GREECE Law and Practice Contributed by: Fotodotis Malamas, Bernitsas Law
Guidelines on the scope and services of Family Offices By way of Decision A.1043/2022 (the “Decision”), the Ministry of Finance and the Independent Authority of Public Revenues (IAPR) have set out guidelines on the scope of and services that can be provided by Family Offices. The exclusive scope of Family Offices is the administration and management of assets and investments owned, directly or indirectly, by Greek tax-resident individuals and members of their family, and includes the management of expenses incurred by them. Only family members can be shareholders, partners or members in Family Offices, either directly or through legal entities in which they are majority shareholders. The services that they can provide include: • services related to the personal and social life of family members, including public relations, teach - • strategic planning services, including business consulting, real estate planning and succession planning; and • other consulting services, including tax consulting and legal, medical, engineering, risk management and cybersecurity services. Special tax regime for Family Offices Family Offices must be registered with the tax authori - ties under the activity code number 66301102: “Man - agement services of family estate”. ers and security guards; • management services; • financial management services; In order for the special tax regime for Family Offices to apply, the following conditions must be cumulatively met: • at least five employees must be employed in Greece by a Family Office within a period of 12 months from its establishment; and • the operating expenses of a Family Office must exceed the amount of EUR1 million within the respective tax year, must be performed in Greece and must relate to its operation in Greece.
The gross revenues of Family Offices are determined on a cost-plus basis. In particular, a 7% profit margin applies to the expenses incurred by them (excluding income tax) unless the revenues registered on their books are higher than the revenues under the cost- plus basis method. All Family Office revenues must be collected via the banking system. Any transac - tions between Family Offices and family members are excluded from VAT as transactions within the same entity. Family Offices must submit a list of documents to the tax office of Athens so that the latter can decide whether they qualify for the special tax regime. However, good intentions do not necessarily lead to practical results. The minimum amount of expenses and number of employees required for Family Offices render this scheme inflexible and expensive. Unless specific amendments are introduced, the viability of this tax incentive is not certain. The present expens - es need to be rationalised, the minimum number of employees needs to be reconsidered and the scope of Family Offices needs to include a broader concept of family, rather than being restricted to the founding family members. 4.2 Succession Planning The tax and legal environment create impediments to business succession planning strategies in most cas - es. Potential structures used for succession should take possible future tax implications into consid - eration. The structure most commonly used to pass wealth and control through generations is the transfer of securities by way of sale or donation, depending on their value; this method of planning is effective in cases of no or very limited liability to capital gains tax. Donations of securities are tax-exempt for amounts up to EUR150,000, after which the maximum rate is 10% for donations to first-class relatives (spouse, chil - dren or grandchildren), whereas the sale of securities incurs capital gains tax at a rate of 15%. In some cases, the older generation contributes assets to a newly established company, shares of which are donated or transferred to the next generation. In cases where the next generation has already established a legal entity, tax incentive laws may be used for the
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