In the context of the restart of the Greek economy and the efforts to boost investment activity, the Greek legislator has undertaken a series of legislative initiatives that, on the one hand, concern the granting of tax incentives to taxpayers who reside abroad and wish to transfer their tax residence in Greece and, on the other hand, aim at enhancing the competitiveness of the Greek economy and improving the economic climate.
Alternative taxation regime for high-net-worth individuals – investors (non dom)
The first initiative was introduced pursuant to Law 4646/2019. It provides for the taxation with an annual flat tax of €100,000 of individuals who will submit a relevant application, transfer their tax residence in Greece and invest in real estate or business or transferable securities or shares in legal persons or legal entities registered in Greece, amounting to at least €500,000. This taxation regime applies to the foreign – source income and this flat tax is paid regardless of the amount of income earned abroad. The period of eligibility for this favourable tax regime is 15 years.
Alternative taxation regime for pensioners
Law 4714/2020 followed and introduced an alternative taxation regime for pensioners who transfer their tax residence in Greece. According to this regime, the pensioner pays tax every year calculated at a fixed rate of 7% for all his foreign – source income. This favourable tax regime lasts for 15 years.
Alternative taxation regime for employees and self-employed persons
The third regime was introduced by Law 4758/2020 and completed the framework of incentives for individuals who transfer their tax residence in Greece. This regime concerns employees or self-employed persons who transfer their tax residence and carry out their professional activities in Greece. Persons subject to this regime are exempted from income tax and the special solidarity contribution regarding 50% of their income earned in Greece from employment or self-employment, while they are exempted from the application of the annual objective expenditure, which is based on their residence or private car. The period of inclusion in this regime is 7 years.
Incentives have also been introduced for the establishment of special purpose family offices. These incentives aim to create a transparent and defined framework that will serve the needs of individuals with tax residence in Greece, taking into account best international tax practices regarding the management of their financial/investment flows and family assets. The Greek Family Offices shall employ in Greece at least 5 persons within 12 months starting from their establishment and thereafter, and shall have in Greece operating expenses of at least € 1.000.000 per year. The gross income of family offices will be determined by the cost method plus a profit margin of 7%, while the tax is calculated on this profit margin at the rate applicable to business profits of legal entities.
Incentives for Angel Investors
Finally, significant incentives have been provided to support innovation and start-up entrepreneurship. In specific, Law 4712/2020 provided for that angel investors, i.e. individuals, with tax residence in Greece or abroad, who hold a Greek TIN number and contribute funds to start-ups with the aim of developing them, may deduct from their taxable income in Greece an amount equal to 50% of the amount of the capital contribution and up to a total amount of € 300,000 per tax year. The start-up company shall be registered in the National Register of Start-ups – Elevate Greece.
In the context of the implementation of the above legislation, our law firm has already successfully supported investors wishing to make use of these incentives. These investors are already enjoying the benefits of the low taxation offered in Greece. Our law firm provides comprehensive legal services and specialized advice to its clients both in relation to the application of the above legislation, as well as in relation to all tax or corporate law issues that may arise, supporting them throughout the entire process of implementing their investment and providing legal assistance ranging from the planning of the investment and the legal due diligence, to the project financing and representation before public authorities.