Greece is extending an open invitation to international alternative investment fund managers and specialized financial sector executives through a provision in an omnibus bill submitted to Parliament, which establishes a new tax and regulatory framework for the industry.
The measure aims to strengthen Greece’s position as a regional investment fund management hub, with a focus on attracting activities such as hedge funds, private equity and Alternative Investment Funds (AIFs), while fostering a broader ecosystem of financial and professional services.
What the new regulation provides for investment funds
Under the proposed framework, investment organizations based abroad continue to be taxed in their country of domicile, even if their executives or support structures operate in Greece. The presence of such activities does not automatically trigger a transfer of tax residency or create a permanent establishment in the country.
At the same time, the regulation stipulates that economic activity carried out in Greece will be fully taxed under the applicable national tax framework. Companies incorporated in Greek territory are subject to the standard corporate tax rate, while employees are taxed on their total income and required to pay the prescribed social security contributions. VAT and all other tax obligations apply in the normal course.
A special provision is introduced for executives who transfer their tax residency to Greece under Article 5C of the Income Tax Code. This regime offers favorable tax treatment for a period of up to 7 years, while certain forms of variable performance-based compensation — such as carried interest and performance fees — are subject to a reduced tax rate under specific conditions.
Through this new regulation, the government aims to position Athens as a regional hub for alternative investment management, attracting specialized executives and fund managers from the Middle East, Asia, London, and other international financial centers, as well as high-value-added activities in the investment services sector.
According to the Ministry, the development of the sector extends beyond fund management companies themselves to a broader services ecosystem encompassing legal, auditing, tax, banking, custody, advisory, and technology services — while simultaneously creating new highly skilled jobs.
In detail, according to the bill:
– Foreign investment organizations (established in the European Union and third countries under specific conditions) continue to be taxed where they are domiciled.
– The new framework guarantees that if certain executives relocate to Athens, or if a service office is established here to provide services to the fund manager, this will not automatically be deemed a transfer of the manager’s, the investment organization’s, or the unitholders’ tax residency to Greece, nor will it create a permanent establishment of the above parties in Greece.
– The foreign group is taxed abroad in any case, while whatever is generated in Greece (service offices, salaries) is fully taxed here. This avoids double taxation and provides the legal certainty that foreign managers need in order to choose Athens.
– Full taxation of all economic activity in Greece is guaranteed.
- Service offices established in Greece to provide services to affiliated companies/managers are fully taxed at the standard corporate rate.
- All employees are fully taxed on their salaries and pay the required contributions, receiving the benefits and rights provided under Greek labor and social security legislation.
- Corporate tax and VAT are paid in the normal course.
– Executives who now transfer their tax residency to Greece, falling under the inbound workers regime of Article 5C of the Income Tax Code, for a maximum period of 7 years and provided they are employed by a Greek entity with operating expenses of at least €3 million per year, will benefit from a 5% rate exclusively on performance-based compensation (carried interest / performance fees) for fund management executives.
Previous measures to attract investment
This latest initiative to attract investment fund managers builds on a series of measures adopted in recent years.
Among others:
- The tax incentive scheme for transferring tax residency to Greece was extended to public sector employees as part of the “brain regain” strategy. The measure provides for a 50% reduction in income tax on employment income for seven years, along with exemptions from deemed income provisions for primary residence and vehicle.
- A new framework for Foreign Direct Investment was established, with special incentives for investment projects of up to €50 million financed by foreign capital and directed toward sectors such as manufacturing, industry, research and development, and artificial intelligence.
- The Golden Visa program was reformed, with increased minimum investment thresholds in the real estate market and incentives to channel capital into startups, investment funds, and Greek government securities.
- A foreign direct investment screening framework was enacted for national security and public order purposes, with dedicated oversight mechanisms in critical sectors such as infrastructure, energy, defense, and high technology.
- Through the development law, special aid regimes were established for large-scale investments, including tax exemptions, subsidies, and expedited licensing procedures.
- The special regime for attracting high-net-worth foreign tax residents is also maintained, featuring a flat tax of €100,000 on their worldwide income, subject to making an investment of at least €500,000 in Greece.
