New foreign investment framework submitted to parliament: tax exemptions and fast-track licensing

The new provisions, submitted to Parliament under the title “New Incentives for Foreign Direct Investment, Restructuring of the Directorate for Foreign Direct Investment and Other Provisions,” establish a standalone state-aid framework for investment projects financed with non-domestic capital.

The aim is to increase foreign investment and channel capital into activities related to digital and technological transformation, innovation, the employment of highly skilled personnel, and the development of investment projects in the regions.

From Artificial Intelligence to Logistics

The new framework does not apply horizontally across the entire economy. It provides for eight categories of activities eligible for support:

• manufacturing and industrial production;
• research, applied innovation and Artificial Intelligence;
• industrialized primary production;
• biotechnology;
• the defense and aerospace industries;
• supply chain management and warehousing;
• convalescence and rehabilitation centers; and
• social welfare facilities and nursing homes.

The scheme will be announced once a year by decision of the Minister of Development. Each call will specify the available budget, the source of public funding, the minimum and maximum size of investment projects, the rates and amounts of incentives, eligible expenditure, and the evaluation criteria.

This means that the bill establishes the overall mechanism, while key financial parameters will be specified in the individual calls for applications.

Who Can Benefit from the New Scheme

Eligible beneficiaries may include newly established companies in Greece or existing foreign companies that establish a new branch in the country. A new company is defined as one incorporated no more than 12 months before submitting its application for inclusion in the scheme. Its shareholders may be individuals who are permanent residents abroad or legal entities headquartered outside Greece.

The framework applies to “initial investments.” These include the establishment of a new facility, the expansion of production capacity, diversification of production, and a fundamental change in the production process.

An initial investment may also include the acquisition of assets belonging to a facility that has been closed or would have been closed without the acquisition. The simple purchase of shares in a company does not qualify as an initial investment, nor does a straightforward replacement investment.

Buildings Up to 45% of Investment – 70% for Logistics

The section concerning eligible expenditure is of particular interest to the real estate and construction sectors. Eligible expenditure includes the construction, expansion and modernization of buildings and facilities, specialized and auxiliary installations, accessibility improvements, and the development of surrounding areas.

Building-related expenditure may account for up to 45% of total eligible regional expenditure. For investments in the supply chain, however, the limit rises to 70%, a provision of particular significance for new warehouses and logistics centers.

Under certain conditions, and for small and medium-sized enterprises (SMEs), the acquisition of existing buildings and other fixed assets belonging to a facility that has been closed may also qualify as eligible expenditure.

Eligible costs may also include new machinery and equipment, equipment acquired through leasing, technologies, exploitation rights, patents, know-how, software, and organizational and certification systems. For large enterprises, intangible assets may account for up to 30% of eligible regional expenditure, while for SMEs the corresponding ceiling is 50%.

By contrast, the purchase of land is not eligible for support. Operating expenses, furniture and office equipment, as well as the purchase of passenger vehicles with up to six seats, among other items, are also excluded. In the acquisition of a building, the value of the land is deducted from the eligible expenditure.

Tax Exemption and Licensing Within Two Months

The principal financial incentive is a tax exemption. This takes the form of an exemption from income tax on the company’s pre-tax profits and is calculated as a percentage of the value of eligible expenditure or of new equipment acquired through leasing.

The second instrument could prove equally important to investors: fast-track licensing.

The bill provides that any permit or approval required for the implementation of projects, the establishment or operation of the investment—including planning and zoning approvals—must be issued within two months of the submission of a complete file to the General Directorate for Development Laws and Foreign Direct Investment.

The two-month period does not include the time required for the investor to provide any additional information or documentation.

Incentives Do Not Remove Foreign Investment Screening

Inclusion in the new scheme does not exempt an investment from the foreign direct investment screening mechanism. The bill clarifies that the applicable Greek and EU foreign investment screening frameworks remain in force, as do the relevant responsibilities of the Interministerial Committee, the Ministry of Foreign Affairs, and Enterprise Greece.

At the same time, certain entities are excluded, including companies in difficulty, companies subject to pending recovery of unlawful state aid, and businesses with specified violations of labor and social security legislation.

The bill also introduces restrictions to prevent the scheme from financing the relocation of an activity from another country in the European Economic Area to Greece where this would result in job losses at the original establishment.

The bill comprises 50 articles in total and is not limited to the new investment incentives. It restructures the Directorate for Foreign Direct Investment, amends the framework governing foreign companies under Legislative Decree 89/1967, and introduces a “Climate Investment Pact.”

It also includes specific provisions concerning trade, transport and energy, including the simplification of procedures for the electrification of electricity storage facilities.