Greece’s pitch to billionaires
The hedge fund industry has for the past decade failed to provide much alpha and substantially outperform the roaring global financial markets. But when it comes to the personal finances of the firms’ billionaire executives, there’s an unbeatable new trade materialising.
Billionaire Chris Rokos is on the cutting edge. The founder of macro hedge fund Rokos Capital Management is moving his tax residency from the UK to Greece.
In England, the top income tax rate is 45 per cent and carried interest is taxed at a rate of 34 per cent. Meanwhile, in Greece, wealthy individuals have since 2019 been allowed to exempt their foreign gains from its tax net by paying an annual flat tax of €100,000. Foreigners are also exempt from Greek inheritance tax on assets located outside the country.
It’s not hard to see the calculation Rokos, who paid himself £477mn last year, is making.
Athens also added a sweetener this summer for private equity and hedge fund executives relocating to the country: they will pay only a 5 per cent tax on bonuses and carried interest, down from the normal rate of 15 per cent.
Rokos is something of a coup for Greece, which designed the new tax regime to lure investors from places such as the UK and the Gulf to establish substantial operations in Athens. The country’s officials have been pitching executives on the tax strategy.
Representatives from the Greek government went to the offices of a top London hedge fund and were “marketing the fiscal benefits [for] hedge funds” of relocating, an executive at the fund told the FT. Vasilis Karatzas, an adviser to finance minister Kyriakos Pierrakakis, personally courted Rokos for months as he weighed up where to move.
Rokos is not unusual among his set for doggedly pursuing lower taxes, even if it means moving overseas.
He follows several other wealthy tax emigrants who have left the UK in recent years including steel tycoon Lakshmi Mittal; Nassef Sawiris, Egypt’s richest man and co-owner of English football club Aston Villa; and Richard Gnodde, vice-chair of Goldman Sachs.
The new tax regime on offer in Greece comes with a condition. The taxpayer’s employer must spend at least €3mn a year operating in the country to benefit from the lower carried interest tax rate. Still, it’s a small price to pay for a 5 per cent tax rate on bonuses and carried interest for your billionaire traders.
Rokos Capital Management is expected to start with a relatively small presence in Athens, but the operation could eventually grow to about 50 people, according to people familiar with the situation.
Relocating from a global financial centre to the Mediterranean may seem a dramatic way to achieve tax savings for Rokos’ executives. But from a purely financial standpoint it’s better than anything the hedge fund can offer to its own investors.