25 March 2014
On 18 March 2014 the Greek parliament approved legislation to dissolve the TEO. The new law, which came into effect following publication in the Government Gazette on 21 March 2014, abolishes the 1% parafiscal charge on motor insurance premiums.
As well as abolishing the TEO parafiscal charge the new law introduces a new parafiscal charge of 0.6% on motor premiums for the benefit of the Motor Guarantee Fund (MGF). Although details are not completely clear, the new charge is understood to supplement the existing MGF parafiscal charge that is calculated at 6% on motor liability premiums. However, unlike the 6% charge the new 0.6% charge is stated to be calculated on ‘motor premiums’, which we interpret to mean premiums for motor liability as well as other motor perils. If this is the case, motor insurers will have to deal with two MGF parafiscal charges, one of which is applied to motor liability premiums and the other applied to all motor premiums.
Detailed instructions on how the above changes (abolition of the TEO charge and introduction of the new MGF charge) will be implemented and transitioned are expected to be published by Ministerial Decree within the next month. FiscalReps will distribute particulars as soon as they become available.