Greece's Ministry of National Economy and Finance is implementing a new tax framework to establish Athens as a global investment hub, specifically targeting alternative investment fund managers, including hedge funds, private equity funds, and other Alternative Investment Funds (AIFs). The initiative aims to attract fund managers, investment teams, and specialized professionals from established financial centers such as London, Asia, and the Middle East, while fostering a broader ecosystem of legal, auditing, tax, banking, custody, advisory, and technology services around investment management.
A key aspect of this regulation is the assurance that providing portfolio management services, investment advice, or related support functions from Greece will not result in the transfer of tax residence for foreign funds, their managers, or investors. This also guarantees that such activities will not create a permanent establishment in Greece, thereby safeguarding against double taxation and providing the legal certainty international players require before expanding operations. This clarification addresses long-standing ambiguities around tax residency and permanent establishment rules that previously deterred relocation.
A significant incentive is the special tax regime for carried interest, which refers to the performance-based compensation of investment fund management executives. Under the new provisions, these specific earnings will be taxed at a highly competitive rate of 5%, provided certain conditions are met. This 5% rate also applies to executives who relocate their tax residency to Greece under Article 5C of the Income Tax Code, for a maximum period of 7 years, provided they are employed by a Greek entity with operating expenses of at least €3 million per year.
The Greek government aims to attract human capital rather than entire institutions, focusing on investment professionals, analysts, compliance officers, and operational teams. Officials believe Greece offers advantages such as lower operating costs compared to other European jurisdictions, an improved economic outlook, and a strategic geographic location. The success of this initiative will depend not only on tax incentives but also on Greece's ability to offer regulatory stability, operational efficiency, legal certainty, and access to talent, as it competes with established financial centers like Luxembourg, Ireland, Cyprus, Switzerland, and the United Arab Emirates.
