Greek Prime Minister Kyriakos Mitsotakis.
Greece is attempting to woo wealthy families with a new legal framework for family offices, the personal investment bureaus of the super-rich.
The framework, which was voted through an unusually snowy parliament on Wednesday (17 February), grants low taxes for family offices in the hope they will generate local prosperity.
To qualify, a family office must employ at least five people and have an annual expenditure of over €1 million ($1.3 million), criteria most would easily fulfil since these secretive offices manage the wealth of multi-millionaires or billionaires. They will then receive an effective tax rate of 1.7% and zero VAT on internal transactions.
In return, “Greece gets the spending of their office, whether buying a home or whatever,” says Alex Patelis, the chief economic advisor to the prime minister. “But they might also decide to support the arts, or a museum or sports. One thing brings the other.”
Then there are the broader knock-on effects, says Patelis: “A family office has spillover effects in nurturing the development of ecosystems, be it in estate planning, asset management, etc.”
Heavy snowfall in Greece has left parts of Athens without power and water for up to three days.
As the rich get richer, their family offices are becoming more influential. A report by Fintrx and Charles Schwab estimates there are between 3,500 and 5,000 family offices in the world and a quarter of them are in Europe.
Increasingly they are “writing larger checks,” says Russ D’Argento, founder and CEO of Fintrx. “There are families that write $50 million, $100 million plus checks, no question about it.”
For this reason, countries from Singapore to Switzerland are rolling out the red carpet for these financial firms, offering low taxes and favourable regulation to get a piece of the family office pie.
This runs contrary to tax campaigners who are calling for governments to tax the rich more not less, particularly in light of coronavirus relief packages.
A controversial tax amnesty that allows more than 5,000 alleged tax evaders to escape prosecution was granted by Greece’s parliament in November. Critics said the amnesty would only reward tax evaders while curbing the powers of public prosecutors.
Nevertheless, Greece’s prime minister, Kyriakos Mitsotakis, is pressing ahead with plans to attract rich retirees and skilled workers through tax reforms.
In 2019, the government introduced a non-domicile law that offers tax incentives for wealthy foreign nationals moving to Greece. The following year, retirees moving to Greece were granted a flat 7% tax on pension incomes.
Then, in December, Greece passed a new law allowing digital nomads to half their income tax if they move to the Mediterranean country.
Only now Mitsotakis has rich Greeks in his sights. Speaking in August when he first announced the family office framework, he said: “Our target now is to attract very rich foreigners and also Greeks who have their money abroad, in Switzerland for example.”
Mitsotakis wants to repatriate some of the wealth that has flowed out of Greece since the 1970s. Greek shipping tycoons such as Aristotle Onassis and Stavros Niarchos made billions before moving themselves, and their vast wealth, west, often to Switzerland, Monaco or the U.K.
Many Greeks resent these tycoons’ move. The country’s economy was slowly recovering from the 2010 Eurozone crisis until Covid-19 hit: Greece’s GDP contracted by 11.6% in the year to October 2020.
Aristotle Onassis wears his trademark ‘shades’ while partying with Elsa Martinelli in Paris.
Several decades on, Patelis says descendants of the same tycoons might be persuaded to return. “Many families have now moved onto second or third generation. These tend to approach wealth preservation and growth in a more professional and sophisticated manner and we as a country need to approach them in the same way.”
This will take time, says Dimitrios Tourikis, a managing partner of wealth and tax advisory firm Callamus. The legislation “doesn’t have any depth,” he says. “The government needs to improve the legislation and make more incentives.”
But there has already been some interest in wealthy families moving to Greece, he says. “Greece has the sun and it’s an ideal place for rich people,” says Dimitrios, somewhat ironically given his office currently has no electricity after heavy snowfall has caused days of power cuts in Athens. It is the first time Dimitrios has made it into the office all week after snow drifts blocked roads.
Prosperty, a Greek real estate agency, expects demand for luxury homes to pick up in the next six to 24 months as a result of “a political climate conducive to growth and positive change,” says Steve Gantzos, a senior manager at the company.
Most newcomers will likely be “people with a connection to Greece—some friends or some family—these will be the first to come,” says Dimitrios. “Maybe towards the end of the year or the new year when things get a little bit better they will come.”
I write about the fortunes of Europe’s wealth amidst the continent’s political ups and downs. I cover billionaires and where their money ends up: The charities and