ATHENS (Reuters) - Greece passed a law on Wednesday aimed at attracting small firms that offer dedicated wealth-management services to ultra-rich clients, in a bid to improve the country's image as an investment destination.
The country has been taking steps to draw in foreign investors and lure highly qualified Greek expatriates back home, in the wake of a decade-long financial crisis that shrank its economy by a quarter and led to frequent street protests.
Numerous other European countries including Germany, Austria, Belgium, the Netherlands, Luxembourg, Sweden, Denmark, Finland and Italy have passed similar legislation, a government official said.
Greece's law stipulates that if a family wealth-management firm employs at least five people and has annual expenditures of at least 1.0 million euros ($1.2 million), it can deduct staff costs and operating expenses from its tax bill.
Such offices will be taxed using the "cost plus method" (CPM) under the OECD's transfer pricing guidelines - a way of comparing gross profits to sales costs - for tax purposes, and tax authorities will assume a 7.0% profit margin on incurred expenditures.
With the corporate income tax rate in Greece at 24%, that translates to an effective tax rate on such firms of just 1.68%.
Small firms offering dedicated services to ultra-rich clients including investment, charitable giving, tax and wealth transfers have mushroomed in the years since the 2008 global financial crisis.
Officials say that while Greece is unlikely to challenge established centres such as Switzerland, attracting "sophisticated wealthy families" could help change perceptions of the country.
($1 = 0.8288 euros)