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Greece has passed a new law to attract private family offices that caters to ultra-affluent clients with lower taxes.

The new legislation allows family wealth management firms with at least five employees and an annual expenditure of minimum €1m ($1.2m) to knock off staff costs and operating expenses from their tax bill.

Such offices will be taxed using the ‘cost plus method’ (CPM) under the OECD’s transfer pricing guidelines for tax purposes.

The tax authorities will undertake a 7% profit margin on incurred expenditures.

The corporate income tax rate in the country is currently at 24%. With the new law, the effective tax rate on family wealth management firms will stand at 1.68%.

Greece has been trying to bring in foreign investors as well as Greek expatriates to the country following a decade-long financial crisis that narrowed its economy by a quarter.

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It is said that many European countries including Germany, Austria, Belgium, the Netherlands, Luxembourg, Sweden, Denmark, Finland and Italy have ordained similar laws to boost the economy.

Previously in 2016, Greece and Germany authorities signed a joint declaration of intent to exchange information and know-how aimed to combat tax evasion on Greece.

In 2015, the country proposed a tax amnesty deal for its tax evaders who have hoarded cash in Swiss bank accounts, in a bid to bring much-needed revenue to the debt-laden country.

In 2014, the European Commission adopted a ‘Partnership Agreement’ with Greece setting down the strategy for the optimal use of European Structural and Investment Funds in the country’s regions and cities for 2014-2020.