Introduction
For the purposes of this analysis, property is defined as the totality of economic goods of monetary value belonging to a person that may be lawfully disposed of, including:
- movable assets (including money),
- immovable property,
- receivables,
- rights (real or obligatory),
- possession,
- goodwill and stable clientele, and
- a stable expectation of acquiring such assets.
Directive 2014/42/EU (recitals 11 and 12) clarifies that “proceeds of crime” encompass both direct and indirect benefits, as well as any asset converted or mixed with lawfully acquired property.
The concept of the beneficial owner is commonly identified with Article 3(17) of Law 4557/2018, but in practice it also refers to situations in which certain persons appear to participate in a transfer of property (movable or immovable) while others are the actual holders or enjoyers of it — the so-called straw men or interposed persons.
The aim of this study is twofold:
- To examine the tax treatment of such disguised transactions (where the donee is a natural person related to the donor or a capital company) under Article 88(3) of Law 5219/2025; and
- To perform a risk analysis and assessment within the context of the accountant’s due diligence obligations.
1. Conditions for Taxation of a Donation
A donation is taxable where a property transfer occurs without consideration, provided that:
- it is made voluntarily and with the intent of liberality;
- it results in an increase in the donee’s assets and a corresponding decrease in the donor’s; and
- the benefit is genuine rather than apparent (i.e. the donee is not a mere front or nominee).
2. Legislative Framework – Article 88(3) of Law 5219/2025
The Tax Administration may recharacterize as a donation any transfer of property that is formally disguised as a transaction for consideration but in substance conceals a gratuitous transfer.
This provision applies in particular to transfers of:
- immovable property,
- vessels,
- unlisted shares,
- other unlisted securities, and
- participations in companies or legal entities.
In such cases, any transfer or capital gains tax already paid is credited against the donation tax determined through audit.
3. Burden of Proof under the Administrative and Tax Procedure Codes
According to Articles 144–147 of the Code of Administrative Procedure and Article 77 of the Tax Procedure Code:
- each party bears the burden of proving the factual circumstances that support its claims, and
- the taxpayer who contests an assessment must prove the deficiency of the contested act.
4. Burden of Proof under Article 88(3) of Law 5219/2025
Under this provision, the Tax Authority bears the burden of proving the existence of an informal donation without consideration.
However, a presumption of donation may arise between relatives or persons with a close personal connection, provided that:
- any other source of funds is excluded,
- the donor’s financial capacity allows for such a transfer, and
- the donee’s acquisition is genuine and not merely formal.
5. The Special Case of Corporate Donees
5.a. General Rule
The company itself — not its shareholders or members — is liable for donation tax, even if they are related to the donor.
A company is an autonomous legal entity, possessing distinct legal personality and separate patrimony (Supreme Court 618/2015; Plenary Supreme Court 5/1996).
5.b. General Exceptions
Corporate personality is not disregarded merely because:
- all shares are held by one person,
- the majority shareholder controls the company’s management, or
- the shareholder’s interests coincide with those of the company.
Conversely, abuse of legal personality arises when the corporate form is used to circumvent the law, to defraud creditors, or to evade obligations.
5.c. Simulation and the Beneficial Owner
The rule of autonomy is lifted where an abuse of legal personality or simulation is found (Article 79(4) of the Tax Procedure Code).
Indicative signs include:
- use of the company as a front or interposed person;
- management for personal rather than corporate purposes;
- absence of genuine commercial organization or activity (e.g., lack of premises, personnel, or transactions).
5.d. Reversal of the Burden of Proof
If the donee claims to have acted merely as a nominee, he bears the burden of proving this assertion.
This situation must not be confused with the revocation of a donation for ingratitude under Civil Code Articles 505 and 509.
6. Due Diligence and Risk Assessment
An external accountant or tax advisor, within the obligations of Law 4557/2018, must:
- analyse potential money laundering risk in transfers of assets with or without consideration;
- assess whether the transfer occurred without or with inadequate consideration; and
- verify whether the asset or its income remains under the donor’s control.
Examples:
- The transferor of a yacht continues to pay marina and maintenance costs.
- Rental income from a transferred property continues to be deposited into the transferor’s account.
- A “divorce” is followed by a “distribution of assets” while the spouses continue to cohabit without economic justification.
If the donee is a legal entity, the element of knowledge (intent) is examined in relation to the persons who:
- have legal or de facto authority of representation,
- are empowered to take decisions, or
- exercise control over the entity.
7. Directive 2014/42/EU – Confiscation in the Hands of Third Parties
The Directive recognizes that suspects often transfer assets to third parties to avoid confiscation.
Confiscation from third parties is possible where they knew or ought to have known that the transfer sought to frustrate seizure, based on concrete circumstances such as lack of consideration or transfer at a price far below market value.
The rules apply to both natural and legal persons.
8. Conclusions
- The accountant/tax advisor must integrate the tax analysis of Article 88 of Law 5219/2025 with the criminal preventive rationale of Law 4557/2018.
- Plausibility (probable suspicion), not full proof, suffices to trigger reporting obligations for suspicious transactions.
- Distinguishing between the real and the apparent beneficial owner is crucial for both tax and criminal purposes.
- Proactive risk assessment is a matter of professional responsibility, not mere administrative compliance.
Author: Christine J. Kapela
Key Case Law and Legislation
- Supreme Court 4/2003
- Civil Code Article 939
- Council of State 696/2009
- Supreme Court 618/2015
- Plenary Supreme Court 5/1996
- Income Tax Code (Law 4172/2013), Articles 27, 28A, 42, 43
- Council of State 43/2006
