GREECE Trends and Developments Contributed by: Theodore Rakintzis, Panagiotis Pothos, Angeliki Miliakou and Petros Roumpis, Kyriakides Georgopoulos Law Firm
ticularly where long-term governance and protection are required. Typical objectives include the following. • The protection of minors or vulnerable beneficiar- ies through controlled administration and staged distributions rather than an immediate and poten- tially fragmented transfer of assets at a single point in time. • The continuity of management across generations, where the trustee or foundation board can adminis- ter assets under a pre-set governance framework, limiting the risk of post-death paralysis or disputes among co-heirs. • Risk management and asset separation objectives, to the extent compatible with the applicable legal framework and creditor protection rules. A defin- ing characteristic described in the administrative guidance is that trust assets are managed by the trustee as a distinct pool, which is central to private clients’ asset protection thinking. • Intergenerational preservation of wealth, given that the trustee holds legal title to the assets; as the beneficiaries do not directly own the assets, the wealth is less exposed to personal risks such as creditors, divorce or poor financial decisions. It should be noted that asset protection through trusts or foundations is not absolute. Greek law gives credi- tors the right to challenge transfers of assets that were made to their detriment, meaning that if assets are moved into a trust or foundation primarily to place them out of creditors’ reach, a court may set aside that transfer (Civil Code Articles 939–946). For this reason, these structures should be driven by genu- ine succession and governance objectives, such as providing for minor children or ensuring continuity of family wealth management, and should be properly documented. Greek law also recognises the concept of a founda- tion as a legal person, where assets are allocated by a founding act to serve a specific purpose. In practice, domestic foundations in Greece are generally struc- tured as non-profit or public benefit entities under state supervision, with the legal framework for common benefit foundations addressed in Law 4182/2013. This means that, as a domestic Greek tool, foundations tend to be most relevant for legacy and philanthropy
planning rather than as a private holding vehicle for family wealth. Foreign foundations may nonetheless appear in Greek-connected private wealth structures and are addressed together with foreign trusts in the AADE administrative guidance (POL 1114/2017). The tax treatment of inter vivos trusts/foundations largely depends on the wording of the constitutional documents governing such distributions. In principle, the Circular recognised that the true intention of the settlor is to proceed to a gift, during their lifetime, to the designated beneficiaries. To this end, the settlor/ founder transfers assets gratuitously from their estate under the management of the trustee/board or coun- cil and for the benefit of the beneficiaries, who have a simple expectation of receiving distributions from them. In principle, distributions from a testamentary trust fall within the scope of Greek inheritance tax rules; accordingly, the beneficiaries are treated as heirs for Greek tax purposes. Finally, and in accordance with the Circular, the set- tlement of assets into an inter vivos/hereditary trust or foundation does not, in itself, constitute a taxable event for the beneficiaries. However, distributions from said vehicles to the beneficiaries, in principle, give rise to gift taxation in Greece, depending on the facts and the relationship between the parties. Please note that the Circular clarifies that a trust is regarded as a succession planning vehicle and, as such, must reflect the genuine intention of the settlor to transfer their estate to the designated beneficiar- ies. At the same time, the Greek tax anti-avoidance framework applies to prevent artificial arrangements established solely for the purpose of securing tax advantages for the settlor. It should also be noted that trust distributions from settlors or to beneficiaries who have opted into the 5A tax regime may qualify for exemption from Greek gift/inheritance tax to the extent that the trust assets consist of foreign assets. Real estate owned by trusts Greek real estate owned directly or indirectly through legal entities can trigger the annual 15% special real estate tax (SRET) under Law 3091/2002, unless a
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