The Private Capital Company in Greece (IKE)

The purpose of this legal form is to enable commercial activity with limited liability for the shareholders, combined with a simple and flexible formation procedure. The IKE has since become by far the most commonly chosen form of company in Greece.

The basic features of the IKE largely correspond to those of the other Greek capital companies — the GmbH (EPE) and the AG (AE) — but are considerably more flexible. A minimum capital of just one (1) euro is sufficient for formation. In addition to cash and in-kind contributions, so-called guarantee contributions (suretyship-type contributions) are also possible.

The law expressly provides for the formation of a single-member IKE; the manager may be appointed from among the shareholders or may be a third party.

Forms of contribution in the private capital company (IKE)

In addition to cash and in-kind contributions, the IKE recognises so-called capital-external contributions — performances that cannot be directly valued in money, such as the assumption of obligations, the carrying out of work, or the provision of services.

Such contributions are more familiar from the law of partnerships, but they do not alter the capital-company character of the IKE, even where the share capital consists exclusively of such contributions.

A further distinctive feature is the guarantee contribution: the contributing shareholder assumes, up to a maximum amount specified in the articles of association, a suretyship-like liability for the company’s obligations towards third parties. In doing so, the shareholder bindingly declares that they will at all times be able to settle the obligations up to the specified amount. In this way, a company can be formed without any capital actually being contributed — the value lies instead in the liability assumed.

Formation and tax treatment

As a general rule, no notarial form is required for the formation of an IKE, unless the shareholders wish it or assets are contributed for whose transfer the law prescribes a notarial form (e.g. real estate).

Today, formation takes place almost exclusively via the electronic one-stop shop e-ΥΜΣ, using the statutory model articles of association; a notarial deed remains possible in addition, either where the shareholders wish an individually drafted set of articles, or via a one-stop shop at the competent chambers of commerce. In practice, formation can be expected to take a few working days.

Where share capital is contributed, the capital accumulation tax (Φόρος Συγκέντρωσης Κεφαλαίου) is generally payable, currently at a rate of 0.5% of the capital contributed (previously 1%).

With regard to annual accounts, the accounting provisions of Law 4308/2014 generally apply, supplemented, insofar as relevant, by the provisions of Law 4548/2018 on Greek stock corporations. The annual accounts essentially comprise the balance sheet, the profit and loss account, and the notes, and must be disclosed to the General Commercial Registry (ΓΕΜΗ/GEMI) within the statutory time limits.

For tax purposes, the IKE is treated in the same way as a Greek GmbH (EPE); the provisions applicable to the EPE apply correspondingly to the IKE. The current corporate income tax rate is 22% of taxable profit. Distributed profits are additionally subject to a withholding tax on dividends, currently 5%.