Stock inventory

The obligation to inventory the assets of the company and the consequent valuation thereof arises from the relevant provisions of Articles 27 and 28 of Presidential Decree 186/1992. An inventory is a detailed entry, recording, and valuation of all the elements of the business property of the company, which exists at the specific period of time when the inventory is carried out.

The inventory is required to be detailed and factual, according to the rules of accounting, in order to reflect the actual condition of the business since it achieves the verification of the entries in the books and the confirmed determination of the extracted accounting result (profit or damage) of the use (Circ. Min. of Econ.117/1968 and 40/1977).

Compilation time for the inventory – Time limits for updating the books

The registration of the result of the quantitative inventory of trafficable goods is mandatory until the submission of the income tax return. For the legal entities of Article 101 of Law No.2238/1994 (SA, Ltd, etc.), which are in liquidation, the deadline for the registration expires at the same time as the submission of the income tax return. It is noted that the legal entities of Article 101 of the ITC that are in liquidation submit an income tax return within one month from the end of the liquidation and within one month from the end of each year in case of extension beyond the year.

Regarding businesses that keep single-entry books and have an obligation to inventory their marketable items, the update of the inventory book happens until the date of submission of the income tax return, and in this case, it will happen as above as well.

Requirement of drawing up an inventory

1. Businesses with single-entry books
   A professional person with single-entry books should also keep a book of inventories of marketable assets, since their annual gross income from the sale of goods during the previous management period exceeded the first-class bookkeeping limit, which is 150.000 euros.It is noted that only a professional who trades goods as such or after previous processing is required to keep an inventory book. Thus, there is no obligation to keep an inventory book for the professional of the second category, who provides services and uses various materials to carry out their work (POL.1163/1994).

2. Businesses with double-entry books
   The compilation of the inventory is required in accordance with the provisions of Article 27 of the C.B.R. as an essential obligation of businesses that keep compulsorily or optionally double-entry books and export an accounting result. Within the deadlines provided by the management period, the company that manages double-entry books proceeds to count, record, and value all the elements of its business property in an inventory book. A similar obligation applies at the end of each year to the legal entities referred to in Article 101 of Law No.2238/1994 (S.A., Ltd., cooperatives, etc.) that have been placed in liquidation that lasts beyond the year. The business that is going to keep mandatory or optional double-entry books, for the first time, draws up an initial inventory within the deadlines that are set by the C.B.R.
3. Dormant businesses
   The obligation to keep an inventory book is also applicable to dormant businesses (POL. 1321/1995).
4. Businesses in liquidation
   For legal entities referred to in Article 101 of Law No. 2238/1994 that have been placed in liquidation, the inventory is recorded until the time of submission of the income tax return (paragraph 7, Article 17 of the C.B.R.), which for the incomes acquired during the liquidation period, is one (1) month from the end of the liquidation. In the case of an extension of the liquidation beyond the year, a provisional income tax declaration for the incomes of each year shall be submitted within 1 (one) month from its end, subject to the submission of a final admission at the same time as the end of the liquidation (Article 27, paragraph 1, Article 29, paragraph 1 and Article 17, paragraph 7, Presidential Decree 186/92).

5. Freelancers
   Entrepreneurs practicing liberal professions, as long as they generate works of intellectual work from the disposition, will have income taxable at the source G (Article 48, paragraph 1, Law No. 2238/94) – for example, accountants, lawyers, sculptors, painters, etc. they are not required to draw up an inventory. However, it is noted that third parties (for example, gallery operators, etc.) to whom works have been delivered for exhibition, or sale on behalf of the artists, are required to inventory the productions found in their facilities by type and quantity (not by value) (POL. 1321/1995).

