With the provisions introduced by Law 5313/2026, Greece aims to become an attractive destination for the establishment and management of Alternative Investment Funds (AIFs).
In detail, the favorable tax regime already applicable to income derived from the participation of individuals, members of the Manager’s team, in the carried interest of Venture Capital Mutual Funds (AKES), is now expanded to the relevant income paid, pursuant to a contractual right, to employees of legal entities established in Greece who provide services to affiliated AIF Managers established both in the European Union (subject to Directive 2011/61/EU) as well as in third countries. The favorable provision applies provided that their registered office is not located in a non-cooperative jurisdiction (as determined based on article 65 of the Income Tax Code) and that they are supervised by a competent authority of the country in which they are established, accredited by the International Organization of Securities Commissions (IOSCO).
Furthermore, in terms of the potential permanent establishment implications that may arise, it is stipulated that the management, partial or total delegation of management, or portfolio management of the abovementioned EU AIFs or supervised AIFs established in third countries does not constitute the exercise of effective management in Greece. The same also applies for foreign legal entities in which the aforementioned AIFs hold, directly or indirectly, an interest of at least 95%, provided that such entities operate exclusively for the purpose of holding assets or investing funds for the benefit of those AIFs, as well as for the unitholders of such AIFs.
In addition, it is clarified that the management or advisory services provided by Greek companies acting in the context of their regular business activities to EU AIFs or supervised AIFs established in third countries do not create a permanent establishment in Greece for the AIFs, their managers, or their unitholders.
To further strengthen the AIFs regime, with effect as of 1 January 2026, Greece has introduced a special tax regime for the carried interest paid, pursuant to a contractual right, to employees of Greek companies providing services to AIF Managers by taxing the relevant income as income from capital gains at a reduced tax rate of 5%, to the extent that:
- the individual concludes an employment relationship with the legal entity and transfers their tax residence to Greece pursuant to the non-dom regime provided under Article 5C of the Income Tax Code, and
- the legal entity incurs annual expenditure in Greece of at least €3 million. If the underlying period within the tax year is less than 12 months, the minimum expenditure amount is calculated on a pro-rata basis.
The favorable tax treatment applies for a period of 7 tax years, commencing as of the tax year for which the non-dom application is filed by an individual and cannot be extended beyond this period. If the income in question relates to a period prior to the transfer of the individual’s tax residence to Greece and prior to the commencement of their employment relationship with the legal entity established in Greece, the portion of the income corresponding to that period is not subject to tax in Greece.
In addition, the carried interest paid to employees pursuant to a contractual right is recognized as a deductible expense for the legal entity, provided that an amount equal to the carried interest has been recognized as income.
Overall, the new provisions significantly enhance Greece’s attractiveness as a jurisdiction for the establishment and management of AIFs and related investment structures. By combining a favorable tax treatment for the carried interest with greater certainty regarding permanent establishment considerations and targeted incentives for the relocation of highly skilled professionals to Greece, the new framework seeks to address key tax and operational considerations faced by international fund managers.
