Removal of bureaucratic obstacles and tax incentives for donations to the State, the possibility of housing households in properties inherited by the State or owned by institutions and remaining unused, transparency rules in the management of donations with the establishment of a digital platform for their submission and acceptance, among other things, provides for the draft law presented today by the Minister of National Economy and Finance Kostis Chatzidakis.

The draft law “Framework for donations to the State, school legacies, foundations and charitable estates” addresses several problems that currently exist, including the difficulty of accepting donations to the State, resulting in the phenomenon of even cancellation of donations. The State’s ignorance of the existence of school legacies and their misuse by fraudsters or their gradual depreciation. The existence of bureaucratic obstacles that make it difficult for foundations to fulfil their public benefit objectives and which deter potential donors from disposing of their assets through foundations, etc. At the same time, tax exemptions for foundations and safeguards to prevent tax evasion under the pretext of charitable activities are envisaged.

The Minister of National Economy and Finance, Kostis Chatzidakis, said: “The state should encourage and not put obstacles in the way of citizens who assist with their property in fulfilling public benefit goals. It must also manage the property that comes into its possession effectively for the benefit of society as a whole. And to support the fulfilment of the objectives of the foundations as defined by the testators. Private benefactors, donors, or legatees help to address social problems – such as housing – while reducing the burden on taxpayers. Our draft law addresses several problems in these areas by using digital tools that increase transparency, remove disincentives, and introduce incentives for donations and foundations. With respect for donors, benefactors and taxpayers alike.”

Secretary General of Public Property Athanasios Tsiouras said: “The Ministry of National Economy and Finance is introducing to donations to the State and public assets a concept that governs government policy as a whole: less bureaucracy, more transparency. Donations and the fulfillment of the public benefit purposes of foundations, i.e. the substantial contribution of civil society to social welfare, will be enhanced, without discounting issues of legality.”

More specifically, the main provisions of the draft law provide for the following:

A. FEES

Prospective donors currently face bureaucratic hurdles and delays that make it difficult for the government to accept donations. By way of example, for a donation to be made to the State, not only is acceptance by the donor body (Ministry or organization) required, but also approval by the Ministry of Economy and Finance, an opinion from the Central Council of Public Utilities, new approval from the Ministry of Public Utilities for VAT exemption of the donation. In addition, there is no clear legal framework for donating money directed to the procurement of a specific good or service or execution of a project, there is no record of the needs of the State for donations in a way that would allow potential donors to know where their donation will be allocated and there is no provision (with few exceptions) for public recognition of the donor. The regulations introduced:

– The National Register of Beneficiaries and Donors is established, which will proceed to the establishment of an electronic platform for donations. The body will assist donors in processing the procedures, provide them with information on the progress in the implementation of their donation, and ensure their visibility. In addition, it will collect donation needs and inform interested donors about them.
– The proposal and acceptance of the donation will necessarily be done through the online platform.
– Model donation contracts for goods, services, and projects are being prepared and will be available on the Registry’s electronic platform for the convenience of donors.
– Acceptance of donation will be done exclusively by the donor organization. Approval by the Ministry of National Economy and Finance is abolished.
– Donations are excluded from the electronic platform in cases where there is a need for confidentiality (e.g., donations to the Ministry of National Defence).
– The procedure for the donation of a monetary amount is regulated, as well as the exemption from public procurement legislation when the donation covers all or at least 75% of the value of the supply. It is provided that the donor may determine how the contractor will be selected.
– Promotion of the donor (but not advertising of the donor’s products) is permitted, and a notice will be issued at the end of each year listing the names and donations of benefactors and donors.
– The Anti-Money Laundering Authority will have full and permanent access to the donation data and the relevant platform and will be automatically updated for donations over 500,000 euros.

B. TAX DRIVERS

According to the provisions of the draft law:

– The income tax (22%) for foundations and endowments is abolished for the years in which they are recorded as active in the register of endowments (in two phases, i.e., a 50% reduction in 2026 and complete abolition in 2027).
The gift tax (0.5%) on donations to charitable foundations is abolished.
– The deduction of donations from the taxable income of legal entities – donors, which already applies to donations to the state, is extended to cover donations to legal entities under public law – foundations.
– It is provided that the mere drawing up of the donation contract results in exemption from Value Added Tax, without requiring special approval from the Minister of National Economy and Finance.
– At the same time, it is prohibited to conclude contracts with the persons managing the foundation or administering its property, spouses and relatives, unless otherwise specified in the foundation’s constitutional act. In addition, presumptions are introduced from which it can be inferred that the foundation does not serve public benefit purposes but is a vehicle for tax evasion (e.g. percentage of income directed to administration expenses, use of real estate/multi-vehicles by founders or their relatives).

