Law 4935/2022 was published, which refers to “Incentives for business development through partnerships and corporate transformations and other provisions”. More specifically, Article 15 provides for income tax exemption in the case of cooperation between natural persons, mainly farmers.
Article 15 of the Law states:
“1. Natural persons, mainly farmers, shall be granted the incentive of exemption from the payment of income tax on pre-tax profits, which arise from the exercise of individual agricultural business activity, based on the tax legislation, at a rate of fifty percent (50%), if the following conditions are met: a) they are farmers members of legal entities and associations of persons registered in the National Register of Agricultural Cooperatives and other collective bodies of article 22 of Law No. 4673/2020 (A’ 52) and they supply the legal person or legal entity with quantities of products equal to at least seventy-five percent (75%) of the total quantity of similar or similar products produced by them, or b) they are farmers who have concluded a contract with a specific undertaking – buyer, or b) they are farmers who have concluded a contract with a specific undertaking – buyer, a farmer who has concluded a contract with a contractor with a specific producer, for the purpose of contract farming, as defined in Article 16, by which he undertakes to contribute quantities of products equal to at least seventy-five percent (75%) of the total quantity of identical or similar products of his production.
- Para. 1 shall apply to profits earned from tax year 2022 onwards. Article 16 Contract farming The future sale of agricultural products between producers and buyers may be agreed upon by private written contracts of a definite date. The contracts, which shall be drawn up, shall be registered by the parties electronically through the application of the Independent Public Revenue Authority (AADE) “my AADE”, in accordance with par. 16 of Article 8 of Law No. 8 “AADE”. The contracts of the first subparagraph, for the application of Article 15, shall include: a) the type, the area cultivated and the quantity of agricultural products to be sold, b) the minimum duration of the contract, which may not be less than one (1) year, and c) the price of the product’.
So, according to Article 15, only natural persons who work professionally as farmers are entitled to a tax credit. In order to qualify as an adult natural person as a farmer in his main occupation, the following conditions must be met:
- It is registered at MAE (Register Farmers’ Register & Agricultural Holdings).
- He is a farmer.He/she spends at least 30% of his/her total annual working time engaged in agricultural activity on his/her holding.At least 50% of his total income must be agricultural.He is insured himself and his agricultural holding, where required, in accordance with the legislation in force.It shall keep accounting books in accordance with the legislation in force.
In addition, they must deliver 75% of their production to the collective scheme. These obligations exist in all cases in the articles of association of each cooperative, but in some cases they are not fulfilled. In the Producer Group and in the Articles of Association, the relevant obligation includes each farmer member of the group to deliver at least 80% of the product (if the product has a commercial status).
Clearly, what is mentioned in Article 15 of the Law is a strong incentive not only to unite individual producers around collective projects but also to strengthen and reinforce the latter. Our assessment is that one of the few ways to circumvent the low competitiveness of Greek agriculture, partly due to small and fragmented land, is collective action.
Of course, strengthening collective action is not limited to participation in the collective scheme. Participation must be active, and the rationale for this active participation in this case is to hand over the majority (75%) of production to the collective co-marketing scheme. The logic of participation in collective schemes, which only defines rights and does not define obligations, is outdated and this is largely responsible for the breakdown of the cooperative movement in our country.
