Chapters in this guide
20
Greece is a continental law jurisdiction, a Member State of the European Union (EU) and one of the founding members of the Organisation for Economic Cooperation and Development (OECD). It has concluded a large number of Conventions on the Avoidance of Double Taxation and has incorporated the important EU Directives concerning tax transparency and exchange of information. Due to their dispersion and involvement in shipping, Greek high-net-worth individuals (HNWIs) are familiar with tax and wealth planning. A significant part of their private wealth is invested in real estate abroad (Europe, United States) but also in Greece, which, after the Greek debt crisis, has become attractive for both Greek and foreign investors in the real estate sector. Otherwise, a significant part of private wealth is held in banks and wealth planning structures abroad. The most common schemes are trusts, foundations, private wealth management companies and Life Asset Portfolios (LAPs). In recent years, there has been increasing interest from foreign HNWIs in investment in Greece due to the very favourable tax regimes that exempt them from paying tax on their worldwide income and the golden visa regime. At the same time, Greece has recently introduced the concept of the “Greek Family Office”, effective as of tax year 2021 onwards.
Greek residents are taxed in Greece on their worldwide income, i.e., both income earned in Greece and income earned abroad. An exception applies to individuals who have been subject to the tax incentive regimes of Articles 5A, 5B and 5C of the Income Tax Code, for whom special favourable provisions apply. In addition, income of foreign individuals arising in Greece is also subject to income tax. The above is without prejudice to the provisions of the Conventions on the Avoidance of Double Taxation. Personal income is taxed on a progressive scale, with a maximum rate of 44%. However, income from real estate is taxed separately at a rate of 15% for income up to EUR 12,000, 35% for income from EUR 12,001 to EUR 35,000, and 45% for income from EUR 35,001 and above. Dividends are taxed at a rate of 5%, interest at a rate of 15% and royalties at a rate of 20%. Capital gains from the sale of real estate are not subject to tax until 31 December 2026 because the application of the tax has been suspended in order to strengthen the real estate market in Greece. Goodwill from the sale of securities is, in principle, subject to tax at a rate of 15%, but there are important exceptions, for example, in relation to listed shares, the sale of which at a profit is not subject to capital gains tax if the investor holds less than 0.5% of the share capital. Gains in the form of dividends or capital gains from the sale of units of Undertakings for Collective Investment in Transferable Securities (UCITS) authorised to be established or operate in Greece or the EU are exempt from any tax, duty, stamp duty, etc. This exemption does not apply to UCITS from third countries.
With regard to inheritance and gift taxation, the tax liability does not only depend on the place of residence of the deceased or heir or donor and donee, respectively, but also on nationality, while it should be stressed that inheritance or gift of assets located in Greece are taxable even if they belong to foreigners. It should be noted that Greece has concluded few Conventions for the Avoidance of Double Taxation in the field of inheritance. However, specific provisions of the Inheritance, Gift and Parental Gift Tax Code allow the deduction of inheritance tax proven to have been paid in a foreign country for movable property located in a foreign country up to the amount of tax due on property located in each foreign state.
The tax rates for gifts and inheritance are not particularly high, especially for close relatives. In particular, for inheritance and gifts to spouses, children and grandchildren, the maximum rate is 10%. Exemption from inheritance tax is provided in relation to the movable property of a Greek citizen located in a foreign country if he/she has been resident in the foreign country for 10 consecutive years. Recently, very significant exemptions from inheritance tax have been introduced for deposits in joint bank accounts held in a foreign country, as will be discussed in more detail in Section 1.1, below. Exemptions from gift tax have also been introduced in relation to gifts made by Greek nationals who were resident abroad for 10 consecutive years, as will also be discussed in Section 1.1, below.
Greek Family Office
Effective as of 2021 onwards, incentives are provided for the establishment of special purpose family wealth management companies, which manage the cash flows and family wealth of individuals tax resident in Greece. This specific framework is focused on families of high financial standing, and aims, in combination with the provisions of Articles 5A, 5B and 5C of the Income Tax Code, to attract HNWIs moving their tax residence to Greece.
