Family Offices companies can have any legal form (Ltd, SA, etc.) other than that of non-profit legal entities. Family Offices can be attended by family members, as well as legal entities or legal entities, in which the natural persons or their family members (spouses, unmarried children, parents) participate.
In order for the company to be subject to the special status of Family Offices it must cumulatively meet the following conditions:
- To employ in the EU member-country a staff of at least five people (the number of staff differs according to the EU member-country) within 12 months from its establishment and onwards.
- To incur in the member-country in which it is based operating expenses a minimum of EUR 1 million per year, depending on the member-country in which it is established.
The sole purpose of Family Offices is to provide support to natural persons, who must be tax residents of the member-country in which the Family Office is located and their family members in the administration and management of assets and their direct-indirect investments, as well as the management of the expenses incurred by the above natural persons to cover their needs and the cost of their living and their charitable and cultural activities.
The services that a Family Office can provide to achieve its purpose are indicative and the following:
1. Services related to the personal and social life of family members,
that is, public relations services, security escorts, static guards, cooks, housekeepers, teachers, educators and babysitters, drivers, technicians, gardeners, cleaners, procurement of goods and charity management, respectively.
2. Managerial support services,
that is, secretarial support, human resource management, accounting monitoring and payment of expenses of all kinds, management of bank accounts, technical support for the management and maintenance of real estate and its surroundings and services for organization of business trips.
3. Financial management services,
that is, investment management and wealth transfer management.
4. Strategic planning services,
that is, business consulting, real estate strategic planning, successful replacement (in the family) planning and educational planning.
5. Other consulting services,
that is, tax advisory services, legal services, engineering services, medical services, compliance management advice and support, and cybersecurity services.
To provide these services, Family offices can employ staff of various specialties or outsource their services to third parties established in the EU member-country based or abroad (but not in non-cooperative tax countries).
Natural persons who are members of Family offices cannot be employees of them.
Regarding the tax treatment of Family offices, it is noted that the gross income from the provided services, which are obligatorily collected through bank transfers, are determined by adding a profit percentage x% (x% is determined by the respective member country) to the total of all types their expenses and depreciation, excluding income tax (cost method plus profit margin).
Income tax is calculated on this profit margin at the rate applicable to the profits of the business activity of legal entities xs% (and depending on the member-country).
For the determination of the taxable income of Family Offices, all expenses on which the percentage of profit is calculated are deducted from their gross income, if they are documented by the appropriate supporting documents. Of course, if for any reason the income of the Family offices as it results from the books he keeps is greater than the income as determined by the method prescribed by law, the income that results from the books will be taken into account.
It is particularly important that the internal transactions carried out between the Family office and the persons participating in it, constitute transactions carried out within a single entity and are outside the scope of VAT. Therefore, the services provided by Family offices are not subject to VAT.