Exemptions from keeping an inventory book

Exemption on the basis of POL. 1134/2004

The professionals that keep single-entry books, and they might have as the main object of their work (more than 50% of the total gross income) one of the following activities, are exempted from the obligation to keep an inventory book and prepare an inventory of marketable assets (inventories) around 31 December 2004 and hereafter:

1. Quarry exploitation (simple extraction of rough stone processing of quarry products).
2. Manufacture or trading of seals, inscriptions, and signs.
3. Mainly exploitation of printing offices.
4. Photography studio and film exposure workshop – General photographic printing.
5. Newspaper and magazine publishing companies.
6. Bindery
7. Photocopy and polygraph workshop.
8. Bakery, bread, bakery and pastry shop, pastry workshop (retail sale or mainly retail).
9. General dairy confectionery and milk seller (retail sale or mainly retail).
10. Trading of kinds of food (retail sale or mainly retail).
11. Trading of fresh and frozen fish (retail sale or mainly retail).
12. Fruit and vegetable seller (retail sale or mainly retail).
13. Olive mill.
14. Flour mill.
15. Trading in rakes or scraps.
16. Trading of haberdashery (retail sale or mainly retail).
17. General newspaper and magazine agency.
18. Flower shop.
19. The Professional who maintains a restaurant, pastry shop, entertainment center, bar, cafeteria, canteen, refreshment stand, and other related things.
20. Hotel businesses.
21. The Professionals engaged in the manufacture of private or public technical works (technical enterprises).*(This case was abolished by POL.1152/14.12.2007)

22. Trading of bookstore items (wholesale – retail sale).
23. Trading of stationery items (envelopes, stationery, etc.) items for designing and related instruments (wholesale – retail sale).
24. General book publishing businesses.
25. The Professional who acts processing on behalf of third parties (contract).
26. The Professional who sells goods on behalf of third parties.
27. Workshop on cheese pies and related items (wholesale – retail sale).
28. Pharmacy.
29. The Professional who sells electronic spare parts and accessories (wholesale – retail).
30. Sewing and footwear materials (wholesale – retail).
31. Trading of hand tools and hardware goods (retail sale or mainly retail).
32. Health food products (retail sale or mainly retail).
33. Scrap metal, iron, and old metals (scrap).
34. Passed down spare parts for cars and other self-propelled machinery (purchased according to weight). In the event of an inventory of these items, it may be carried out by weight and not by element.
35. Trading of Haberdashery and Confectionery (wholesale – retail).
36. Trading of old stamps and other relevant items.
37. Trader in Haberdashery – Sewing and Knitting Threads, Yarns, Needlework, Embroidery, and Related Items (retail sale or mainly retail).
38. Farmers and agricultural holdings.
39. Secondhand seller (retail sale or mainly retail).
40. Trader in used clothing and consumer textiles (bought or sold by weight).
41. Trader in general costume jewelry (retail sale or mainly retail).
42. Trader of goods from auctions.
43. Manufacturer of tobacco-based products.
44. Trader of songbirds, small animals, food and accessories for them, ornamental fish, birds, animals, and other related products (retail sale or mainly retail).
45. Trader of general costume jewelry (wholesale or mainly wholesale).
46. Trader of paints, varnishes, putties, and other related products (retail sale or mainly retail).
47. Veterinary pharmacies.
48. Sale of Calling Cards.
49. Sale of Mobile Phone Cards.
50. Butchers (retail sale or mainly retail).
51. Stand operator.
52. Seller of fruit and vegetables, fresh fish, and other agricultural products exclusively in mobile street markets or on the street, as well as the farmer who sells his produce from street markets.

*(The cases 51 and 52 were set as added by the POL.1198/27.12.2010)

B. The liquid fuel station owner and the professional registrar (DI.PE.THE.) – seller of heating oil, who keep single-entry books and sell gasoline, oil, lubricants, cigarettes, and other items (accessories, small spare parts, soft drinks, and other related items), are evaluated on the basis of their total gross income from the sale of all the goods they trade. This is for their obligation to draw up an inventory for gasoline, oil, lubricants, and cigarettes, from 31-12-2010 and on. For the other traded items, (except gasoline, oil, lubricants, and cigarettes) the obligation to draw up an inventory is determined independently based on the gross income from their sale, as defined by the provisions of Article 6 paragraph 6 of the Code.

*(Paragraph B was inserted as it was replaced by

the POL.1198/27.12.2010)

C. The professional who deals with the sale of buildings under construction and maintains single-entry books is exempt from the obligation to keep an inventory book and prepare an inventory of marketable assets for this activity. In the event that they also sell other goods, the obligation to keep an inventory book or not and to prepare an inventory for them is judged independently on the basis of their gross income from the sale of them.