In particular, the Greek Family Office shall have as its sole purpose the administration and management of assets and investments, held either directly or indirectly, of individuals and their family members (spouse, unmarried children, grandchildren), the management of expenditure incurred by such individuals to meet their general living expenses, as well as charitable and cultural activities. The assets and investments may be located in Greece or abroad.
The Greek Family Office can operate under any of the legal forms provided by Greek corporate law, with the exception of non-profit-making legal entities.
The requirements for setting up a Greek Family Office are:
- within 12 months from the establishment of the Greek Family Office and onwards, to employ in Greece at least five individuals; and
- to incur operating expenses in Greece of at least EUR 1 million per year.
The Greek Family Office, in fulfilling its purpose, may provide, amongst others, services related to the personal and social life of family members, administrative support services, financial management services, strategic planning services and other advisory services. An indicative list of the specific services that may be rendered by the Greek Family Office has been specified by Ministerial Decision Α.1043/05.04.2022. Outsourcing of services is foreseen by the relevant framework.
The Greek Family Office is taxed on a cost-plus basis. Specifically, a profit margin of 7% is applied on expenses of any kind and depreciation, excluding income tax. It is important to note that any expenses realised by the Greek Family Office must be realised through the banking system. The resulting gross income is then taxed at the applicable corporate income tax rate of 22%.
Gifts
In an effort to harmonise exemptions applicable to inheritance tax and, more specifically, on the succession of Greek nationals having lived abroad for more than 10 consecutive years, the Greek Parliament introduced similar exemptions as regards gift tax in 2020. The said legal provisions, which were subsequently amended in 2022, provide that gifts of movable assets that are located abroad at the time of the gift from a Greek national who has been resident abroad for at least 10 consecutive years and, in case of relocation to Greece, no more than five years have elapsed, are exempt from gift tax, unless the Greek tax authority can prove that such assets were acquired during the last 12 years in Greece.
In addition, for Greek nationals who have been resident abroad for at least 20 consecutive years and have not relocated to Greece at the time that the gift occurs, a gift tax exemption applies to the gift of movable assets that are located abroad at the time of the gift.
These provisions are extremely important for the Greek diaspora.
In addition, important gift tax breaks were introduced in 2021 for gifts made between spouses as well as between relatives of first degree of kinship. In particular, a gift of assets up to EUR 800,000 is exempt from gift tax. In the case of monetary gifts, these must be made through the banking system.
Such provision has been met with great enthusiasm and Greek taxpayers have taken the opportunity to effect gifts tax-free to their children and grandchildren. However, such transactions are at the same time at the forefront of tax audits, especially in cases where the conditions set by the law are not met or when aggressive tax planning has taken place by channelling funds through successive gifts between related parties so as to achieve the lowest tax rate (e.g., a gift from sibling A to parent and then from parent to sibling B would benefit from the nil tax for an amount up to 800,000 EUR, whereas a direct gift from sibling A to sibling B would be subject to 20% gift tax and not be entitled to the tax-free amount of 800,000 EUR).
Joint bank accounts
An established practice in Greece is that an exemption from inheritance tax is granted on money deposits in joint accounts (compte joint, joint account) provided that the banking contract contains the additional condition that, in the event of the death of one of the joint account holders, the deposits will automatically pass to the other surviving joint account holders and up to the last of them. As such, joint bank accounts do not form part of the estate and therefore are not subject to inheritance tax in Greece.
Such clauses are typically included in the Greek bank account opening forms.
A similar exemption from inheritance tax shall also apply to units of mutual funds and to securities portfolios held in joint investment accounts, as well as to financial instruments issued abroad and registered in an account held with a credit institution or an alternative investment fund with its registered office or establishment in Greece, subject to a relevant agreement with the clients.
