Greece woos the wealthy with plan for ‘non-dom’ tax breaks

Erechtheum at the Acropolis
The famous statues at the Erechtheum temple

Athens will offer tax incentives to wealthy individuals willing to reside in Greece for at least six months a year in a “non-dom” programme intended to attract shipowners, successful entrepreneurs and the retired. Draft legislation due to be approved by parliament on Friday introduces a flat tax rate of €100,000 annually on worldwide income for a period of 15 years for people who qualify for the programme. The move by the centre-right government of Kyriakos Mitsotakis, the prime minister, highlights a drive for fresh revenues to accelerate a weak economic recovery following Greece’s eight-year crisis. A senior government adviser said the programme was “loosely based” on Italy’s non-dom arrangement, launched in 2017.

The Italian scheme was deemed so successful that it was extended this year to foreign pension holders who agree to live in local communities of fewer than 20,000 people. “We really don’t know how well our system will work. We expect some hesitation at first . . . We may end up with just a few hundred people in the early years,” the adviser said. A finance ministry official stressed that Greece’s international creditors, the EU and the IMF, had not raised objections to the scheme. He said it was in compliance with OECD rules on countering tax avoidance, thanks to the residence requirement.

Mr Mitsotakis has ruled out selling Greek passports to non-EU citizens, following a scandal in Cyprus last month over the €5m sale of a passport in 2015 to Jho Low, a Malaysian financier accused of involvement in a multibillion-dollar international fraud. €100,000 Proposed flat annual tax rate on worldwide income for a term of 15 years The term non-doms — borrowed from the UK — refers to people who will become Greek residents but claim their primary domicile in another country.

The status means they are not liable for tax on offshore income and capital gains unless the money is brought into Greece. “One attraction of a non-dom programme for a global businessperson is that you don’t have the administrative costs associated with managing trusts and paying taxes in a number of jurisdictions,” said Yiangos Charalambous, a tax consultant. Greece’s non-doms will have to invest €500,000 in stocks, bonds or property within three years of taking up residence. There will be no inheritance tax on assets held outside Greece and a grandfathering clause will protect against changes of policy by a future government.

Greece already runs a “golden visa” programme that hands out five-year residence permits to non-EU citizens in return for a €250,000 investment in residential property. There is no minimum length of stay set by the government. About 5,000 visas have already been granted under the initiative, mostly to Chinese and Russian applicants and their families.

Many have bought properties around Athens, with some taking advantage of a housing price collapse during the crisis to buy several small apartments as holiday rentals for European tourists. Yet their contribution to the economy is minimal compared with the spending power of wealthy Greeks who live outside the country.

Shipowners based in the UK, Monaco or Switzerland are among the targets of the non-doms programme. “We saw shipping people based in Athens pack up and flee abroad during the Greek crisis. Now there is political stability and a tax incentive: two good reasons to return,” said a maritime insurer based in Piraeus port. Members of the global Greek diaspora who already make regular summer visits could be the biggest group, according to Philip Stefanides, an adviser to foreigners buying Greek real estate. “We already get a lot of inquiries from successful people approaching retirement and wanting to spend time close to their Greek roots. This [programme] could be a game changer,” Mr Stefanides said.