A new and... tempting tax framework for attracting to Greece executives who manage alternative investment funds brings the Ministry of National Economy and Finance through the multi-legislature deposited in the Parliament. The new provisions concern hedge funds, private equity funds and alternative investment organisations (AIFs) and form part of a wider plan to create an investment hub based in Athens. The aim is to attract fund managers, investment groups and highly qualified officials from London, the Middle East and Asia, while creating an ecosystem of legal, audit, tax, banking, custody, advisory and technological services around investment management.
The main change introduced by the regulation is that the provision of portfolio management services, investment advice or other supporting functions by Greece to alternative investment organisations of the European Union or certain third countries is not in itself considered as a reason for transferring the real administration to Greece. At the same time, no permanent establishment in the country is created for its administrator, investment firm or investors.
In simple terms, a hedge fund or private equity fund based in London, in Luxembourg, in Dublin, Singapore or on another international financial market, it will be able to maintain in Athens executives, analysts, portfolio managers or service providers without risk of the transfer to Greece of the tax residence of the administrator, investment agency or its shareholders, or of a permanent establishment in the country. This is a security issue that prevents double taxation and provides the necessary legal certainty demanded by international fund managers before choosing a country to develop activities.
The new framework covers alternative investment organisations established in the European Union and third country investment organisations, provided that they are not based in non-cooperative States and supervised by competent authorities recognised by the International Securities and Exchange Commission Organisation (IOSCO). This extends the possibility of installing activities in Greece beyond the European market, covering investment schemes operating in large international financial centres.
Especially for portfolio management services and investment advice provided by Greek companies to EU alternative investment fund managers. or eligible third countries, the bill provides that they are not considered as a real administration in Greece for foreign investment schemes. At the same time, the provision of these services is not considered in itself to create a permanent establishment in Greece for foreign managers, removing one of the main tax risks that have hitherto prevented the transfer of such activities to the country.
The regulation is not a tax exemption. Investment firms are still taxed in the country where they are established, while all economic activity developed in Greece is taxed normally. The services offices created in the country will pay the corporate tax planned, VAT will normally be paid and employees will be taxed and insured in accordance with Greek legislation.
In other words, Greece does not give up tax revenues in order to attract investment activities. On the contrary, it seeks to tax fully what is produced in the country while ensuring that foreign investment funds are not faced with additional tax charges due to the presence of executives or services in Athens.
At the same time, the multi-legislature provides for special tax treatment for so-called Carried interests, i.e. the overpayments of investment fund managers. According to the provision, these fees will be taxed at a rate of 5% if specific conditions are met.
The favourable scheme concerns persons transferring their tax residence to Greece through the scheme of incoming workers under Article 5C of the Income Tax Code, enter into a working relationship with a Greek entity and are employed in companies with operating costs in Greece at least EUR 3 million per year. The incentive may apply for up to seven tax years.
The new provisions apply retroactively from 1 January 2026 and form part of the wider effort of the financial staff to place Athens on the map of international investment fund management centres.