C. FUNDING INCOME

This is how inheritances are classified until the State’s right to inherit is finalized, because either the deceased had no relatives or they disinherited the estate. There are currently 6,500 pending inheritances (4,500 in school and 2,000 in liquidation).

The problem is that there is no procedure for systematically informing the State in cases where the deceased has no heirs or they have renounced. In addition, the State does not know what the economic value of outstanding inheritances is. The result of all this is that properties that could contribute to addressing the housing problem remain unused or even depreciate. There are also cases where the recognition of the State’s inheritance right is prevented by forged private wills. For these reasons, the following provisions are introduced:

– Interconnection with the National Register of Citizens and with the information systems of the Ministry of Justice for the State to be informed of the existence of an inheritance right by will or intestate. In addition, the registries of the Courts and the Notaries are obliged to inform the decentralised administration when a will is published or filed, by which property is left to the State or the State is named heir.
– Operation of a register of guardians of estates, liquidators and auditors of the State’s estates, in which lawyers, accountants and auditing firms may register.
– Expediting the liquidation process based on the value of the estate. Up to 20,000 euros, the decentralized administration of the place of death of the deceased is designated as the supervising authority. From 20,000 to 1 million, a liquidator is appointed from the register. For amounts of EUR 1 million and above, the liquidator will be a compulsory auditing company.
– If a third party disputes the State’s inheritance right, it must appeal to the Single-Member Court of First Instance. An inheritance right founded on a private will is not claimed against the State.
– Property that comes to the State after the liquidation of an inheritance has been completed shall be used for the State’s housing policy if it is deemed suitable for the respective uses.

D. REGULATIONS FOR INSTITUTIONS

Currently, excessive bureaucratic procedures that are mandatory for foundations and involve a series of approvals from the supervisory authority deprive their management of any autonomy. The financial management of the foundations is similar to public accounting, there is an obligation to draw up and approve a budget, while procurement is carried out by the public sector. As a result, the will of the donor is often substituted by the supervisory authority. In addition, there is no institutional framework for the rehabilitation of institutions facing financial problems.

It is noted that there are currently about 700 registered institutions (and a larger number do not update their data) with a registered property value of EUR 235 million.

The regulations introduced provide for the following:

– The approval of the budget preparation/reformulation, the procedure similar to public procurement and the approval for sales or long-term leases are abolished.
– In their place are transparency rules such as:

– All institutions, regardless of their assets or income, must publish audited financial statements annually.

– Property sales and leases are made after public notice, and bids are submitted on a public platform.

– institutions utilize the National Register of Beneficiaries and Donors for their transactions, resulting in the recording and retention of transactions for any audit required.

3. The supervisory authority shall be given the power to replace the management of an institution that does not utilize its assets or acts contrary to the will of the testator.

4. A distinction is made between active and inactive foundations. Active institutions are those that publish statements and comply with the requirements of the law, while inactive institutions are those that do not publish financial statements for three years. The tax incentives will only apply to active institutions.

5. A resolution framework is established for institutions that have financial viability problems. The regulation of tax – insurance debts and debts to public utility organizations is allowed, while the assignment to creditors of income from the exploitation of the institution’s assets, the taking of a loan with a mortgage or a mortgage on real estate, the sale of the institution’s assets are also allowed, subject to the permission of the Court. If the institution is in permanent and total default and at the request of the creditors, a reorganisation agreement shall be drawn up to settle all debts.

6. Provision shall be made for the partnership of the State and public bodies with institutions, one or more, for the promotion of public benefit purposes consistent with the public interest. In this context, in particular, an institution is allowed to dispose of real estate to serve the purposes of government housing policy. For this purpose, a lease agreement shall be entered into between the foundation and the relevant general government agency, the duration of which may not be less than 12 years.

E. PROVISIONS 

Finally, the draft law introduces rules of flexibility in the operation of the Zappeion Megaron, which currently operates as a legal entity under public law, is governed by an inflexible operating framework, and has only 12 employees, without a director.

With the new regulations, the Zappeion became a legal entity under private law with the sole purpose of managing the legacy bequeathed by Evangelis Zappas. The NPO under the name “Commission of the Zappeion Legacy” is exempted from the public sector concerning recruitment procedures (the status of the EESYP is applied) and special regulations for procurement, always respecting the rules of EU law, while, because of the Greek Presidency of the EU, care will be taken to recruit a core group of executives.