink Slip") be obtained at the time of importation of the capital and that it be properly completed.

RESTRICTIONS ON INTERNATIONAL INVESTMENT (EXCHANGE CONTROLS)

Any foreign exchange control restrictions which had not been abolished in recent years have been almost completely lifted during 1994.

The importation of foreign currency into Greece is unrestricted and the exportation of foreign currency is also no longer subject to restrictions. However, all exportations of foreign exchange must still be effected through the commercial banks which will review the authenticity of the transactions, requesting supporting documentation. Receivables may be used to offset payables in foreign exchange.

Foreign Currency Earnings

Greek exporters of goods or services are now permitted to maintain all of their foreign currency receipts in foreign currency bank accounts with banks operating either in Greece or abroad. All other profits, commissions, or other benefits in foreign currency earned by Greek residents from the provision of services in Greece to persons established abroad, or receiving rents from the leasing of immovable property in Greece, or the proceeds from the sale thereof are obliged to sell the foreign currency received to an authorised bank within a reasonable period of time of the receipt thereof unless such funds will be spent to cover investments or obligations arising abroad in foreign currency.

Foreign Currency Accounts

Both residents and non-residents may maintain foreign currency accounts with banks in Greece. Such accounts may be credited only with foreign currency which is not required to be assigned to the Bank of Greece, as in the case of residents' earnings from employment abroad, proceeds from disposal of foreign assets, inheritances etc. The funds and interest thereon may be freely transferred abroad by residents and non-residents.

Travellers

Residents

There are restrictions on the amount of foreign currency provided in exchange for drachmae which residents may obtain as travelling allowances for holidays or business, although the limits have been raised substantially and are now up to 2 000 ECU for each trip without the need to provide supporting documentation.

Non-Residents

Persons permanently residing abroad are permitted to freely re-export cheques, letters of credit etc. in foreign currency, which are issued directly to their name (not by endorsement) as well as travellers cheques in their name. Foreign bank notes up to a certain amount, not declared upon entry into Greece may be carried by non-residents on leaving Greece, provided they have not remained in Greece for more than one year. The amount of Greek bank notes which may be carried by travellers to and from Greece is limited.

Drachmae bank accounts of non-residents

Non-residents may maintain bank accounts in drachmae. Such accounts may be credited with either drachmae which have arisen from the conversion of foreign currency to drachmae and the relevant currency conversion certificates (commonly referred to as "Pink Slips") have or will be issued for that purpose or with drachmae from other sources.

The drachmae may be re-converted (or converted) into foreign currency and remitted abroad or used for other transactions in foreign currency.

Blocked Funds

Blocked funds arising from certain transactions (e.g. sale proceeds from certain real estate, tax refunds), where the recipient was in the past obliged to deposit the relevant amount in a blocked account with a bank in Greece, have been abolished. Accordingly, proceeds from such transactions are no longer placed in blocked accounts and release of previously blocked funds requires only an application by the beneficiary to the Bank of Greece.

Current Transactions

Payments to EU residents and non-EU residents for purchased goods and services including construction, engineering, information, services, remittances of profits and dividends etc. are freely permitted. Prior permission of the Bank of Greece is no longer required for purposes of monitoring such payments and transfers and all payments are now effected through the commercial banks who are responsible for reviewing the authenticity of such transactions.

The Ministry of National Economy maintains that in most situations, the payment of royalties to residents of non-EU countries requires the prior approval of the Ministry of National Economy. Until 1993, this approval was also required for royalty payments to EU residents.

Greek Residents Investing Abroad

Greek residents are allowed to make direct investments, investments in real estate and enter into transactions in securities abroad. Greek residents are obliged to import the proceeds of liquidation of such investments within a reasonable time from liquidation, unless such proceeds are reinvested or deposited in foreign bank accounts or used to settle obligations abroad.

RESTRICTIONS ON INTERNATIONAL INVESTMENT (BUSINESS REGULATIONS)

The use of company names is subject to prior approval from the local Chamber of Commerce. A licence or authorisation is required before companies can carry out business in certain sectors such as banking, insurance, defence, and oil exploration. Prior permission from the proper authorities is required before real estate in border areas (or shares in companies owning such real estate) can be purchased by EU and non-EU residents. Generally, there are no other restrictions on foreign ownership, although conditions for securing licences in certain sectors may require a minimum participation by EU residents.

Trade Practices

As a means of protecting consumers and in an attempt to curb inflation, price controls have been imposed in the past on a wide range of essential products and services. Such controls, have taken the form of setting either maximum selling prices or maximum profit margins. Progressively, price controls have been relaxed in Greece and today only a few products (mainly foodstuff) are subject to price controls.

Other controls over quality, product labelling, safety, advertising, etc. of products, are also exercised by the Government. The controls are primarily exercised by the Ministry of Trade through the "Consumer Protection" and "Price Control" departments and the Ministry of Social Affairs through the "State Laboratory for Drug Control" and the "Public Health Office".

Anti-Trust Legislation

Greek legislation prohibits business agreements or practices that directly aim at or indirectly result in the hindrance of free competition.

The prohibited agreements and practices include those which restrain production, sales, prices, the allocation of supplies, resources or markets, obtaining or offering of additional uncontracted remuneration and the unjustifiable refusal to buy or sell goods and services.

Certain fields such as telecommunications, radio and television services, power supply, postal services, rail and air transportation and certain statutory audits were under monopolistic Government control. Following a privatisation programme, the Greek Government may retain control of 51% only of the shares of the telecommunications, power supply and air transportation sectors.

The Ministry of Trade monitors adherence to the anti-trust regulations, violations of which can result in fines being imposed and imprisonment of the persons responsible.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information contact Marios T. Kyriacou, KPMG Peat Marwick Kyriacou, Athens, Tel: +301 77 52 001; Fax: +301 77 04 182 or enter text search 'KPMG Peat Marwick Kyriacou' and 'Business Monitor'.