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+30 6977175045
Pay 7% tax as a retired foreigner in Greece? Tax benefits for wealthy individuals? Read more about the attractive tax arrangements in Greece for foreigners.
To address financial problems exacerbated by the COVID pandemic, the Greek government realized it might be a good idea to attract new taxpayers to Greece through schemes similar to Portugal’s tax regime and Italy’s flat tax, which would see pensioners pay just 7% tax on their pension income.
In 2020, for example, the Greek government launched a plan to attract millionaires, wealthy individuals and pensioners through two schemes:
• A flat-tax scheme for foreign pensioners moving to Greece.
• An alternative tax system for wealthy individuals.
The program, called “Tax Reform with a Development Perspective for the Future of Greece,” includes a new flat tax of 100,000 euros for the super-rich and a tax exemption and flat tax on income for foreign pensioners moving their residence to Greece.
The Greek government is trying to attract new residents to invest their business or pension money in buying real estate in Greece. Read more about the different tax regulations below.
In a strategy to attract wealthy retirees, Greece has also devised a preferential tax regime for foreign retirees, allowing new Greek residents to live in idyllic locations such as Mykonos, Athens, Corfu or Lefkas while paying almost no taxes.
To qualify for the Greek scheme for foreign pensioners, an individual must meet the following conditions:
• Receive pension income from a foreign source
• Transfer their tax residence to Greece, i.e. reside in Greece for more than 183 days or more days than in any other country
• Not have been considered a tax resident in Greece for 5 of the last 6 years prior to moving your tax residence to Greece
• Move from a country with which Greece has a valid tax administrative cooperation agreement or double taxation treaty (such as the Netherlands and Belgium).
The conditions for applying for the Greek scheme for foreign pensioners are as follows:
• Apply for the scheme before 31 March of the relevant tax year. Applications submitted after this deadline will be considered for the following tax year.
• The Greek Tax Authority has 60 days to make a decision, i.e. to accept or reject the application.
• Proof of foreign pension income can consist of any document issued by a foreign social security institution.
• The competent tax authority to receive and decide on such applications is the Athens Tax Office for Foreign Taxpayers and Alternative Tax Regimes for Greek Taxpayers.
• The application and supporting documents can be submitted electronically or on paper, so that no visit to Greece is required.
Pensions under the Greek scheme for foreign pensioners are taxed as follows:
• Annual flat rate of 7% on pensions and withdrawals from non-Greek private pension schemes.
• Annual flat rate of 7% on foreign income (dividends, interest).
• Tax credits and deductions for international double taxation are applied to the above 7% if tax is paid at source.
• The applicant is taxed on his/her Greek personal income tax for all Greek source income according to the general tax rules (with a progressive rate of up to 44%).
• The scheme can last up to 15 years, which is a longer period than in Portugal or Italy.
• Successful applicants are not exempt from Greek inheritance tax, nor from Greek gift tax on movable property located abroad, if applicable.
• It should be noted that the successful outcome of an individual’s application does not affect the tax residence of his/her family members (e.g. spouse or relatives, etc.), who are examined separately. The law therefore does not provide for the possibility of extending the application of the above-mentioned alternative tax system to relatives of the applicant.
In an attempt to attract wealthy individuals to Greece, a “flat tax”, as introduced in Italy, also known as “alternative tax on foreign source income”, will be introduced.
They will have to pay a tax or a flat rate of €100,000 per year, regardless of the amount of their foreign income. This concerns income earned abroad by individuals (and/or their family members).
• The natural person has not been a tax resident in Greece for 7 out of the 8 years preceding the transfer of his/her tax residence to Greece
• The applicant must be able to demonstrate that he/she, his/her immediate family members or a company in which he/she holds the majority of the shares, invests in real estate or movable property or shares in legal entities established in Greece.
• The amount of the investment cannot be less than €500,000 and must be made within a period of 3 years.
• The last condition is not required if the person has already obtained a residence permit by investing in Greece or a Golden Visa.
• They will be required to pay a tax or flat rate of €100,000 per year, regardless of the amount of their foreign income. For a family member covered by the respective provisions, a flat tax of €20,000 per year will be due.
• The flat tax of €100,000 cannot be reduced by double tax relief or tax credits.
• Each applicant will be exempt from Greek inheritance and gift taxes in respect of real estate located abroad.
• Once applied, the scheme has a maximum validity of 15 years.
• Income from Greek sources must be declared in the annual income tax return and will be taxed in accordance with the Greek income tax.
So if you are interested in changing your tax residence but are not sure what your ideal destination is, we recommend you to contact Makelaardij Griekse. We will help you without obligation with the search for a suitable property, the purchase and application process. If you have any questions and you want us to help you with the process, write to us at [email protected] or via the contact form.