The Incentives & Who Can Benefit
We have to mention another tax breakthrough which was passed right after the new Prime Minister took office, and certainly can lead to an economic growth, that is the ‘freeze for 3 years’ of VAT 24% in the construction industry (‘E 2006/2020’). Till that moment, we were experiencing mainly building renovations (at
the Residential Real Estate), but not new land development housing projects. Undoubtedly, Construction and therefore newly developments can produce govement in several sectors within the economy. Construction is for the most countries, a major industry throughout the world accounting and it’s a big part of their Gross Domestic Product (GDP) and Gross National Product (GNP). It plays a key role in economic growth and it could have a major impact on the economy.
Therefore, policy-makers may be misguided, even destructive, or saviors for many jobs least to say. So, the new tax law has already attracted many nationalities and there are hundreds of applications, from investors in the UK, Russians, Chinese, Lebanese etc. aiming to make Greece their tax residence.
It is worth noting that the new law has been running since 2020, during covid-19 times, and so far the numbers (applications) and interest seems to exceed even the most optimistic forecasts in terms of its acceptance.
Who Can Apply
According to the provisions of the law, the incentive offered to those with high incomes to move their tax residence to Greece; one of the main requirements is a fixed annual tax payment of 100,000 euros regardless of the amount of income earned. Additionally, another basic condition which can lead to the approval of the favorable tax is: The Tax Payer himself and/or any proven relative person, and/or through a legal person or legal entity in which one of the following three investments are met and made: Investment Amount of 500.000 Euros minimum.
The eligible categories for the 500.000 Euros investment are:
I) Purchase of a real estate in Greece. The acceptable amount of the investment is determined as the smallest amount between the ‘objective value’ of the property at the time of purchase, increased that by 10%, and the purchase value based on the Final Contract. In the case that there is no objective value for the particular chosen property or the taxpayer wishes to document an invested amount higher of the 10%-increased objective value and the value shown on the final contract, for the determination of the acceptable investment amount the Applicant can submit a valuation report which is recent and not older than six months from the date of the property acquisition.
II) Purchase of existing or establishment of new premises facilities in Greece for conducting business activity through a sole proprietorship.
III) Acquisition of company shares not listed in the stock market; such an investment can be the purchase of participation securities, through a legal physical person or legal entity, and in particular the purchase of shares of a Greek Company (type ‘SA’, ‘O.E.’, ‘Ltd.’, ‘IKE’).
IV) Purchase of Greek Government Bonds with a residual maturity at the time of purchase of at least 3 years.
V) Capital contribution for participation in an Alternative Investment Organization.
VI) Purchase of securities that are traded in regulated markets. The investor is obliged to keep in a credit institution established in Greece a unique and exclusive account for the operations of the investment and the subsequent management transactions of his/her portfolio and not to disburse any amount from liquidation of the securities, except for his/her reinvestment in movables values eligible for this category, so that the average annual balance of the above account does not exceed 20% of the amount of the initial investment.
Lastly, the investment is considered to have been completed, provided that all the physical object has been implemented and all its expenses have been paid. The taxpayer is obliged to maintain the investment in Greece for the entire period of its inclusion in the favorable tax provisions, which can last up to 15 years. The responsible Office for the submission of applications and the control of the supporting documents of the taxpayers is the Tax Office (‘D.O.Y.’) of the Overseas Residents