GREECE Law and Practice Contributed by: Fotodotis Malamas, Bernitsas Law
Family Offices By way of Law 4778/2021, Greece introduced a tax incentive intending to facilitate the management of family estates. As the matter of family estates is rather complicated for handling by individuals, the manage - ment of cash flows, investments and family assets of natural persons with a tax residence in Greece can be carried out by special purpose legal entities, the so-called family offices (“Family Offices”). Internal transactions between a Family Office and the persons participating in it constitute transactions carried out within a single entity and are outside the scope of VAT. The sole objective of Family Offices is to provide sup - port to the natural persons that reside for tax pur - poses in Greece and to their family members, in the administration and management of their assets and investments, held either directly or indirectly through legal persons or entities. Family members can participate in the special pur - pose companies, as can legal persons or entities in which the natural persons with a tax residence in Greece and/or members of their family participate. In order for Law 4778/2021 to apply, the Family Office must: • employ at least five employees in Greece within 12 months from its establishment and onwards (the natural person members of the Family Office can - not be employed by it); and • incur operating expenses of at least EUR1 million per year in Greece. The gross revenues from the services provided by Family Offices are determined by adding a percent - age of profit to all their expenses and depreciations, except for income tax (ie, the cost-plus method), and their profit margin is 7%. For the calculation of the taxable income of Family Offices, expenses are deductible on the condition that they are supported by the respective documentation, and income tax is calculated at the ordinary corporate income tax rate (currently 22%).
approach, treating beneficiaries as being subject to inheritance or donation tax. Dividends, Interests and Royalties In particular, for the period after the introduction of the ITC, any income from dividends, interests and royal - ties acquired in Greece by foreign trusts is subject to withholding tax (at 5%, 15% or 20%, as the case may be), after which their tax obligation is exhausted, to the extent that they do not have a permanent estab - lishment in Greece. Income from immovable property acquired in Greece is taxed as income from business activity at the tax rate of 22%. Finally, capital gains acquired from the transfer of securities are not taxed in Greece, unless it is deemed that a foreign trust maintains a permanent establish - ment in Greece. Avoiding Double Taxation It should be noted that the foregoing provisions apply subject to the provisions of relevant DTTs. Conse - quently, where a trust is tax-resident in a country with which Greece has concluded a DTT, the provisions of the respective DTT in force will apply; in any other case, the provisions of domestic legislation will apply. 3.4 Exercising Control Over Irrevocable Planning Vehicles There have been no changes regarding irrevocable planning vehicles in Greece.
4. Family Business Planning 4.1 Asset Protection
To the extent that there is no framework for trusts or foundations other than charitable foundations, the structures available for asset protection are fairly limit - ed, with the most popular being the foundation. Under this structure, assets such as artworks and antiques are contributed to a foundation with a public benefit scope. Buildings can also be contributed to a foun - dation to be used for exhibitions or other purposes benefiting the public.
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