The Government Gazette(in Greek FEK) published the decision A.1043/2022, according to which the services provided by special purpose family property management companies are clearly defined, while there is a special provision for issues related to the application of the provisions of article 71H of l. 4172/2013 (A' 167), which concern the incentives of special purpose family property management companies (in Greek EESDOP).
In particular, with article 71H of l. 4172/2013 (Income Tax Code), the possibility is provided of managing cash flows, family property, expenses, human resources employed in natural persons’ companies who have their tax residence in Greece, by special purpose companies ("family property management companies" – (in Greek EDOP), for which special tax treatment is also provided.
As regards their corporate form, family property management companies may have any legal form (Public Limited Company, Limited Liability Company, Private Company, General partnership, Limited Partnership etc.), with the sole exception of Νon-Governmental Organization (MKO) and may be incorporated both in Greece and abroad.
The special purpose family property management Company has as its primary purpose the administration and management of the property and investments held by natural persons through legal persons or legal entities with their tax residence in Greece and their family members. According to par. 2 of Article 71H of the Income Tax Code, the following are considered as members:
a) The other spouse/part of a cohabitation agreement,
b) the unmarried children of the spouses/part of a cohabitation agreement,
c) the unmarried children of the breadwinner or of one of the spouses/parts of a civil partnership, if custody has been legally granted to the breadwinner for the children of the breadwinner and to the other spouse/part of a civil partnership for the children of the other spouse/part of a civil partnership,
d) the direct ascendants (i.e., ascending parents, grandfathers, grandmothers, etc.) of the spouses/partners in a civil partnership.
The services that the special purpose family property management company may provide to achieve its purpose are as follows:
a) Services connected with the personal and social life of the family members, such as services of public relations, security escorts, security guards, static guards, cooks, housekeepers, teachers, childminders and nursery attendants, drivers, technicians, gardeners, cleaning, supply of goods and charity management.
b) Administrative support services, secretarial services, human resources management, accounting and payment of all types of expenditure, management of bank accounts, technical support for the management and maintenance of property and its surroundings and the organization of business travel.
c) Financial management services, through the management of investments and wealth transfers.
d) Strategic planning services, through the provision of business advice, strategic planning for real estate and educational planning.
e) Consultancy services, such as tax advisory services, legal services, engineering services, medical services, compliance advice and risk management support and cyber security services.
The concerned Company, at the time of its establishment, should declare as its main and sole activity the Βusiness Activity Code(in Greek KAD) 66301102 "Family property management services" as its main and sole activity and may not provide any other services or incur expenses that are not related to the achievement of the purpose for which it is established.
These companies may employ a workforce of various specializations or outsource the services to third parties established in Greece or abroad (but not in non-cooperative tax states), in order to provide services. It should be noted that natural persons who are members of the special purpose family property management company cannot be employees of this company. In addition to the above, for the application of the provisions of Article 71H of the Income Tax Code, the following conditions must be cumulatively met:
a) The Company must employ in Greece at least five (5) individuals within twelve (12) months of its establishment and thereafter, as evidenced by the submission of the relevant forms to the relevant Information System (IS).
Specifically for the first fiscal year, the above requirement may be completed at any time within the twelve-month period from its establishment and must be maintained thereafter. In case that at the time of submitting the income tax return for the first tax year the twelve (12) month period has been completed and this condition is not met, the return shall be submitted without applying the provisions of Article 71H of the Income Tax Code, but applying the general provisions thereof. In case at the time of submission of the income tax return for the first tax year the twelve (12) month period has not been completed and the condition in question is not fulfilled, the return shall be submitted by applying the provisions of Article 71H of the Income Tax Code. If the twelve-month period has expired and this condition is not fulfilled, the Company is obliged to be taxed according to the general provisions for that year, by submitting an amended return for this purpose.
In subsequent tax years, the Special Purpose Family Property Management Companies (in Greek EESDOP) must employ at least five (5) persons, per month, throughout the tax year. Provided the number of persons employed falls below the minimum prescribed limit, due to resignation for any reason, or even voluntary resignation, termination of a fixed-term employment contract, retirement, termination of an employment contract prior to its expiration, without a replacement by the end of the following month, the requirement shall be deemed not to be met and,
b) the Company must incur operating expenses in Greece of at least one million (1.000.000) euros per annum in each fiscal year. In case the first tax year is less than twelve (12) months, for the purpose of verifying the fulfillment of this condition, the operating expenses shall be reduced to an annual amount. Operating expenses incurred in Greece shall be deemed to be all kinds of expenses incurred by the Company for its operation in Greece, i.e. for the management of the family property, as taken into account in the concept of all kinds of expenses and depreciation as the basis for calculating its gross income.
With regard to the tax treatment of the Company, it is worth noting that the gross income from the services provided is determined by adding a profit rate of 7% to the total of all kinds of expenses and depreciation, with the exception of income tax, unless the income resulting from the records kept is greater than the income calculated according to the above, in which case the income resulting from the records kept is taken into account. Income tax is calculated on this profit margin at the rate applicable to business profits of legal entities (22%). In addition, for the determination of the Company's taxable income, from the gross income, which may not be less than those determined by adding the profit margin of seven percent (7%), the expenses on which the profit rate is calculated are deductible, provided that they are documented by corresponding supporting documents that meet the requirements of Law No. 4308/2014 (A' 251) and their partial or total payment has been made through the company's bank account. Regarding the company's gross income, it must be collected by means of bank transfers to a recognized bank. The provisions of Articles 58, 68 and 71 of the Income Tax Code apply to the calculation of income tax, the submission of the income tax return, and the payment of tax, while the provisions of Part Four "Withholding Tax" of the Income Tax Code apply to the payments made by these Companies. Regarding the VAT, according to the provisions of par. 1 of Article 3 of L. 2859/2000, the internal transactions carried out between the Company and the persons participating in it (within the meaning of paragraphs 1 and 2 of Article 71H of the Tax Code) constitute transactions carried out within a single entity and outside the scope of application of VAT.