Introduction
The incentives framework for the transfer of tax residency to Greece had a recent makeover with a view of attracting high net worth individuals. Even though the main aim is at the Greek diaspora, the tax incentives apply to all interested parties. The investment benchmark for initiating the tax benefits is set at 500.000,00 Euros while larger investments are also welcomed.
The indirect fiscal benefits to the Greek economy motivated the Greek government to provide a tax friendly structure, so that more individuals will transfer their tax residency in Greece.
We reviewed for you the provisions and summarized the necessary information for all those interested in transferring their tax residence to Greece.
We hope you will find the information interesting and remember: We are here to help!
Transfer of tax residency to Greece
Greek law provides for a flat tax of one hundred thousand (100,000) Euros per annum for the persons’ global income regardless of the actual global income earned.
This benefit may be extended to any direct relative father, mother, wife, brother, children in which case a flat tax of twenty thousand (20,000) Euros is due for each relative. Any tax paid by these individuals abroad on income under these taxation provisions shall not be set off against any tax liability in Greece.
The eligible person must also prove that they or a related person have invested the minimum amount of € 500.000 in the Greek market.
The current legal provisions allow the investor to divide the investment up to three (3) installments, giving him space to manage his economic affairs in a better and more efficient way.
The amount of €500.000 can be invested in various sectors such as: real estate, legal entities, securities etc.
Types of investment
The law imposes as a prerequisite for the applicants to prove that they, or a related person, have made three distinct investments, with at least € 500,000 value of own funds, excluding other sources of financing (for example loans) in one or more of the following categories:
- Investment in real estate, purchase of property, construction of property
- Investment through participation in a legal entity, with securities that are not listed on a regulated market.
- Purchase of Greek government bonds.
- Capital contribution for participation in an Alternative Investment Organization
- Purchase of negotiable securities traded on regulated markets in Greece.
The investment must be made after December 12, 2019.
The procedure in practice
The process for verifying the completion of an investment in Greece involves the following steps:
The applicant applies to the foreign resident’s tax bureau. It is advisable to appoint a solicitor to oversee and manage the process. Even though significant progress has been made in the last years regarding e-filing and e-communications, complex projects of this nature require local involvement of an expert with practical knowledge. In addition, a solicitor will guarantee that no mistakes throughout the procedure will occur and thus no delays will take place.
After the payment of the minimum amount the tax authority will review the application and decide if the conditions that are specified by the Law are met. It is only after the decision has been issued that the investor will be granted the tax incentives.
It is essential with the application that the investor will provide evidence that the minimum amount that is required for the investment (i.e., 1/3 of € 500.000) has been transferred. A receipt from the bank is considered adequate evidence and usually this is requested.
The investment must be fully executed within three (3) years as of the date of applying for the tax status. The investment is considered complete only if the necessary procedural and actual work has been concluded, all expenses related to the investments have been paid, and the registration has been duly completed. For instance, if an investor decides to buy a house, the procedure for the construction and the purchase must be completed within the period of (3) three years with the actual transfer of the property in his/ her name and the full payment of the purchase price.
The applicant can request a certificate that the investment is completed.
The application is filled in with the tax authority for non-resident individuals at Athens, which reviews the application which is then forwarded to the Directorate of Foreign Direct Investments.
Supporting Documentation:
The application should include the following supportive documents:
- Investment documents that prove that the investment is ongoing or completed.
- A report by a certified auditor who will verify the adequacy of all the investment documentation. This report is of grave importance as the tax authority will possess a report from an independent auditor who will prove the validity of all the documentation. It can be stated that the report of the auditor is a safety net for the tax authority.
Duration of investment retention and monitoring
The investor should retain without any interruption or cancelation the investment into the Greek economy throughout the inclusion period. The inclusion period can last up to fifteen (15) tax years, starting from the tax year in which the application for inclusion under these provisions is submitted.
For monitoring the retention of the investment after its completion has been confirmed, and for the years during which the inclusion lasts, the taxpayer is required, up until the 31st of March of each year and whenever requested, to submit to the tax authorities an application a statement regarding the continuous retention of the investment.
Terminating the investment or amending the terms of the investment after its Completion
It is mandatory that the investment is not terminated during the entire period. If any partial or total interruption takes place (e.g., liquidation of the capital, or adjournment of the construction of a building), then the Foreign Resident Tax Office must be informed immediately via written notice. The notice should be made within one month of the day of interruption.
If the investor does not retain the investment for a period longer than six (6) consecutive months after the completion of the investment, then he/she is deemed to lose the tax benefits.
Summary
The Greek government decided to make a change in the tax legislation and create a fruitful ground for those individuals who wish to transfer their tax residence to Greece.
individual who wishes to transfer his tax residence to Greece, should he or one of his close relates invest a minimum amount of €500.000 in one or three installments into the Greek economy.
As soon as the investor deposits the minimum amount, he/ she is granted the preferential tax residency status. However, the investment should not be interrupted throughout the inclusion period.
We hope that this article will provide all the necessary information to the investor who wishes to invest in the Greek market and transfer his tax residency to Greece.
Kapa Investments can support and guide you throughout the process! We welcome you to contact us for any help or information!
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