Nathan Blake 
Using Trusts and Foundations to Hold Greek Assets: What to Know
Reading time: 15 minutes
Table of Contents
- Introduction
- Understanding Trusts and Foundations
- Greek Legal Framework for Trusts and Foundations
- Benefits of Using Trusts and Foundations in Greece
- Challenges and Considerations
- Setting Up a Trust or Foundation in Greece
- Tax Implications
- Asset Protection Strategies
- Comparison with Other Jurisdictions
- Future Outlook
- Conclusion
- FAQs
1. Introduction
As the global economic landscape continues to evolve, high-net-worth individuals and families are increasingly seeking sophisticated strategies to manage and protect their assets. In recent years, Greece has emerged as an attractive destination for wealth management, particularly through the use of trusts and foundations. This comprehensive analysis will delve into the intricacies of utilizing these financial structures to hold Greek assets, providing valuable insights for investors, legal professionals, and financial advisors.
The Greek economy, while having faced challenges in the past decade, has shown remarkable resilience and adaptability. This economic tenacity, coupled with the country’s strategic location and rich cultural heritage, has made it an appealing option for international investors. Moreover, the introduction of programs like the golden visa greece has further enhanced Greece’s attractiveness as a destination for wealth management and asset protection.
2. Understanding Trusts and Foundations
Before delving into the specifics of the Greek context, it’s crucial to establish a clear understanding of trusts and foundations as financial instruments.
2.1 Trusts Defined
A trust is a legal arrangement where one party (the trustor) transfers assets to another party (the trustee) to hold and manage for the benefit of a third party (the beneficiary). Trusts are widely used for estate planning, asset protection, and tax optimization.
2.2 Foundations Explained
A foundation, on the other hand, is a legal entity that holds assets for specific purposes or beneficiaries. Unlike trusts, foundations have legal personality and can own property, enter into contracts, and sue or be sued in their own name.
3. Greek Legal Framework for Trusts and Foundations
Greece, like many civil law jurisdictions, does not have a comprehensive trust law. However, the country has taken steps to recognize and accommodate foreign trusts, particularly in the context of international wealth management.
3.1 Recognition of Foreign Trusts
While Greece does not have domestic trust law, it is a signatory to the Hague Convention on the Law Applicable to Trusts and on their Recognition. This means that foreign trusts are generally recognized and can hold assets in Greece, subject to certain conditions and limitations.
3.2 Legal Basis for Foundations
Foundations, known as “idryma” in Greek, have a more established legal framework in Greece. They are governed by the Greek Civil Code and specific laws relating to charitable and non-profit organizations.
4. Benefits of Using Trusts and Foundations in Greece
The use of trusts and foundations to hold Greek assets offers several compelling advantages:
4.1 Asset Protection
Trusts and foundations can provide a robust shield against potential creditors, legal claims, and political risks. By separating ownership from control, these structures can offer enhanced protection for valuable assets.
4.2 Estate Planning
These instruments allow for sophisticated estate planning, enabling smooth intergenerational wealth transfer and potentially mitigating inheritance taxes.
4.3 Privacy and Confidentiality
Trusts and foundations can offer a degree of privacy not available through direct ownership, which can be particularly attractive for high-profile individuals or families.
4.4 Flexibility in Asset Management
These structures provide flexibility in terms of how assets are managed and distributed, allowing for tailored solutions to meet specific family or business needs.
5. Challenges and Considerations
While the benefits are significant, there are several challenges and considerations to keep in mind:
5.1 Legal Complexity
The interaction between Greek law and foreign trust law can be complex, requiring expert legal guidance to navigate effectively.
5.2 Tax Implications
The tax treatment of trusts and foundations in Greece can be complex and may vary depending on the specific structure and circumstances.
5.3 Regulatory Compliance
Ensuring compliance with both Greek and international regulatory requirements, including anti-money laundering (AML) and know-your-customer (KYC) regulations, is crucial.
6. Setting Up a Trust or Foundation in Greece
The process of establishing a trust or foundation to hold Greek assets involves several key steps:
6.1 Choosing the Right Structure
Deciding between a trust and a foundation depends on various factors, including the nature of the assets, the objectives of the arrangement, and the specific legal and tax considerations.
6.2 Selecting Trustees or Directors
For trusts, choosing reliable and competent trustees is crucial. For foundations, appointing skilled directors is essential for effective governance.
6.3 Drafting Governing Documents
Careful drafting of trust deeds or foundation statutes is critical to ensure the structure meets legal requirements and achieves the desired objectives.
6.4 Registration and Compliance
Proper registration with relevant Greek authorities and ongoing compliance with reporting requirements are essential for maintaining the legal status of the structure.
7. Tax Implications
Understanding the tax landscape is crucial when using trusts or foundations to hold Greek assets:
7.1 Income Tax Considerations
The tax treatment of income generated by trust or foundation assets can vary depending on the structure and the residence status of the beneficiaries.
