Foreign firms contemplate departure from local market
Foreign enterprises with activities in the production and retail sectors are seeking ways out of the domestic market as they discern a further drop in demand and the slow implementation of structural reforms, especially in terms of taxes and red tape. The proposed increase in the income tax rate for corporations and the likely introduction of an extraordinary levy on firms that made profits of more than 500,000 euros last year constitute additional motives for enterprises to flee Greece.
The main factor for that has been the consecutive measures of fiscal adjustment adopted after Greece’s entry into the bailout process, which have led to a dramatic drop in consumption. In several cases, however, foreign companies have left Greece or are preparing to do so due to erroneous moves whose consequences were exacerbated due to the recession.
A leading global food company with production units in Greece is now seriously contemplating the reduction of its investment in the local market, examining two options: the transfer of its administrative center to another country or the sale of one of its loss-making activities in Greece. While in early 2014 company officials estimated that the Greek economy had entered a period of stability, this year they are speaking of an unpredictable macroeconomic and financial environment and say they are taking all necessary measures.
The possibility of the departure of a retail chain has also grown recently, at best through a change in ownership. For now it is examining the suspension of investment plans that had included the opening of new outlets.
Another multinational, this time from the refreshments industry, is also examining its disengagement from the local market. It has already shut down a production unit and is trying to sell a number of properties it owns across Greece. The company has contacted local businesses with the aim of conceding a bottling license, with no success to date.
There are many examples of companies that have already fled Greece since the start of the crisis. France’s Fnac and Carrefour and Germany’s Aldi, Makro and Saturn are just a few examples.
The situation in the market is strongly reminiscent of 2012 for another reason too: Among the options companies are examining is the transfer of their tax address outside Greece, not only to spare themselves the upcoming tax increase, but also to improve their credit capacity, heeding the example already set by Fage dairy company and the Hellenic Bottling Company, the local Coke bottler.
