Greece aims to attract foreign capital and for this reason has formed a more favourable tax regime for all those who wish to invest in Greece and make it the centre of their business activities.
The measure is targeted towards High Net Worth Individuals and aims to increase public revenue, import fresh capital, create new jobs, recover the real estate market and generally boost the Greek economy.
What is the Greek proposition for High Net Worth Individuals?
The regime refers to the application of an alternative way to tax income generated outside the Greek territory, for individuals who transfer their tax residence in Greece, a system which is similar to Non-dom regimes, applicable to other jurisdictions.
The law provides to the aforementioned individuals the opportunity to be taxed in Greece for income derived from foreign activities, with a fixed annual tax of euro 100.000.
Who can be subject to this favourable regime and under which requirements?
Individuals can be subject to this new regime if they:
a) Were not Greek tax residents over the last seven (7) out of eight (8) years before the application to transfer their tax residence in Greece, and
b) Prove that they invest directly or indirectly, in real estate, enterprises, securities, shares in legal entities established in Greece. The minimum amount of the investment is euro five hundred thousand (500.000 €) and has to be completed within three (3) years from the date of the submission of the application to transfer their tax residence to Greece.
The requirement to complete the investment does not apply to individuals who already have acquired and maintain a residence permit for investment activities in Greece (Golden Visa regime).
There is also a provision for the individuals to request an extension of the measure for any family member who is willing to come to Greece, for an additional tax of euro 20.000 € annually, per additional family member.
Another significant incentive is that the persons who opt for this new regime are exempted from taxes regarding gifts, inheritance and parental donation.
The application of the measure cannot exceed 15 years from the first year of the application’s submission.
What is the process in order to be subject to this regime?
- The individuals have to submit an application until the 31st of March of each tax year. They declare in this application the jurisdiction where they had their last tax residence before the aforementioned submission.
- The application is approved or rejected by the Greek tax authority within 60 days.
- The tax authorities of the jurisdiction, where the individual had its last tax residence, will be informed, in accordance with the provisions of international administrative cooperation.
- The individuals have to pay the annual tax for their foreign income within 30 days from the approval of their application.
What are the benefits of this new regime?
It is clearly understood that the measure aims to attract High Net Worth Individuals, who have their assets and business activities all over the world. Since no physical presence in Greece is required, the individuals may choose their place of actual residence (considering regulations, if any, imposed by other jurisdictions regarding permanent residence), and still benefit from the regime provided that they choose Greece as their tax residence.
In order for individuals to benefit from this measure, they have to pay annually a tax amount of euro 100.000 to the Greek Tax Authority. Considering the fact that there is no tax scale and the taxable amount is fixed, the higher the value of assets and the income derived from such property, the higher the benefit.
When individuals pay the above-mentioned tax, their tax obligation is exhausted with regard to income derived from any foreign activities, yet they are subject to tax for income derived from any activities in Greece in pursuance with the general provisions of the Greek Income Tax Code.
Some jurisdictions already apply similar Non-dom systems (United Kingdom, Cyprus, Malta, Ireland, Italy, Portugal) and have attracted a great number of investors, while these jurisdictions have seen a significant increment on their tax revenue.
By attracting both foreign and expatriate investors through the investment plan within this new tax regime, Greece could see a significant increase in business competitiveness, resulting in an inflow of skilled professionals from other business centres to Greece. This would have been very difficult, especially in the recent past.
Therefore, the plan could tackle “brain drain” but also to boost the national economy in Greece.
Why would anyone transfer their tax residence and invest in Greece?
Greece provides an excellent package for High Net Worth Individuals.
The benefits for both investors and their family members are of great significance, since they are exempted, inter alia, from taxes regarding gifts, inheritance and parental donations, while in parallel, this regime does not provide for minimum time of stay in the country. As a result, a very protecting environment is ensured for both the investor and his /her family members.
What does this information mean?
Having regained its credibility, following a ten year austerity period and a successful recovery programme, Greece has now become the ideal place for business activities.
Contrary to other jurisdictions offering similar regimes, except for the regime itself, Greece also offers attractive taxation measures to investors, such as the reduction of tax on dividends to 5%.
The international tax legislation is very complicated. However, the questions that need to be answered are specific:
- What will be the annual tax benefit, for an individual under this new regime?
- What are the consequences in the existing property structures of an individual’s decision to be subject in this new regime?
- How effective will this new regime be for the protection of the worldwide income and assets?
How we can assist you?
High Net Worth Individuals face significant challenges on the protection of their assets due to their activities in many jurisdictions. As a result, they are faced with complicated and interdependent tax issues.
You can contact the experienced in international taxation consultants of Moore Greece, who in cooperation with the global network of Moore Global, will assist and advise you so that you can decide if is of benefit to you to be subject to this new tax regime.