Super tax incentives for advetisment expenses FY 2020 & 20201

Super tax deduction available for certain advertisement expenses like TV, radio, internet ad expenses in FY20 and 21

According to the recently enacted Circular 2033/04.02.2021 defining the Law 4728/2020, a new article 22C is added to the Greek Income Tax Code  (L.4172/2013) providing a super deduction for certain TV, radio, and internet advertising expenses that businesses incur in fiscal years (FYs) 2020 and 2021.

In particular , businesses will be able to deduct from their taxable gross revenue 200% of advertisement expenses incurred in FY 2020, and 160% of advertising expenses incurred in FY 2021, subject to certain conditions. Moreover, a specific provision applies to businesses that either suffer an operating ban or are financially affected by the outbreak and spread of COVID-19.

More specifically, article 22C provides that any advertising expenses incurred in FY 2020 and 2021 will be deductible when they are actually incurred to the extent that the expenses are related to the purchase of

• a) Space for the purpose of airing or placing advertisements
• b) Time or space of airing or placing advertisements via entertainment media, including
• c) TV
• d) Radio
• e) Cinema
• f) Internet
• h) Social media, and other digital media and tools (provided that any requirements for the airing or placement of the advertisement are met),
• i) Newspapers and magazines

….and provided that the following conditions are satisfied:

1. Advertising expenses for FY 2020 equal at least the amount of entertainment media advertising expenses for FY 2019, the latter being calculated before the issuance of any credit invoices and
2. Advertising expenses for FY 2021 equal at least 105% of the amount of entertainment media advertising expenses for FY 2019, the latter being calculated before the issuance of any credit invoices.
3. The transmission or registration in the sub. bd) and be)carried out by a company registered in the Registry of Electronic Media Companies of article 52 of law 4339/2015
4. The 2% Municipality Tax on Advertisement will be paid accordingly were applicable

Note : For businesses subject to an operating ban or that are financially affected by the outbreak and spread of COVΙD-19, advertising expenses for FY 2020 must equal at least only 70% of the amount of entertainment media advertising expenses for FY 2019, the latter being calculated before the issuance of any credit invoices. According to the GITC, any losses that a business incurs after applying the super deduction may be carried forward five years.

Furthermore, the condition set in circumstance iii) on the basis of which the transmission or the registration in the sub. bd) and be) must have been carried out by an enterprise registered in the Registry of Electronic Media Enterprises of article 52 of law 4339/2015 (A ‘133) refers to the enterprises that ultimately transmit or register the advertisement and not to any enterprises intermediated between the advertiser and the companies in question, such as advertisers or advertising companies.

It is clarified as well that these provisions also include companies that during the tax year 2019 did not incur any corresponding advertising costs, including companies that appear in the register as “inactive” in 2019 (for all or part of the year) as well as companies that started operations after 1.1.2020.