*(Paragraph C was inserted as an addition by

the POL.1152/14.12.2007) 

D. The inventory of the marketable goods of the second category of tradesmen can be entered by hand or computerized on separate pages of the monthly statement of the income-expenditure book or of the considered and updated computerized forms of the income-expenditure book or on specific pages of the handwritten book.

*(Paragraph C is renumbered to D with

the POL.1152/14.12.2007)

Obligation to draw up an inventory by technical and construction companies with single-entry books

The provisions of POL 1035/2008 refer to the abolition of the exemption from the obligation to draw up an inventory for technical enterprises as follows:

1. The professional who is engaged in the construction of public or private technical works, whose total gross income from public and private technical works including also those undertaken before 1/1/2007 (old works), exceeds the bookkeeping limit of the category A’ (current limit 150.000€), is obliged from 31/12/2007 to draw up an inventory of all its stocks including the stocks related to the old projects when they are in progress at the end of the year. This happens regardless of the percentage of participation of the gross income from the old projects in the total annual gross income, If these entrepreneurs, maintain another activity apart from the construction and sale of buildings, they are taxed, based on the general provisions (total income from all activities) in combination with the Min. Decree 1134/2004 and they have an obligation to inventory. Exceptionally, the joint venture, that keeps single-entry books, with the object of work being the execution of a public or private technical project, which was undertaken before January 1st of 2007, may not draw up an inventory of marketable assets from December 31st of 2007 and onwards because of the way it is taxed (implied), regardless of the amount of its annual gross income.
2. The professional who deals exclusively with the construction and sale of buildings continues to be exempt from the obligation to draw up an inventory for their building activity, regardless of the amount of their income from this activity. Additionally, if this professional maintains another activity of selling goods, including the performance of public or private technical services, the obligation to draw up an inventory for these activities is determined independently and these activities are required to draw up an inventory if the income from them exceeds the A’ category bookkeeping limit (current limit 150.000€). This is not the case if it is exempt from the registration of the census according to the Min. Decree 1134/2004.

Presumptive Inventory in Businesses with single-entry books

Article 31 of paragraph 1c of Law No.2238/1994 refers to the accounting determination of net income in businesses based on the value of raw and auxiliary materials used as well as other marketable goods. The provisions of the act stipulate that, for enterprises that keep inventory books, when they do not carry out an inventory, a percentage of ten percent (10%) of the purchases of the management period is applied as a percentage of the purchases of the following management period – the same percentage is taken as a percentage of the purchases of the previous management period. If an optional opening and closing inventory have been carried out these data are taken into account for the determination of the net income, provided that the compilation of the inventories will continue for a period of three years from the compilation of the first optional closing inventory. If this obligation is not complied with, the sanctions provided in the provisions of Law No.2523/1997 are imposed for failure to compile an inventory.

Concept of species

Definition of stocks – Concept of “species”

Inventories (paragraph 2.2.2 of the Presidential Decree 1123/1980) mean the marketable goods of each company, as well as those that are directly used in the production process for the production of marketable goods (raw materials, consumable production materials, spare parts for production machinery, etc.). The characterization of a good as saleable inventory or as a fixed asset is generally judged at the time of acquisition or the completion of its production – manufacturing, as the case may be, depending on the nature of the business’s activity. For example, a computer is a marketable good for a computer trading business, while the same computer is considered a fixed asset when used for its operational needs or raw material for an electronic equipment recycling business.

The concept of species is determined by the provisions of paragraph 3 of Article 4 of the C.B.R. According to the above provisions, a kind is the essential qualitative distinction of the goods, which affects by a percentage greater than 5%, at least, either the performance, the cost, or the sale price separately or cumulatively. Therefore, a good is a separate item from the rest of its kind when either the performance, cost, or the sale price shows a deviation of more than 5% from the corresponding parameters of the other goods. Also, we have a separate item when the sum of the percentage differences found in the three parameters above (after comparing them between the two goods) is more than 5%. It is pointed out that the companies that keep single-entry books and are obliged to draw up an inventory of their stocks are allowed to show in the inventory book, as the same item, similar goods whose purchase price does not differ by more than 10% (paragraph 11 of POL 1321/1995).

The quantitative counting of stocks and their recording in the inventory book include the kind, the unit of measurement, and the quantity, with one entry for the entire quantity of each type of goods, for each storage area. Bearing in mind the above, in order to facilitate the claims of the second category of books in the valuation of the inventory and especially those that have a large number of similar items, to avoid disputes with the tax authorities regarding the meaning of the item, their registration in the inventory book by groups of similar species. In each group, items may be included, and the difference between the highest and the lowest acquisition price of the items in each group will not exceed 10% of the lowest acquisition price of the item in each group. The above applies only to businesses with books of category B and only to the entry of stocks in the inventory book (POL.1271/2002, POL. 1321/1995).

The items in each group for valuation shall be considered as one item.

Registration of the Inventory

The quantitative counting of stocks after carrying out a natural inventory concerns the entry in the inventory book of the quantity and the unit of measurement of each item, as well as the storage area where it is housed. In the event that some of the counted stocks belong to third parties (e.g., goods which, while they have been invoiced, are still in the premises of the company), are entered in the inventory book by type and in a separate category. The above registration only concerns cases where the goods belong to commercial entities (not private individuals – see also directive Reg. YPEE 2160/2008) and only when it is not possible to find the specific data in the warehouse book or other additional books of the KBS.

Furthermore, when there are stocks of the company in the facilities of third parties (e.g., suppliers), their quantities are recorded separately by a third party, also in a separate category. It is emphasized that in this latter case, a separate registration is not necessary, for a third-party storage space.

Generally, the inventory count shows the final amount of inventory at the end date of the management period (usually 31.12 or 30.6), and it is done separately for each storage area. However, if more than one storage space is housed in the same building or contiguous buildings it is allowed to draw up a single inventory for the stocks that belong to them. More generally, the inventory of stocks in warehouses and branches that do not produce an independent accounting result are considered duplicate statements, one copy of which is sent to the registered office to update the inventory book. In places located in the same prefecture, on the same island as the registered office, or even at a distance of less than 50 km from it, it is possible to register directly in the registered office book separately.

 Control rules of the inventory book – Penalties for violations

The directive numbered 2160/2008 Reg. YPEE is concerned with the checks for the accuracy of the data entered in the inventory book. In particular, for businesses that keep double-entry books, the relevant circular states that a quantitative verification of marketable items with a significant value should be made since the business is not obliged to maintain a warehouse book. Conversely, when a warehouse book is kept, movement control should be carried out on at least two items of high value in the book.

Accordingly, in businesses with single-entry books where the total turnover of the previous year exceeds 300.000€, the final quantity of an item should be verified. If the total turnover of the business does not exceed 300.000€, the control of the administrative bodies will be limited to the confirmation of the data of the inventory.

It is emphasized that the above instructions, which come from an official source of the Ministry of Economy and Finance, are not restrictive for the competent auditors, especially in cases where additional elements are found which, in their judgment, are considered indicative of illegal behavior. The quantitative verification that is used as a control procedure of stock is based on the closed warehouse method. This method is applied as follows (Pol. 1046/1996):

• A count of the stock of the type selected for control shall be measured at the time of the check, and a counting protocol shall be drawn up, where the result of the count is written and signed by the representative of the company and the competent auditor.
• The listed quantities of the selected item are obtained from the inventory book at the end of the management period (from the inventory statements).
• The quantities of goods purchased or received within a specific time period are counted.
• The delivered quantities are received (sales based on invoices, consignment notes, etc.) in the same time period.
• The quantitative result is extracted, which must agree with the measured quantity, after taking into account any justified differences because of the existence of rust, wear, damage, etc.

Regarding the fines for individual violations, we state that:

• Failure to record the quantitative count of stocks in the inventory book is considered a general violation (a single fine is imposed per management period) and incurs a fine with a gravity factor. The basis for calculating the fine amounts to 586 euros for companies with single-entry books and 880 euros for companies with double-entry books.
• Each non-registration or inaccurate registration of an inventory item is a separate offense (a separate fine is imposed for each offense), for which a fine of 586 euros is imposed for businesses with single-entry books and 880 euros for businesses with double-entry books. It is also noted that if acts or omissions concerning the same book or element are found at the same time, the heavier fine is applied on a case-by-case basis.