Greece Lures Rich Foreigners With Big Tax Breaks

(Photo by Eurokinissi/ Dimitropoulos Sotiris)

ATHENS – While chasing people crushed by austerity measures and unable to pay their taxes, the ruling New Democracy is offering big incentives for the rich who make Greece their place of tax residency, setting a ceiling of 100,000 euros ($111,795) on their worldwide income.

Greek lawmakers okayed the deal for so-called “non-dom” tax residents that gives them preferred deals over Greek citizens now being taxed at higher rates – the basic income tax is 45 percent – as the government wants to bring in more cash from the world’s wealthy.

To qualify, residency is required in Greece at least 183 days a year and an investment must be made by the resident or a relative of at least 500,000 euros ($558,975) in real estate or business securities in legal persons or legal entities based in Greece, The Cyprus Mail said.

The investment must be finalized within three years from the date of submission of the application for the transfer of the tax residence, with the flat tax good for 15 years.

The program is aimed at shipowners, successful entrepreneurs and the retired rich, said The Financial Times in a feature earlier.

Seeking foreign businesses, Prime Minister Kyriakos Mitsotakis was already planning to let rich foreigners who have no ties or heritage to Greece to buy citizenship outright while those in the Diaspora have to wait two years or more.

A senior government adviser not identified told the news site that the program was “loosely based” on Italy’s non-dom arrangement that was so successful it was extended to foreign pension holders who agree to live in local communities of fewer than 20,000 people.

“We really don’t know how well our system will work. We expect some hesitation at first . . . We may end up with just a few hundred people in the early years,” the adviser said.

The sourcestressed that Greece’s international creditors, the European Union and the International Monetary Fund in Washington, hadn’t objected and that the scheme was in compliance with the Organisation for Economic Co-Operation and Development (OECD) rules.

The term non-doms refers to people who will become Greek residents but claim their primary domicile in another country, which means they won’t be liable for tax on offshore income and capital gains unless the money is brought into Greece.

“One attraction of a non-dom program for a global businessperson is that you don’t have the administrative costs associated with managing trusts and paying taxes in a number of jurisdictions,” Yiangos Charalambous, a tax consultant, told the news magazine.

Greece’s non-doms will have to invest 500,000 euros ($554,725) in stocks, bonds or property within three years of taking up residence.

There will be no inheritance tax on assets held outside Greece and a grandfather clause will protect against changes of policy by a future government which won’t be able to make changes to the scheme.

Many wealthy Greeks, who would pay far higher taxes than non-doms, already hide their money in secret foreign bank accounts and rich Greeks who live in other countries would be wooed under the new program, especially shipowners living in Switzerland, the United Kingdom, or Monaco, the report said.

“We saw shipping people based in Athens pack up and flee abroad during the Greek crisis. Now there is political stability and a tax incentive: two good reasons to return,” said a maritime insurer based in the port of Piraeus.