In 2022, this extremely important exemption from inheritance tax was extended to joint bank accounts (either deposit accounts or investment portfolios) held abroad, either in EU Member States or in third countries, provided that the account opening forms/terms and conditions include a clause pursuant to which, upon the death of one of the joint account holders, the account automatically passes on to the remaining account holders.
The exemption does not apply to deposits and accounts held in non-co-operative states and in states that have not concluded and do not apply a Convention on Administrative Assistance with Greece or have not signed and do not apply the Multilateral Agreement of Competent Authorities for the Automatic Exchange of Financial Account Information with Greece.
Greece is not a federal state and therefore no local divergences apply.
After 2012, which coincided with the disclosure of the Lagarde List to the Greek tax authorities, tax audits were initiated with increased force on HNWIs who were tax resident in Greece. One of the most important legal aspects when defending the position of the taxpayer relates to the statutes of limitation, i.e., the period within which the tax authorities maintain the right to issue a tax assessment against the taxpayer. This was not straightforward given that, for decades, the state kept extending the statutes of limitation for tax years that should, in principle, have been prescribed. The first groundbreaking judgments of the Administrative Courts were issued in 2017 onwards, confirming that the successive prolongments of the prescription period violate the principle of legitimate expectations and the principle of proportionality, amongst others. Specifically as regards the cases concerning the Lagarde List, the Supreme Court ruled that the delivery of the CD containing the names of account holders with bank accounts in Switzerland is construed as sufficient knowledge by the Greek tax authorities of the existence of such accounts, and the failure of the Greek authorities to conduct audits in a timely manner cannot lead to an extension of the prescription period to the detriment of the taxpayer, on the argument that the foreign bank accounts constitute “supplementary evidence”, which would enable the prolongment of the prescription period from the statutory five years to 10 years. It is noteworthy that such judgments focus on the obligation of the state to exercise due care and proceed to tax audits in a timely manner and by reference to all information that may be available to them. Subsequent judgments followed this rationale.
One of the most important developments in the jurisprudence of the fiscal courts on the issue of statute of limitation, and especially with regard to foreign bank accounts, is judgment no. 1062/2023 of the Supreme Court. This judgment is important both because it confirmed the existing case law in relation to Greek bank accounts and because it held that data resulting from the processing of foreign bank accounts which have been directly fed with remittances from a domestic account, or which have been fed with incoming remittances to a Greek bank account, cannot be construed as “supplementary evidence”. However, the classification as “supplementary evidence” may apply to foreign bank accounts which have been fed by other bank accounts held abroad. For that category of accounts, the question of whether the information relating to those accounts can be regarded as “supplementary evidence” must be assessed on a case-by-case basis, on the grounds of whether, at the relevant time, the Greek tax authorities were able to obtain access to the balance and transactions realised in those accounts in the framework of administrative assistance.
Greece is not a federal state and therefore no local divergences apply.
In 2017, the Greek Tax Administration issued for the first time guidelines on the method of taxing foreign trusts and foundations. Since then, we have seen an increased demand for such vehicles as part of asset management and estate planning structures.
During the pandemic, the Greek Tax Administration provided specific grace periods for determining the tax residency status of individuals, especially in view of the extended lockdown periods that had restricted travel. However, violations of such grace periods have been detected by the tax authorities, leading to an increased number of tax audits of tax residency status.
Aiming to relieve the courts of procedures that can be appropriately carried out by lawyers, the recently introduced Law 5095/2024 regulates the transfer of competence for specific actions relevant to the estate administration and probate procedures from the civil courts to lawyers. It is anticipated that the enactment of this legislation will result in a more prompt and efficient completion of formalities relevant to the estate administration, such as with respect to the issuance of succession certificates, as well as with respect to the acceptance or renouncement of the estate.
