A new and… attractive tax framework aimed at drawing executives who manage alternative investment funds to Greece is being introduced by the Ministry of National Economy and Finance through the omnibus bill submitted to Parliament. The new provisions concern hedge funds, private equity funds and alternative investment funds (AIFs) and form part of a broader plan to create an investment hub based in Athens. The goal is to attract fund managers, investment teams and highly specialized professionals from London, the Middle East and Asia, while simultaneously creating an ecosystem of legal, auditing, tax, banking, custody, advisory and technology services around investment management.

The key change introduced by the regulation is that the provision of portfolio management services, investment advice or other support functions from Greece to alternative investment funds of the European Union or certain third countries will not, by itself, be considered grounds for transferring effective management to Greece. At the same time, it will not create a permanent establishment in the country for the manager, the investment fund or its investors.

In simple terms, a hedge fund or private equity fund headquartered in London, Luxembourg, Dublin, Singapore or another international financial center will be able to maintain executives, analysts, portfolio managers or service companies in Athens without risking being deemed to have transferred the tax residence of the manager, the investment fund or its unit holders to Greece, nor will it be considered to have established a permanent presence in the country. This constitutes a safeguard against double taxation and provides the legal certainty international fund managers require before choosing a country in which to expand their operations.

The new framework covers alternative investment funds established in the European Union as well as investment vehicles from third countries, provided they are not based in non-cooperative jurisdictions and are supervised by competent authorities recognized by the International Organization of Securities Commissions (IOSCO). In this way, the possibility of establishing operations in Greece extends beyond the European market and includes investment structures active in major international financial centers.

Specifically regarding portfolio management and investment advisory services provided by Greek companies to managers of alternative investment funds in the EU or eligible third countries, the bill stipulates that such services will not be considered the exercise of effective management in Greece for foreign investment structures. At the same time, the provision of these services alone will not be deemed to create a permanent establishment in Greece for foreign managers, removing one of the key tax risks that until now discouraged the relocation of such activities to the country.

The regulation does not constitute a tax exemption. Investment funds will continue to be taxed in the country where they are established, while all economic activity carried out in Greece will be taxed normally. Service offices established in Greece will pay the applicable corporate tax, VAT will be remitted as usual, and employees will be taxed and insured in accordance with Greek legislation.

In other words, Greece is not giving up tax revenue in order to attract investment activities. On the contrary, it seeks to fully tax everything produced within the country while ensuring that foreign investment funds are not exposed to additional tax burdens simply because executives or services are based in Athens.

At the same time, the omnibus bill provides special tax treatment for so-called carried interests, namely the performance-based compensation of investment fund management executives. Under the provision, these specific earnings will be taxed at a rate of 5%, provided certain conditions are met.

The favorable regime applies to individuals who transfer their tax residence to Greece under the incoming employees framework of Article 5G of the Income Tax Code, enter into an employment relationship with a Greek entity, and work for businesses with operating expenses in Greece of at least €3 million annually. The incentive may apply for up to seven tax years.

The new provisions apply retroactively from January 1, 2026, and form part of the broader effort by the economic team to place Athens on the map of international investment fund management centers.