A mid-market holding group based outside the European Union decided to deploy capital into Greece. The target was a portfolio of income-generating commercial properties and a minority stake in a Greek operating company. The client had no prior presence in Greece and no existing tax treaty position anchored there. Each structural choice carried a direct cost in corporate income tax, withholding tax, and repatriation efficiency – and the wrong choice threatened to erode returns before the first distribution was made.
Structuring inbound investment into Greece requires careful alignment of corporate form, tax residency, and applicable tax treaty benefits. The central decisions – choice of holding jurisdiction, local entity type, and profit repatriation method – determine the effective tax burden on dividends, interest, and capital gains. Getting these decisions right at the outset is significantly less costly than restructuring an established position later.
This case study outlines the strategic approach taken, the complications encountered, and three transferable lessons for international investors considering Greece as a destination market.
Client profile and the structuring challenge
The client was a family-owned investment group with operations across three continents. Greece represented a new corridor. The group's existing holding company sat in a jurisdiction with a limited tax treaty network relative to Greece. Direct investment from that entity would have triggered unfavourable withholding tax rates on dividend distributions and produced no path to reduced rates under Greece's tax legislation.
The immediate challenge was threefold. First, the client needed a holding layer that could access Greece's treaty network without creating a genuine permanent establishment risk in Greece itself. Second, the local operating structure had to minimise corporate income tax drag on rental and trading income. Third, the client required flexibility to exit either asset class within a five-year horizon without a punitive tax event.
For a detailed analysis of the Greek tax system's treatment of foreign investors, including applicable rates and treaty positions, see our dedicated page on tax law in Greece.
Legal strategy and key milestones
The team's approach centred on interposing a holding entity in an EU member state with an established bilateral tax treaty with Greece. This positioning allowed the group to rely on both the treaty's reduced withholding tax rates and the EU Parent-Subsidiary Directive's dividend exemption regime – subject to meeting the applicable substance and anti-avoidance conditions.
The local Greek vehicle was incorporated as a private capital company (Idiotiki Kefalaiouchiki Etaireia. IKE). A flexible corporate form under Greek corporate legislation that offers limited liability with fewer administrative formalities than a traditional Anonymi Etaireia (SA). The IKE structure suited the asset-holding and minority-stake functions without triggering unnecessary reporting burdens.
Key milestones unfolded across four months:
- Month one: holding jurisdiction analysis and tax treaty mapping completed; intermediate entity incorporated.
- Month two: Greek IKE registered; bank account opened; regulatory notifications filed with the relevant Greek authorities.
- Month three: property acquisitions completed through the IKE; minority stake transfer agreement signed and submitted for corporate law approval.
- Month four: intra-group loan agreements documented to govern intercompany financing; transfer pricing file initiated.
The corporate law dimensions of the Greek entity formation and the minority stake acquisition involved parallel workstreams. Our colleagues advising on corporate law in Greece supported the share transfer documentation and shareholder agreement review throughout this phase.
To build an effective entry strategy for your investment in Greece, contact us at info@ferrazwhitmore.com.
Complications and how they were resolved
Three complications arose during execution. Each illustrates a recurring pattern in inbound Greek investment work.
Permanent establishment exposure. The intermediate holding entity's directors initially proposed conducting certain management decisions from Greece. Greek tax legislation treats entities whose effective management is exercised in Greece as tax residents of Greece. This would have collapsed the treaty benefit structure entirely. The team restructured the governance arrangement so that strategic decisions were demonstrably taken at the intermediate entity's registered location, with documented board minutes and local management engagement.
Tax residency of the IKE. Greek tax authorities scrutinise whether a local entity is genuinely managed from Greece or is merely a conduit. The team ensured the IKE maintained a local registered office with operational substance – a local director, a Greek bank account in active use, and contracts executed locally. This avoided any challenge to the IKE's tax residency status and preserved its access to treaty benefits as a Greek-resident entity.
Withholding tax on interest payments. The intra-group loan from the intermediate holding company to the IKE generated interest income at the holding level. Under Greek tax legislation, outbound interest payments are subject to withholding tax unless a treaty exemption or reduction applies. Careful attention to the applicable treaty provisions and the arm's-length interest rate – supported by a transfer pricing analysis – reduced the effective withholding tax cost to a commercially acceptable level.
Outcome category and transferable lessons
The matter concluded with a fully operational inbound structure that met the client's return targets on an after-tax basis. No guarantees attach to any particular outcome; the result reflected the specific facts, treaty positions, and timing applicable to this client. Similar structures may produce different results depending on the investor's home jurisdiction and asset profile.
Three lessons apply broadly to cross-border investors entering Greece.
Lesson one: treaty access requires genuine substance. Greek tax authorities – and the tax authorities of intermediate holding jurisdictions – apply anti-avoidance rules with increasing rigour. A holding entity that lacks real economic substance will not reliably access reduced withholding tax rates or dividend exemptions. Investors must plan for ongoing substance costs from the outset, not as an afterthought.
Lesson two: corporate form shapes the exit. The choice between an IKE and an SA affects not only administrative burden but also how a future buyer will price the acquisition. Investors who intend to exit via share sale within five years should model the corporate income tax and transfer tax consequences of each form before incorporation. Restructuring an established entity is possible but costly in both time and tax.
Lesson three: permanent establishment risk is not hypothetical. The risk of inadvertently creating a permanent establishment in Greece. through management activity. Agent activity. Alternatively, dependent personnel. is a live concern for any international group with active Greek operations. The analysis must be refreshed whenever the operational footprint changes. A related case study examining a comparable structuring exercise in a neighbouring civil law jurisdiction is available in our case study on investment structure in Portugal.
For a preliminary review of your inbound investment position in Greece, email info@ferrazwhitmore.com.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our tax law practice supports international investors, family offices, and corporate groups structuring inbound investment into Greece and other EU markets. We combine Portuguese civil law expertise with English common law tradition to deliver cross-border tax and corporate solutions that work across multiple legal systems. Our attorneys have advised on inbound investment structuring across both civil law and common law jurisdictions, with experience before tax authorities and arbitral bodies in multiple EU member states. Engaging a lawyer in Greece with cross-border expertise – or a law firm in Greece familiar with EU holding structures and treaty networks – is a material factor in achieving a durable investment structure. To discuss your situation, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.