Rich Foreigners Offered Tax Breaks for Greek Relocation

Greece's Finance Ministry. (Photo by Eurokinissi, file)

ATHENS – After planning to offer citizenship outright to wealthy foreigners, Greece’s New Democracy government will also offer tax incentives to persuade them to move their move their tax residence to attract investments.

Greece is notorious for tax evasion, especially among the wealthy who hide their money in secret foreign bank accounts and the volatile tax laws and high rates of taxation have made it unattractive for investors to relocate, especially as the government has the power to confiscate bank accounts of debtors and even go into their safe deposit boxes to hunt for assets.

Tax relief included in draft legislation will include a cut in the corporate tax rate to 24 percent from 29 percent set by the former ruling Radical Left SYRIZA to appease the country’s European creditors, while the tax rate on dividends would be cut from 10 to 5 percent, said Reuters.

The so-called non-dom program will offer qualified wealthy investors who shift their tax residence to the country a flat tax of 100,000 euros ($110,710) on global incomes earned outside Greece annually.

“The tax incentive will run for a duration of up to 15-years and will include the benefit of no inheritance tax for assets outside Greece,” a senior government official who wasn’t identified told the news agency about the scheme.

One of the requirements to qualify will be residing in the country for at least 183 days per year and making an investment of at least 500,000 euros ($552,475) within three years. “The investment can be in real estate, stocks or bonds. If the investment reaches 1.5 million euros then the flat tax is cut by half,” the official said.

Investments of 3 million euros ($3.31 million) will reduce the flat tax to just 25,000 euros ($27,624) and investors would be protected from tax changes by future governments under a grandfather clause exempting them.

“Once you’re in the program, you’re in. A future government cannot get you out,” the official said as the government moved to remove one of the main reasons why investors have been reluctant to come to Greece or move their tax residence.

New Democracy hopes the plan will also bring back shipping magnates who have their headquarters the country.

Going past the sale of Golden Visas that come with a residency permit, New Democracy earlier said it wants to lure rich foreigners by offering them citizenship if they invest at least 2 million euros ($2.2 million) and move here for good.

While the visas allow wealthy foreigners to buy property but not live in it – which has seen those from China, Russia and other countries scooping up Greek apartments and turning them into short-term rentals – citizenship gives investors a Greek passport.

To get it though, part of their investment must be buying a home that costs at least 500,000 euros ($550,710) and paying at least 50,000 euros ($55,071) in annual maintenance costs, apparently whether it’s needed or not.

With the United Kingdom set to leave the European Union, wealthy foreigners and investors are looking for other alternatives in Europe, said Kathimerini in a report on the scheme that also includes steps to vet applicants for fraud.

The Golden Visa program – also in effect in Greece – has seen accusations in a number of countries that offer it that it’s open to infiltration by criminals looking to launder money and hide their cash in foreign countries.

To get citizenship, proof of purchase of buying the required limit of real estate must be shown, paid in full with crossed check or bank transfer into the account of the beneficiary through an account with a Greek bank or a credit institution supervised by the Bank of Greece.

Without explaining why, if it could turn out to be a cash cow, the government also reportedly will set a cap on the sale of citizenships at 200 annually while even many Greeks in the Diaspora will continue to have to wait up to two years and longer to get dual citizenship even if their grandparents were born in Greece and they can provide documents in a program open to corruption and bribery.