But can they get their cake and eat it?
In the last year, we have seen a host of countries throw their hat in the ring for a spot on the Family Office radar. Hong Kong, Singapore and Dubai have all launched initiatives to try and attract wealthy families and their portfolios and it seems they are not alone.
Greece is the latest country after a slice of the Family Office pie and after spending two years passing a string of legislative policies to try and attract wealthy individuals, they have firmly and very publicly set their sights on Family Offices.
In 2019 the government introduced a non-domicile law that offered tax incentives for wealthy foreign nationals moving to Greece. In early 2020, retirees moving to Greece were granted a flat 7% tax on pension incomes and later on in the same year Greece passed a new law allowing digital nomads to halve their income tax if they moved to the country, furthering the local talent pool and offering to affluent and institutional families.
In 2021, following a year and a half of reform, a framework was voted through parliament which granted low taxes for Family Offices in the hope of attracting more families to the region and now, the Finance Ministry are considering opening up their Family Office regulation to allow non-doms to set up Family Offices in the region as currently only Greek tax-residents, their household members and any companies they participate in can take part in the Family Office.
Ministry Officials have said that the adoption of single Family Offices has been selected as the appropriate structure for the size of the Greek economy, favouring this over a Multi Family Office structure but, is Greek a stable economy for Family Offices who typically weigh in favour of a low-risk environment?
This drive to reposition Greece as a Family Office playground follows a decade-long financial crisis starting after the 2010 Eurozone Crisis and continuing much into 2020 with the coronavirus when Greece’s GDP contracted by 11.8%.
It does grant access to European financial centres while offering a low-cost of living and affordable resources but does that make-up for the political instability or the lack of exceptional talent?
From our experience, even in Cyprus, arguably the most Family-Office ready hub within Greece, relevant Family Office talent is incredibly hard to find and most mandates require a re-location from other European Ecosystems. It can be a hard sell for talent accustomed to working in more established financial centres such as Switzerland or London and it does not make up for the lack of service providers that Family Offices need to survive.
Looking away from the landscape and more towards legislation and it seems it might be failing at the first hurdle by not allowing international families to set up in the country. While the Finance Ministry is considering allowing non-domestic families to establish in Greece, the legislation has not yet been passed meaning international families are currently exempt from the ecosystem. Secondly, the current regime is limited to serving two generations, forfeiting the longevity that Family Office Leaders often care a great deal about and rightfully so.
Thirdly, the minimum expenditure set at 1,000,000 euros is quite an expense. While this might not make a dent in the investments made by Family Offices typically, this is a stark increase from Singapore for instance which requires the fund to incur S$200,000 in business spending and a team of three. Another contrast to Greece which requires a Family Office to employ five people within 12 months of establishing to qualify from their low tax regime, a perhaps unnecessary requirement for Family Offices who, after 10 years in operation, may only ever require four employees.
Do you think Greece will ever become a hub for Family Offices?