CORPORATE CRIMINAL LIABILITY FOR TAX EVASION & DEBTS TO THE GENERAL PUBLIC SECTOR

* The present article is written by Ioannis A. Sarakinos, Attorney-at-law – LL.M in Banking Law & Financial Regulation from the London School of Economics & Political Science.

Athens, 29 January 2016

Last Updated: 17th February 2016

As per Greek criminal law, criminal liability is subjective. Generally, this means that both the actus reus (unlawful act or beginning of unlawful act) as well as the mens rea (causal link – the existence of intention or negligence) must be present for criminal liability to arise. At the same time, the ability of the perpetrator to commit the offense is required (i.e. full mental and emotional ability to act).

The above are also applicable to the financial offences of tax evasion and late payment of debts to the general public sector (hereinafter ‘the offences’). Yet, attention is drawn when companies appear as the perpetrators of these offences. In such case, criminal liability of the company’s members/partners is of interest, since the company does not stricto sensu “act”, and, therefore, no criminal liability can be imposed on a company under Greek law.

Article 25 of Law 1882/1990 on “Tax evasion – Tax and other provisions”, recently amended by Article 8 of Law 4337/2015 on “Memorandum Implementing measures 3: Pension/Tax Evasion Crimes/Financial etc.”, defines the penalties imposed as well as the perpetrators of the offences committed by companies.

Brief overview of the above leads to the following conclusions:

  • Company’s members/partners criminal liability depends, mainly, on the type of the company. Briefly, at partnerships (such as general partnership (O.E.) or limited partnership (E.E.) etc.) there is joint and several personal liability (Law 4072/2012). Whereas, at companies limited by shares (S.A., Ε.P.Ε. (), Private Company (I.K.E.)) liability exists up to the amount of the company’s assets.
  • Perpetrators vary depending on the type of the company. In summary, the following company members/partners are considered perpetrators for Greek criminal law purposes:
  1. a) In A., the BoD chairman, the directors, the authorized signatories or collaborating consultants, administrators, managers and, in general, any person authorized either directly by law or by private will or by a court decision to exercise administration, management or representation of the company.
  2. b) In E. & E.E., the partners and managers and, in general, any person authorized either directly by law or by private will or by a court decision or any other cause to exercise administration or management of the company.
  3. c) In P.Ε. (Ltd.) & Private Company (I.K.E.), the managers and, in general, any person authorized either directly by law or by private will or by a court decision or any other cause to exercise administration or management of the company. In case of absence or non-presence of any of the aforementioned persons, then perpetrators are considered the company’s members/partners.

Based on the above, the criterion in identifying the perpetrator, i.e. the person who acts on behalf and for the company, is that of actual involvement in the committed criminal offence of tax evasion or late payment of debts to the general public sector. The intention of the legislator is, primarily, to include the de facto manager of the company who, even without the managing authority according to the statutory document or according to the law, nevertheless he performs duties and actions suitable only to someone with such authority (Article 8 of Law 4337/2015).

  • The manager of a company is held individually liable for debts occurred during his actual involvement in the management of the company, regardless of who was exercising the management at the time of prosecution. Specifically, as per Article 25 par. 3 of Law 1882/1990: “…prosecution is exercised for debts to the public and third parties, other than to individuals, that were confirmed during acquisition of the above authority or while the authority was present, regardless if that authority was later lost, in any way or for any reason, and for the debts confirmed irrespective from the companies’ winding up or not but created or traced back at the time they had this authority… .”

Finally, special attention should be drawn to the provision of Article 71 par. 2 of Law 4174/2014, recently inserted by Article 8 of Law 4337/2015, according to which: “Criminal courts’ decisions, issued for debts less than one hundred thousand (100,000) euros and not executed by the date of publication of the present law, remain unexecuted. If their execution has been started, it stops. Pending applications from the Head of Finance and Public Services or Audit Centres or Custom Offices for debts below this amount [100.000 euros] are not introduced for discussion. The suspension of the limitation period for debts, lower than the amount of one hundred thousand (100,000) euros, for which application for criminal prosecution has been submitted, ends with the publication of the present law, the limitation period continues and is not completed before the passing of one year from the end of suspension.” Greek justice is responsible for the implementation of this provision. Yet, regular monitor by a legal counsel of each case is recommended in order to check the proper implementation of the aforementioned.

Disclaimer: This article is not intended to provide legal advice on individual situations as the merits of each case differ. For specific advice on your case please contact us by email: info@sarakinoslaw.com or tel.: +30 211 4106546.

 © 2016 Ioannis A. Sarakinos. All Rights Reserved.