ECONOMY

Tax aims at property held by offshore firms

Lawyers are busy doing the paperwork for the transfer of property belonging to offshore companies to private individuals. In this way, property owners will avoid the taxation imposed by Law 3091, voted in last year. Provisions in this law state that offshore companies which own properties in Greece, and whose revenues from the properties exceed 50 percent of the company’s total revenue, must pay an annual tax equivalent to 3 percent of the value of the property. An exemption from this tax is only given to companies based in a European Union country, provided that they either declare the names of their shareholders or register their shares. These provisions, in effect, negate the benefits of setting up an offshore company to conceal the identity of a property owner. Given that the law provides an end-June deadline for the transfer of properties to individuals or companies with registered shares, or a shareholders’ register, the race to make that transfer has sped up. This creation of offshore companies as fronts to conceal the identity of property owners took off in Greece in the 1980s. Unsurprisingly, it concerned acquisition and ownership of luxury properties, almost exclusively, as only such owners could devise such mechanisms. The property owners sometimes set up their own firms, but often made use of existing companies in places such as the Channel Islands, where they transferred the property to a trustee, while remaining the beneficiary owners. Such a split of ownership is possible, and common, according to the laws of English-speaking countries.