The new law on “Guarantees for investments and fostering of job creation and economic and social development” (No. 5542/2015) establishes a benefits regime that supplements the one established in Law 60/90. With a view to protecting capital investments in activities contributing to job creation and economic development, the law covers both domestic and foreign investments made in money or contributions of physical assets and technology.

For applicability, investors must submit their projects to an Investment Council and, if approved, an agreement is to be signed with the government. The maximum term for paying in capital is five years for investments exceeding USD 5 million and two years for investments under that amount.

The law establishes the beneficiaries’ right to make capital remittances two years after project startup, while remittances of earnings are not subject to any time limits. From the tax standpoint, the law applies a tariff exemption for imports of machinery and equipment not produced in the country and establishes a fixed rate for income tax for a ten-year period. In the case of investments in the USD 50 million to USD 100 million range, the term can be extended for up to 15 years, and if equal to or greater than USD 100 million, up to 20 years.

In addition to the above benefits, high social content industries will have an additional exoneration of 5% of income tax applicable to distribution of earnings abroad for each 100 jobs directly created, up to 50% of the applicable rate (15%). To be considered as high social content industries the following requirements must be met: (i) location in lesser developed zones, (ii) significant demand for labor and training of middle management, (iii) inclusion of added value to raw materials by means of industrialization, and (iii) no significant or irreversible environmental damage.

Additionally, the law establishes the possibility of bringing administrative and judicial appeals against rules considered discriminatory against investments covered by the law’s benefit. Discriminatory rules are those applicable to activities in general with the exception of investments covered by the new law, or which establish exceptional regimes that do not cover the investment despite its fulfilling the same conditions and requirements for their enjoyment. It also guarantees that investments made under the new regime cannot be subject to appropriation or confiscation under principles of non-retroactivity of the law, freedom of competition, and respect for private property.


Néstor Loizaga: