Greek Tax Incentive Regimes For Newly Arrived Residents And Family Offices – Tax Authorities – UK – Mondaq




The segment of European countries that have enacted favorable tax regimes designed to attract the wealthy are well known. Switzerland has its forfait regime, the U.K. has its Nondom Tax Regime, Portugal and Italy have new resident regimes, and Malta and Cyprus have favorable regimes designed to attract new residents. To that list of countries, Greece is a new arrival, having introduced several tax incentive regimes designed to create a favorable tax environment for nonresident individuals transferring tax residence to Greece and the establishment and operation of family offices in Greece. This article provides an overview of the most important Greek incentive provisions, which are (i) the 5A Nondom Tax Regime, (ii) the 5B Pensioners Regime, (iii) the 5C Employee and Self-Employed Regime, and (iv) the Family Office regime.
The Nondom Tax Regime provides an alternative taxation method for foreign source income generated by individuals who transfer their tax residence to Greece. The main features of the regime include the following benefits:
Two main conditions must be met for coverage by the Nondom Tax Regime:
There is no requirement in the law under which an individual must be present in Greece for a minimum period of time in order to qualify as a Greek tax resident under the Nondom Tax Regime. Given that the undertaking of significant investments in Greece demonstrates the intent of to render Greece as the center of vital interests, a leased or owned main residence in Greece must be declared.
The procedure for obtaining tax residence under the Nondom Tax Regime involves the following steps:
The Foreign Pensioners Regime provides for an alternative taxation method for individuals who earn foreign source pension income and transfer their tax residence to Greece.
The main features of the Foreign Pensioners Tax Regime include the following benefits:
Three main conditions must be met for coverage by the Foreign Pensioner's Tax:
There is no requirement in the law under which an individual must be present in Greece for a minimum period of time in order to qualify as a Greek tax resident under the Foreign Pensioner's Tax Regime. Hence, no undertaking is required as to the intent to spend a set number of days. Nonetheless, if an individual retains contacts with another jurisdiction it is likely prudent to be present in Greece for sufficient time each year and to maintain sufficient contacts in Greece to fend off an assertion of residence in the other State.
The procedure for obtaining tax residence under the Nondom Tax Regime involves the following steps:
The Employee and Self-Employed Regime provides for an alternative taxation method for taxing Greek-sourced income from salaried employment and business activity by individuals who transfer tax residence to Greece.
The main features of the Employee and Self-Employed Regime include the following benefits:
Four main conditions must be met for coverage by the Foreign Pensioner's Tax:
The procedure for obtaining tax residence under the Employee and Self-Employed Tax Regime involves the following steps:
A family office is a special purpose vehicle having as its exclusive purpose the management of assets and investments owned by individuals. The Family Office Tax Regime applies to family offices of Greek tax residents and members of their families. Investments of a Greek tax resident may be made directly or indirectly through legal entities. In addition to overseeing investments, a family office may manage expenses incurred by a wealthy Greek tax resident, or members of his family, relating to living costs, charitable activities, and cultural activities.
A family office may take the legal form of a Société Anonyme, a limited liability company, a private capital company, or a personal company or partnership, provided it is not formed for the purposes of carrying on activities of a nonprofit nature. It may be established in Greece or abroad. Similarly, its assets and investments under management may be located in Greece or abroad.
To benefit from the Family Office Tax Regime, the office must be operated for the benefit of (i) a Greek tax resident individual, (ii) close family members of the resident, such as a spouse, parents and grandparents, and unmarried or underage children, and (iii) Greek or foreign legal entities in which the foregoing individuals hold a majority stake. Persons who benefit under the 5A Nondom Tax Regime, the 5B Foreign Pensioners Tax Regime, and the 5C the Employee and Self-Employed Tax Regime qualify as Greek residents for purposes of the Family Office Tax Regime.
The family office must meet the following conditions to qualify for the Family Office Tax Regime:
The following services may be provided by a family office:
The family office cannot provide services or incur expenses that are not related to the fulfillment of its purpose. When providing qualifying services, the family office may employ the individuals performing the services, outsource the services to third parties located within Greece or located elsewhere. However, payments made to individuals or legal persons that are tax residents in noncooperative states or in states with a preferential tax regime will not be deductible by the family office unless they relate clearly to real and customary transactions.
The gross income of a family office is determined on a cost-plus basis, using a 7% profit mark-up to all expenses maintained in properly kept tax records and paid through disbursements from the family office's bank account. Certain adjustments are made when computing the tax base.
Documentation is required to support the contention that the Family Office Tax Regime is applicable, meaning that the cost plus 7% income computation applies. The procedure is as follows:
In comparison to the O.E.C.D., the European Commission, and the European Parliament, the Greek government has adopted well-thought-through provisions designed to attract wealthy families, retirees, executives, and family offices. At least one tax-examination cycle will be required to assure wealthy nonresidents that the plan works in practice as well as in theory.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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