Extended abstract

In today's globalized economic environment, with the rapid developments across the spectrum of economic activity, tax uncertainty has emerged as a significant factor of concern for businesses, taxpayers, and tax administrations. This phenomenon is increasingly intensifying due to the excessive complexity of tax legislation, the frequent changes in the legislative and regulatory framework governing the taxation of economic entities, the increasing internationalization of economic activity, the emergence of new financial tools and digital business models and cross-border transactions. As can be seen from the review of international scientific literature, it is commonly accepted that tax uncertainty is currently one of the most important factors affecting investment activity, tax compliance and the relationship of trust between taxpayers and tax administration. On the other hand, tax certainty is a key component of the effective operation of tax systems, contributing to reducing the compliance costs of economic entities and enhancing business activity and investment.

In this context, Advance Tax Rulings (ATRs) have emerged as an important institutional mechanism for proactively clarifying the application of tax legislation. ATRs, in general, refer to the advance position of the competent tax administration, following the payment of a sum of money by the entity concerned, on the manner of applying specific tax provisions, with regard to facts, financial transactions, planned future actions of an economic entity and in general actions of the entity with a tax impact. ATRs should not be confused with interpretative circulars, regulatory decisions, or implementation guidelines, since ATRs concern an individualized interpretation that concerns an individual economic entity.

The purpose of this study is to analyze the theoretical and practical application of ATRs, to evaluate their contribution to tax certainty, to enhance voluntary compliance and to cultivate an investment climate, as well as to investigate the risks of opacity and aggressive tax planning.

ATRs essentially function as a mechanism for the temporal frontloading of the administrative crisis, where the tax treatment by the tax administration is no longer determined exclusively after the financial transactions are carried out and possibly after the tax audit, but the interpretative uncertainty is attempted to be addressed before the commencement and completion of the financial transactions. A review of the international literature shows that ATRs are used, with some differences in their application, in developed economies. Specifically, countries such as the USA, Great Britain, Germany, France, Italy, Canada, Australia, the Netherlands and recently Greece with article 36 of law 5301/2026, as well as almost all OECD member countries, have introduced ATRs into their tax framework.

From the empirical research conducted with the participation of business executives, accountants and tax advisors and which was carried out using questionnaires and semi-structured interviews and on the occasion of the recent introduction of ATRs into the Greek tax system in May of this year, the significant usefulness of the institution emerged, especially in cases of major corporate transformations, large investments, and complex tax transactions.

Based on the results of the research, it emerged that the significant benefits of ATRs are found in the predictability of the economic entity, regarding the application of specific provisions by the tax administration, in the significant reduction of future tax disputes either at the stage of the administrative procedure or at the stage of judicial disputes and in their positive effect on the investment decision-making process and in the strengthening of entrepreneurship. Furthermore, for the successful operation of the institution, the speed of implementation of the procedure and the issuance of a response in a short time, the adequate staffing of the competent unit of the tax administration, transparency, the avoidance of preferential treatment, the uniform application of the relevant provisions, the publication of anonymized responses, the reduction of the price that should be paid to the tax administration, and the real commitment based on the responses are particularly important. Further research could focus on the size of the entities that make use of this institutional possibility, their legal form, the category of tax objects such as income tax, property taxes, value added tax, etc., the average time for issuing responses and the average amount of money required to utilize this specific possibility.