Greek Golden Visa Program: A Success Story
Greek Golden Visa Program: A Success Story
The article is written by Ariel Manika, Lawyer/Senior Manager, TAX, KPMG
KPMG in Greece is pleased to provide legal and tax assistance to non EU investors in receiving Greek residence permit through the Greek Golden Visa Program. Our services include purchase negotiations, submission of residence permit application and follow up until issuance, bank account opening, issuance of Greek tax registration number, real estate registry checks, drafting and signing of notarial deed for the real estate purchase, annual tax filings. Whatever the need, KPMG‘s experts are there to assist.
Golden Visa Program
In accordance with a tendency adopted in recent years by many European countries, Greece introduced in April 2013 its own “Golden Visa” program in an effort to attract foreign investments to contribute to a long term and sustainable growth for the Greek economy.
The Greek Golden Visa program is an attractive option for those seeking investment opportunities and/or residence in the European Union especially given the ideal geographical position of Greece. According to the program, a five year residency permit is granted to non EU citizens who are investing in real estate in Greece. Purchased property can be located anywhere in the Greek mainland or the islands, can be either residential or commercial, in the form of one single or multiple properties, or even shares in real estate holding companies as long as the purchase price exceeds EUR 250,000.
The success of the program, while modest in the first couple of years from its introduction, has increased significantly in recent years bringing to the country funds of more than EUR 1 billion.
Approximately 2,300 residence permits have been issued since the commencement of the program until the end of 2017 for real estate owners (a total of approximately 5,700 when counting also family members). Almost half of these permits have been granted to Chinese nationals with Russians holding second place and Turkish nationals rising up recently to third place (obviously because of political turmoil in our neighboring country). Other countries whose nationals have received residence permits include Egypt, Lebanon, Ukraine, Iraq, Syria, Jordan, Iran, Saudi Arabia etc.
Analyzing the particulars of the program
Evaluating the factors of success of the program, one would say this is mainly due to the low level of investment required (EUR 250,000), the long term of the residence permit (five years subject to indefinite renewals of five year periods provided the property is still owned by the applicant), the granting of residence permits to the applicant’s family members (spouses, children until the age of 21, parents of both applicant and spouse), fast track procedures (40 to 60 days from the time of investment until residence permit is issued), no minimum stay requirement (just a lawful entrance into the country) and low application fees (EUR 500 for each permit excluding those for minor children).
The residence permit granted through this program allows the applicant and his family members to live in Greece but not to work. However there is always an option for the applicant and family members to establish businesses in Greece, open bank accounts and expand investments worldwide. The Greek residence permit allows freedom of travel to the applicant and his family members throughout the EU Schengen zone without further visa applications. If the resident sells the property to another non-EU citizen, the Greek residency is revoked for him and his family members and transferred to the new investor on condition the new investor meets all other terms of the program.
How is the investor taxed for his Golden Visa investment in Greece?
Golden Visa investors may continue to be non-Greek tax residents and pay tax only on their income derived in Greece and not on income from outside of the country. Taxes for rental income from property in Greece follow a progressive tax rate starting from 15% (for income up to EUR 12,000) and up to 45% (for amounts over EUR 35,000). Certain operating expenses are deductible whereas when real estate is held through a legal entity, all expenses relevant to the exploitation of the real estate are tax deductible subject to general deductibility rules (current corporate income tax rate is 29%). Capital gains tax on the sale of real estate is currently not applicable (it has been postponed since 2014 in an effort to boost the local real estate market) and as a result local real estate sales are only subject to a transfer tax at the effective rate of 3.09% burdening the purchaser and imposed on the higher between the purchase price and the objective tax value of the real estate. VAT at the rate of 24% is applicable on the purchase of new buildings.
Is the Greek citizenship “sold” to rich foreigners?
Unlike other similar European programs, the Greek Golden Visa program is a residency investment program and does not come under the “citizenship by investment” programs which have raised much controversy and have fueled nationalistic outcries in other member states. In line with the EU principles on nationality matters, Greece is not selling its citizenship, however the option for citizenship is available for those committed to living in Greece. Applicants who live in Greece can apply for citizenship and a passport after seven years subject to the same conditions existing for all other applicants as introduced in domestic immigration law and in full implementation of EU immigration legislation.
Other investment opportunities under the Golden Visa program
Although the Ministry of Economy and Development has been examining the possibility to add more types of investments valued at EUR 250,000 to the Golden Visa program (for example shares and bonds), for the moment there does not seem to be any development towards this end especially in view of the need to give a push to the long time stagnated real estate market.
Indeed there seems to be movement in the local real estate market especially for properties located in the so called “historic center” of Athens opening up a new booming market which, according to what real estate agents say, is linked to the Airbnb business. Now the real question is whether the income of the State from taxes arising from the rental of these Golden Visa investments will be equally thriving since rumor is that most real estate owners “forget” to declare Airbnb rentals of their properties in the tax notification electronic system “TAXIS”.
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