Greece Wants To Become Europe's Next Hedge Fund Hub

Athens is emerging as an unlikely contender in the competition for Europe’s hedge fund money, with Greece using favorable tax treatment, an improving economy and Mediterranean living to attract financiers looking beyond London and other established financial centers, according to Bloomberg.

That campaign has already produced some notable converts. Millennium Management has established an operation in Athens, while billionaire hedge fund manager Chris Rokos is heading to Greece after deciding to leave Britain. Greek officials are betting that attracting firms of that caliber will make it easier to persuade smaller funds and finance professionals to follow.

It is a striking development for a country that spent much of the previous decade synonymous with sovereign debt problems and economic instability. Greece has since repaired its public finances, regained investment-grade credit ratings and posted stronger economic growth than much of Europe. Its government can now borrow at lower yields than several much larger economies.

That turnaround is central to the sales pitch.

“Greece is fiscally healthy, it constantly produces surpluses and, as a result, it provides tax predictability and macroeconomic stability,” said Vasilis Karatzas, an adviser to Finance Minister Kyriakos Pierrakakis.

Bloomberg writes that there is also plenty of financial incentive to make the move. Greece continues to offer qualifying wealthy newcomers a €100,000 annual flat tax on foreign income, a program that has remained unchanged since 2019. By comparison, Italy has repeatedly increased the cost of its competing program. Greece has now sweetened the deal for the investment industry specifically, allowing eligible fund managers who become Greek tax residents to pay 5% on carried interest and bonuses.

The government says it isn't simply trying to become another European parking lot for wealthy foreigners. The larger ambition is to get investment firms to actually operate from Athens, bringing well-paid finance jobs, encouraging talented Greeks working abroad to return and creating the foundation for a domestic money-management industry.

Timing could be working in Greece’s favor. Higher taxes have made Britain less attractive to some wealthy financiers, while geopolitical instability has introduced another consideration for people who had been looking toward financial centers in the Middle East. Athens suddenly finds itself competing for people who might previously have considered London, Milan, Dubai or Abu Dhabi the obvious choices.

There are still practical obstacles. Athens will need more luxury housing, strong private schools and the broader infrastructure expected by highly paid international finance workers and their families. And a couple of prominent arrivals hardly make Greece the next Mayfair.

“The country won’t become a wealth hub overnight. It will take years,” Karatzas said.

Still, Millennium and Rokos give the Greek experiment something more important than another tax incentive: validation. Once major funds demonstrate that Athens is a viable place to operate, Greece’s hope is that the next wave of managers becomes considerably easier to convince.