7.2 Capital Gains Tax
Capital gains tax implications need to be carefully considered, particularly for high-value real estate or investment portfolios.
7.3 Inheritance and Gift Tax
While trusts and foundations can offer potential benefits in terms of inheritance planning, the specific tax implications need to be carefully analyzed.
8. Asset Protection Strategies
Effective asset protection through trusts and foundations requires careful planning and execution:
8.1 Structuring for Maximum Protection
The specific structure of the trust or foundation can significantly impact its effectiveness as an asset protection tool. Factors such as the choice of jurisdiction, the powers reserved to the settlor, and the discretionary powers of trustees or directors all play crucial roles.
8.2 Timing Considerations
The timing of asset transfers to trusts or foundations is critical. Transfers made too close to potential claims may be vulnerable to legal challenges.
8.3 Regular Reviews and Updates
Regular reviews of the trust or foundation structure are essential to ensure it remains effective in light of changing personal circumstances, legal environments, and economic conditions.
9. Comparison with Other Jurisdictions
To fully appreciate the Greek context, it’s valuable to compare the use of trusts and foundations in Greece with other popular jurisdictions:
9.1 Cyprus
Cyprus, with its common law tradition, offers a more established trust framework and potentially more favorable tax treatment for certain structures.
9.2 Malta
Malta provides a hybrid system that recognizes both trusts and foundations, offering flexibility for international wealth planning.
9.3 Luxembourg
Luxembourg’s sophisticated financial sector and favorable regulatory environment make it a popular choice for complex wealth structures.
10. Future Outlook
The landscape for trusts and foundations in Greece is likely to evolve:
10.1 Legislative Developments
There is potential for Greece to introduce more comprehensive domestic trust legislation, which could enhance the attractiveness of Greek trusts for international wealth planning.
10.2 Economic Factors
The ongoing economic recovery in Greece, coupled with initiatives to attract foreign investment, may lead to increased interest in using trusts and foundations to hold Greek assets.
10.3 International Trends
Global trends towards increased transparency and information exchange may impact the use of trusts and foundations, requiring ongoing adaptation of wealth planning strategies.
11. Conclusion
The use of trusts and foundations to hold Greek assets represents a sophisticated approach to wealth management and asset protection. While offering significant benefits in terms of flexibility, privacy, and estate planning, these structures also come with complexities that require careful navigation.
As Greece continues to position itself as an attractive destination for international investors, particularly through initiatives like the golden visa program, the role of trusts and foundations in holding Greek assets is likely to grow in importance. However, successful implementation requires a thorough understanding of the legal and tax implications, as well as expert guidance to ensure compliance and effectiveness.
For high-net-worth individuals and families considering Greek assets as part of their wealth portfolio, trusts and foundations offer powerful tools for achieving their financial objectives. As with any sophisticated financial strategy, thorough due diligence, professional advice, and ongoing management are essential to realizing the full potential of these structures in the Greek context.
12. FAQs
Q1: Can a foreign trust directly own real estate in Greece?
A1: While foreign trusts are recognized in Greece, direct ownership of real estate by a trust can be complex. Often, it’s more practical for the trust to own a Greek company that, in turn, owns the real estate. This approach can offer greater flexibility and potentially more favorable tax treatment.
Q2: How does the Greek golden visa program interact with trust and foundation structures?
A2: The golden visa program primarily focuses on individual investors. However, in some cases, it may be possible to structure investments through a trust or foundation, provided the ultimate beneficial owner meets the program’s requirements. Professional advice is crucial to ensure compliance with both golden visa regulations and trust/foundation laws.
Q3: Are there any restrictions on the types of assets that can be held by trusts or foundations in Greece?
A3: Generally, trusts and foundations can hold a wide range of assets in Greece, including real estate, securities, and business interests. However, certain strategic or sensitive assets may be subject to additional regulations or restrictions. It’s important to conduct thorough due diligence for each specific asset type.
Q4: How does Greece’s participation in international tax information exchange agreements affect the privacy of trusts and foundations?
A4: Greece is a participant in various international tax information exchange agreements, including the Common Reporting Standard (CRS). This means that financial information related to trusts and foundations may be subject to reporting and exchange with other jurisdictions. While these structures can still offer a degree of privacy, it’s important to be aware of and comply with these reporting obligations.
Q5: Can a Greek foundation be used for charitable purposes while also managing family assets?
A5: Greek foundations can indeed serve dual purposes, combining charitable activities with family asset management. However, the structure must be carefully designed to ensure compliance with Greek law regarding charitable foundations. This may involve creating separate entities or clear delineation of assets and activities within the foundation structure. Professional legal and tax advice is essential in setting up such arrangements.
Article reviewed by Ariana Smit, Investment Portfolio Manager | Real Estate & Private Equity Expert | Driving High-Yield Investments, on March 11, 2025
