There is a huge issue regarding the legalization of the funds that have bought the “red” loans of Greek households and carry out foreclosures and auctions through the servicers, as their mode of operation in Greece violates important provisions of the tax legislation and their contracts lack legal force.
The specific major issue was highlighted by the Palazis – Mangola law office of Thessaloniki. In particular, the lawyer Giorgos Palazis discovered that the funds that have bought the securitized “red” loans of Greek households instead of a lentil board are allowed to violate most of the provisions of the Greek tax legislation and since last November he began to besiege AADE with questions-complaints in order to receives official confirmation of the violations.
The first question
On November 23, 2023, G. Palazis asked the AADE if the companies acquiring receivables from loans and credits based in Ireland, i.e. the funds that mediate between banks and servicers, have the obligation to obtain a VAT number in Greece.
“In the case of the management of the “red” loans, we have companies in a triple relationship” explains G. Palazis in Documento. “They are the systemic banks based in Greece, the loan and credit management companies, known as servicers, and the loan acquisition companies that mediate and are special purpose companies, i.e. the funds based in Ireland. The acquiring companies have bought the loans from the systemic banks and given them to Cepal, DoValue and others. to be managed, but they do not have a VAT number in Greece. However, from the moment they are active in Greek territory, who sign contracts with Greek banks and servicers in which Athens is mentioned as the place of registration and which are attended by specific Greek lawyers and who register their claims with the Greek mortgage registrars, they must have a VAT number, as every Greek professional is obliged to have a VAT number in Bulgaria, e.g. operating there. Our office raised a relevant question to AADE and the service confirmed to us with its reply on January 18 that it is valid. The funds must have a VAT number and tax representative in Greece. In fact, the AADE added that our complaint will be forwarded to the General Directorate of Taxation for further action,” he added.
Since then, a month and a half has passed during which nothing has come from the AADE and it is rather futile to expect that the tax authority will question anything in the basic decision planning of the ND government to liquidate the “red” loans from the Greek banks through of the special purpose companies with the exotic names Galaxy II, Poseidon, Artemis, Sunrise I, etc. and a capital of only 100 euros. They issued bonds worth hundreds of millions of euros with “air”, the only return being the money they expect to get from the sale of the properties of the “red” borrowers, they took the public guarantees and bought the securitized “red” loans of the banks at 2-10 % of their value.
However, this fact is indicative of the political hypocrisy of the rulers who now impose VAT on 12-year-olds and proclaim that Greeks must become tax conscious, but allow the funds to operate without VAT or tax control, reaping huge profits from the redistribution of the real estate of Greeks households. Indicatively, during the two years 2022-23 there were 96,546 auctions of properties of each category, of which two out of three ended up barren, but around 32,000 properties changed hands.
No one knew how high the real profits were made by the funds. How is he to know since they did not show them anywhere, while as the lawyer G. Palazis pointed out in Documento, based on their balance sheets found by his office in Ireland, four of these companies had declared for 2022 net profits of 500-700 euros.
The agreements
Following its first question, on February 26 the Palazis – Mangola law firm came back with a second question-complaint to the AADE. In particular, he sent her five agreements between funds and servicers for which he had established that neither party had submitted them to Taxisnet within three months, as was required under the current tax legislation (law 1882/1990, article 8 par. 16), and asked the tax authority to confirm whether the specific companies were required to submit the agreements in order to have legal effect. AADE in its response on March 5 confirmed this.
“Any company that enters into a private agreement under which it undertakes anything must file it with the competent DOU, otherwise it has no legal effect. Exempt from this obligation are banks and insurance companies that perform specific functions and participate in TEKE and the Co-Guarantee, but not special purpose companies and servicers,” G. Palazis explained in the Documento.
“This means that all private agreements between funds and servicers, on the basis of which seizures and auctions are made, are legally void. Essentially, if you do not have a VAT number, as is the case with funds, you are led to continuous violations of tax legislation, e.g. it is not possible to submit your agreement to the DOU without a VAT number. And AADE may not initiate proceedings against the funds, but we will do so” concluded G. Palazis.
What can you do;” Documento asked. “There is the possibility of filing a complaint with the Supreme Court. Whatever we do, we will share it with the European institutions, so that the matter is not buried here,” concluded the jurist.
See also: Again at the mercy of the servicers thousands of borrowers through a hidden provision by the Mitsotakis government
Hatzidaki’s secret amendment with favors in favor of the servicers in the Parliament
The 10% down payment to servicers is a trap for borrowers: It is not provided for in the Community directive – Question SYRIZA
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