Early in 2021, through Law 4778\/2021, the Greek government set forward a provision introducing \u201cFamily Offices\u201d (FO) in the Greek economic system. The aforementioned provision can be applied individually, as a means to assist Greek families already residing in Greece better manage their assets, as well as complementary to the recent regulations providing tax incentives to High-Net Worth Individuals (HNWIs) to transfer their tax residence in Greece (Laws 4646\/2019, 4714\/2020, 4758\/2020).<\/p>\n\n\n\n
Evidently, the Greek government is aiming to formulate a complete legal framework that will facilitate and incentivize HNWIs to use Greece as the center of their financial activities which, by extent, will rejuvenate Greek economy through the rise of the cash flow but also through the qualitative diversification and upgrade of the mix of the services offered, thus better accommodating its economy to the spirit of globalization.<\/p>\n\n\n\n
Family Offices are legal entities which essentially manage a family\u2019s assets and disburse payments to family members as required. The company\u2019s capital is the family\u2019s wealth. FO engage in a range of activities that can be classified as follows: Wealth management, including indicatively asset allocation, investment advice and strategy, private equity; Wealth planning, particularly succession planning and company\u2019s continuity; Tax planning, including tax returns\u2019 filing, international allocation, real estate structures; Trust and Corporate services, including corporate incorporation, real estate management, aircraft & yachts, trust administration, family shareholding.<\/p>\n\n\n\n
In broader terms, a FO will simultaneously manage the household staff but also legal affairs, make succession and education planning while making travel arrangements, decide on property development while processing day-to-day accounting and payroll activities.<\/p>\n\n\n\n
To establish a FO, the provision requires an individual (native or not) who has his tax residency in Greece. This individual along with his\/her spouse (or partner through a civil partnership) and their children and parents, are considered as members of a family and can be partners\/shareholders of a FO.<\/p>\n\n\n\n
The provision further requires that the FO employs at least 5 people – of various specialties- in Greece within 12 months from its launch. The FO can further employ the services of third parties (individuals or companies) regardless of their establishment. However, members of the family cannot be employees of the FO.<\/p>\n\n\n\n
The transactions of the FO are obligatorily carried out through bank remittances. Finally, the FO needs to spend annually 1.000.000\u20ac in operating expenses in Greece.<\/p>\n\n\n\n
FO operate as special investment schemes, managing the funds of specific taxpayers, not seeking commercial activity and profit. For that reason, a special and indirect way of determining their tax income is introduced: their gross income will be a notional amount, which will be the outcome of all the expenses and depreciation costs (except the income tax) plus a 7% profit margin over them. Finally, for the assessment of the tax base (net income), the expenses of the entity will be deducted from the gross income, on the condition, that these are booked in accordance with the relevant provisions of the law N. 4308\/2014. In case there are deviations between the notional income and the actual income recorded in the accounting books, the higher amount will serve as the calculation base. The tax will be assessed over the final amount by applying the tax rate for legal entities (currently 24%).<\/p>\n\n\n\n
Finally, the provision strictly exempts transactions between the FO and its shareholders from VAT charge. For the purposes of the law, these transactions are considered as acts within the one and the same economic entity.<\/p>\n\n\n\n
The newly introduced provision applies to individuals that have their tax residency in Greece and allows them to establish a legal entity that will have as its sole purpose the management of their fortune (money flows and family property). The provision solely introduces a compulsory tax regime for the FO, thus its shareholders will decide on its legal form. Therefore, the legal entity can have the form of a limited company, a private limited company, a general partnership, a limited liability company etc. It is worth mentioning that the legal framework for companies has been recently renewed and modernized and offers a stable and predictable operational context, to the extent that it is accompanied by a thorough statute and a responsible administrative team.<\/p>\n\n\n\n
The FO can manage assets, regardless of the country to which they are located. It is important to note that the provision clearly specifies that the management of the corporate shares of any legal entities through the FO cannot be considered as a presumption that the center of the effective management of the said entity is located in Greece. According to Greek law, there is a presumption of tax residency for legal entities whose actual administration is located in Greece and the clear exemption set forward by the provision simplifies the legal management of corporate affairs.<\/p>\n\n\n\n
A few points of concern need to be addressed: the provision limits the FO\u2019s scope to one generation, with the beneficiaries of its services being strictly those included in the definition of family as given by said provision and not in accordance to the broader notion of family of the Civil Code. Furthermore, FO provide their services exclusively to individuals and they cannot be subcontracted by legal entities that these individuals own and\/or manage. The decisions of the Minister of Finance and the Governor of the Independent Authority for Public Revenue, which will specify the services FO are allowed to provide as well as clarify which transactions are considered internal and deductible from VAT, are pending. Finally, those willing to establish a FO need to make an informed decision on the corporate scheme it will have, since the available under Greek law corporate forms have advantages and challenges and certainly require a close legal and accounting monitoring.<\/p>\n\n\n\n
FO are a quite widespread means of managing wealth and their introduction in the Greek legal and economic system is a clear and undisputed signal of the direction the Greek economy is moving towards. After a troubled decade of austerity and turmoil, Greece seeks to reestablish itself as a committed and vigorous participant of globalization.<\/p>\n<\/span>","protected":false},"excerpt":{"rendered":" Early in 2021, through Law 4778\/2021, the Greek government set forward a provision introducing \u201cFamily Offices\u201d (FO) in the Greek economic system. The aforementioned provision can be applied individually, as a means to assist Greek families already residing in Greece better manage their assets, as well as complementary to the recent regulations providing tax incentives […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/cremer-law.com\/wp-json\/wp\/v2\/posts\/142"}],"collection":[{"href":"https:\/\/cremer-law.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cremer-law.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cremer-law.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/cremer-law.com\/wp-json\/wp\/v2\/comments?post=142"}],"version-history":[{"count":1,"href":"https:\/\/cremer-law.com\/wp-json\/wp\/v2\/posts\/142\/revisions"}],"predecessor-version":[{"id":229738,"href":"https:\/\/cremer-law.com\/wp-json\/wp\/v2\/posts\/142\/revisions\/229738"}],"wp:attachment":[{"href":"https:\/\/cremer-law.com\/wp-json\/wp\/v2\/media?parent=142"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cremer-law.com\/wp-json\/wp\/v2\/categories?post=142"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cremer-law.com\/wp-json\/wp\/v2\/tags?post=142"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}