The Missing Tax Certificate ... and the end of the affair

Since March 17^th, I have been trying to obtain a Certificate of Tax Residency from the Hellenic Ministry of Finance.

This certificate is a government document which confirms the tax residency of my company, Navigator Consulting Group Ltd. in Greece. It’s something we get nearly every year – you can see a copy of our 2009 certificate below. It should be a formality, but in fact is an extremely time-consuming process ridden by bureaucratic inefficiency and gross stupidity that is emblematic of doing business in Greece.

The procedure for obtaining this certificate is the following: We submit a first application to our Regional Tax Office, the DOY Pallinis, requesting a formal certificate that we are registered in the Pallini tax region. With this in hand, we have to go to the Ministry of Finance, to request a second, formal Tax Residency Certificate, which for some reason can only be granted by the Ministry of Finance.

To our vast surprise, the Pallini tax office refused to give the certificate. The reason for this was that we had not yet filed a tax return in Pallini. This is true. Our tax filing deadline was May 15^th.

Prior to this, we were registered in the Halandri Tax Authority. We moved our corporate address from Halandri to Geraka (which is part of the Pallini tax region) in October 2009. This involved a legal change in our corporate statutes, authorised by a public notary, and includes publication in the Government Gazette.

I therefore have to ask what the point is of doing an official change of address, which is published in the Government Gazette, at a total cost of nearly EUR 1,000 and over 1 month of processing time if the tax office to which we have moved refuses to recognise us.

This is even more stupid, when you consider that anyone can look up our tax number on the Ministry of Finance’s online TAXIS system, and see that we are registered at the Pallini Tax Office.

So we are legally registered at the Pallini Tax Office. But the Pallini Tax office does not recognise us.

Our accountant had to make 6 different trips between DOY Halandriou and DOY Pallinis, finally brokering a compromise whereby the Halandri tax office wrote a “Departmental Note” (Υπηρεσιακό Σημείωμα), which our accountant took back to the DOY Pallinis, finally getting them to issue the first certificate. This process took over 1.5 months: the certificate was submitted to the Ministry of Finance on May 3^rd.

The Ministry of Finance normally needs 10 working days to process this form into a second form, the official Certificate of Residence. As of yesterday, 21 May, the Certificate was not ready.

Why do I need this certificate in the first place? On March 22^nd, I started a due diligence and business planning project for a leading CIS company, which required a Tax Residency Certificate to advance a 50% project downpayment. I also need it to invoice the final billings for three other projects.

So, at a time when the Greek government is bankrupt, I am not only importing consulting fees (by export consulting services) from abroad, but I am doing it legally: by declaring the income. Instead of helping me, the Greek tax system is causing an unacceptable delay, and a serious cash flow problem for my firm.

After this experience, I have decided to close our company in Greece, and bill all new work through our new company in London. I can no longer afford to have both my professional reputation as a Greek service provider dragged through the mud by the machinations of an irresponsible government, and then face these unacceptable delays in what should be a simple tax certificate.

I am also no longer willing to pay multiple, absurd fees for the Government Gazette or the tax office or whomever, if the very system does not respect its own rules. And this is not to speak of million Euro websites for the Greek Parliament, or Siemens bribes, or Vatopedi, or German submarines.

The fact is that no one in a position of political responsibility in this country appears to have any idea of the challenges faced by individuals or companies to implement what should be a simple business procedure. While the Prime Minister jets off to meetings of the Socialist International, I am struggling to pay bills, because I can’t obtain a simple tax residency certificate, even though we have abided by all the rules, and are 100% legal.

We have operating our consulting firm in Greece since 1995. In this time, we have been one of the few Greek consultancies working in “real-world” (as opposed to subsidised) investment management and due diligence in international markets, having advised manufacturers and international financial institutions on over 40 projects and EUR 3 billion in invested resources. This era is now coming to an end, as we move our consultancy to a location which actually supports small business.

Perhaps this story will help our elected officials reflect on why Greece scores so badly in international business environment rankings. Like most actual, everyday experience, however, I am sure it will be ignored, in favour of complex political theory and empty rhetoric which has nothing at all to do with reality.