Furthermore, from a substantive point of view, substantial amendments to the inheritance provisions contained in the Greek Civil Code are under discussion and would constitute the first major amendment of such provisions in 80 years. Amendments are expected to focus on the following:
- limitation of the deadline within which heirs can acknowledge their rights to the estate;
- the introduction of inheritance rights to partners, i.e., for life partners that are not married or have not concluded a cohabitation agreement; and
- the introduction of succession contracts (which, up until now, were absolutely prohibited).
Greece is not a federal state and therefore no local divergences apply.
The Greek estate laws are specific and well interpreted by the courts. Therefore, a shift in settled case law is not common.
Greece is not a federal state and therefore no local divergences apply.
In 2008, Greece introduced legislation as regards cohabitation agreements (civil partnerships) and has recently enacted legislation as regards same-sex marriages. Same-sex civil partnerships have been available since 2015, but same-sex marriages have been possible only since 2024. If a couple has already concluded a same-sex civil partnership, this remains in force, and they can further proceed to same-sex marriage which will be valid retroactively as of the date that the civil partnership was concluded. When it comes to inheritance rights, individuals entering into a civil partnership have the right to autonomously regulate their affairs, including their succession, and it is particularly noteworthy that forced heirship rules may be circumvented.
No specific developments apply.
No substantial developments have taken place.
Greece is not a federal state and therefore no local divergences apply.
As a general rule, inheritance contracts are not permitted by Greek law, unlike in other jurisdictions. In particular, Article 368(a) of the Greek Civil Code stipulates that a contract concerning the inheritance of a person who lives either by him/herself or with a third person, either for the whole or a percentage of the inheritance, is null and void. In 2022, the Supreme Court issued judgment no. 1326/2022, pursuant to which the absolute nullity provided for by the provisions of the Greek Civil Code affects contracts which concern the whole or a percentage of the inheritance, but not contracts concerning the disposal of certain existing object(s) of the inheritance. This category includes inheritance contracts relating generally to the testator’s future inheritance, which are permitted when specifically regulating certain elements of the inheritance and not the whole or a percentage thereof.
Greece is not a federal state and therefore no local divergences apply.
No specific developments apply.
No specific developments apply.
4.1 Is it possible to set up a trust under the provisions of common law in order to preserve the family wealth, although settlor and beneficiaries live in Greece? And is there clarity as regards the tax treatment of distributions made to both the settlor and beneficiaries?
Yes, it is possible for a Greek tax resident and national, acting as settlor, to set up a foreign trust for the benefit of family members, residents and nationals of Greece. However, the applicable Greek forced heirship rules would always need to be respected in order to avoid future controversy.
From a tax law perspective, settling assets under a trust does not constitute a reportable transaction in the sense that it is not necessary for such settlements to be declared in the annual income tax return of the settlor. In addition, the settlement of assets under trust does not fall within the ambit of the Greek imputed income tax provisions.
The tax treatment of distributions from a trust to either the settlor or the beneficiaries has been specifically regulated by the Greek tax administration’s guidelines of 2017.
4.2 I have assets both in Greece and abroad. Should I settle my succession in one will or by separate wills in all relevant jurisdictions?
The answer to this question depends on many parameters and there is no ‘one-size-fits-all’ solution. If the estate includes Greek property, it is highly recommended to set up a Greek will in relation to such assets. However, the overall strategy must be confirmed in co-ordination and by receiving separate legal advice from all jurisdictions involved. An issue that must always be taken into consideration when concluding separate wills in different jurisdictions is ensuring that the validity of each will is not impacted by virtue of having concluded a (newer) will in another jurisdiction since, in many jurisdictions, including Greece, it can be argued that the newer will abolishes the older one and that the real intention of the deceased was to regulate his overall estate by virtue of the newer will.
4.3 Can I hold real estate in Greece through a trust?
It is not recommended for a trust to directly hold a real estate property, however, this may be possible indirectly by interposing a corporate entity. Particular attention should be given to the provisions of the annual Special Real Estate Tax (currently imposed at a rate of 15% annually on the tax value of the property) and the acquisition should be structured in such a way as to allow for the exemption from said tax.