Entertainment Tax relief for super rich and retirees

Tax relief for super rich and retirees

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Athens Munich: Rain, minus two to seven degrees. Athens: sun, 16 to 22 degrees. These are the current weather forecasts for this Saturday. Some people get their travel fever – off to the south! A tempting idea, not least for retirees who do not have to work on Monday.

The Greek government now wants to encourage retirees from northern latitudes to spend more than a long weekend or a few weeks in Hellas.

Anyone who transfers his permanent residence and thus his tax domicile to Greece as a pensioner should be exempted from income tax for the next ten years. This is a plan that Prime Minister Kyriakos Mitsotakis discussed this week with his Finance Minister Christos Staikouras and experts from the Athens Ministry of Finance.

The temptation for the pensioners: Not only their pensions remain tax-free, but also all other income and capital gains. The only condition: the pensioners have to spend at least 183 days a year in Greece.

From the point of view of the Greek Minister of Finance, too, the offer could be worthwhile. Because the retirees then spend their purchases in Greece, rent an apartment, maybe buy a house, create a car. This could enliven the local economy on many holiday islands that are hibernating after the end of the summer season.

Not only pensioners want to lure Premier Mitsotakis to Hellas. He now woos wealthy foreigners with tax benefits: Who relocates his tax residence to Greece, spends more than six months a year there and invest at least 500,000 euros in the next three years, pays only a flat rate tax of 100,000 euros for his income earned abroad Year, no matter how much he earns. These may be investments in real estate, stocks or bonds.

The more you invest, the greater the tax savings: Anyone who invests 1.5 million euros pays only 50,000 euros in taxes on his global income. At three million, there are only 25,000 euros. A so-called "grandfather clause" is intended to provide investors with legal certainty. During the 15-year period of the program, tax benefits can not be revoked or restricted.

The benefits are part of a reform package that the government will submit to Parliament for approval in November. Among other things, it provides for a reduction in corporate taxes from 28 to 24 percent. The tax rate on dividends is halved from ten to five percent. There is also relief for income tax: the first 10,000 euros will be taxed from next year on only at a rate of nine percent, compared to 22 percent so far.

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Nothing is more urgently needed by Greece than investment. During the financial crisis that broke out in late 2009, the country lost a quarter of its economic power. Gross capital investment in Greece accounted for 20.6 percent of gross domestic product before the crisis. That corresponded approximately to the level in Germany. Currently, the rate is only twelve percent.

Because most Greek companies are still struggling with the consequences of the crisis and domestic banks are hardly lending, new investments can only come from abroad.

"Golden visa" for investors from third countries

The tax benefits are aimed at EU citizens as well as wealthy third-country investors. China is currently the focus of attention. On Sunday evening, Chinese head of state Xi Jinping will visit Athens for a three-day state visit. Chinese companies have invested around 7.5 billion euros in Greece since 2005, more than any other country.

But Chinese private investors are also interested in Greece. Athens rewards private investors from third countries who invest at least € 250,000 in a property with a "Golden Visa", a residence permit that also entitles them to travel to all Schengen states.

Greece has awarded 15,400 such visas since 2013. Two-thirds went to Chinese investors. With the new tax flatrate, the finance minister wants to persuade such investors to relocate their tax domicile to Greece and thus commit themselves permanently to the country.

But the program also aims to lure Greeks living abroad back into their own country. Nearly eleven million people live in Greece, but another four million live abroad. Many have come there to considerable wealth. So many stony Greek shipowners have their tax domicile traditionally in London.

And then there are the new emigrants: estimated 400,000 Greeks left their homeland during the crisis years – mostly young, well-trained professionals and academics. The country lost many of its best talents during the crisis. With the tax incentives, Premier Mitsotakis hopes to reverse this brain drain.

More: Greece has a long period of insecurity behind it. Now the government wants to ensure more growth with new reform projects. Read the full interview with Greece's Minister of Finance Christos Staikouras here.

Greece

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