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Bulgarian Prime Minister Boyko Borisov warned Greece of countermeasures in the event that the Greek parliament approved the imposition of a new preventive tax. The proposal of a 26% tax on all transactions of Greek companies with their partners, whose headquarters are located in countries with preferential tax regimes has been submitted by the cabinet of SYRIZA and Independent Greeks.

According to sources referred to by the Greek economic online edition Euro2day.gr, late last night Borisov told a Greek Minister that if Athens introduced this tax, Sofia would impose an additional tax to all Bulgarians who visit Greece for tourism as well as on Greek goods imported in Bulgaria.

The Bulgarian Prime Minister said that this tax rate could even reach up to 30% in both cases. To present what the consequences of the imposition of such a measure might be Euro2day.gr indicates that eight Bulgarians, who spend their holidays in Greece, correspond to one Greek tourist who visits Bulgaria.

At the same time, Bulgaria is one of Greece’s major trading partners. In particular, it is fourth in the ranking of countries with the largest import of Greek products after Turkey, Italy and Germany. Last year the Greek products exported to Bulgaria totalled 1.339 billion euro whereas in 2013 the volume of Greek exports to Bulgaria was worth 1.396 billion euro.

According to the sources of Euro2day.gr, Bulgaria and Romania intend to raise before the bodies of the European Union the issue of imposing a preventive tax on the part of Greece, arguing that it violates European law.

The issue has been raised by the Association of Greek Industrialists, which has sent a letter to Deputy Minister of Finance Nadia Valavani.

It states that from a legal perspective, the proposed legal order, which Greece has signed with most of the countries that are defined as countries with preferential tax regimes, violates both European law and international agreements on avoidance of double taxation.

This is because the imposition of a preventive tax at the rate of 26% on the profits earned in Greece by foreign companies and EU member states with which Greece has concluded agreements for the avoidance of double taxation based on the model proposed by the Organization for Economic Cooperation and Development (e.g. Cyprus, Ireland, etc.) is a prohibited discrimination against those companies. It is present when the deducted tax does not apply to: a) the income that foreign companies headquartered in EU Member States have in Greece and b) on the income of companies with headquarters in Greece.

All this indicates that the proposed legal order would provoke a lot of complaints to the European Commission and litigation in and outside Greece."