Taxation of Foreigners in Greece

Nickolas C. Papanikolaou

June 24, 2024

Abstract: Greece, known for its rich history, stunning landscapes, and vibrant culture, also has a detailed and structured taxation system. For foreigners residing or earning income in Greece, understanding the intricacies of the Greek tax system is essential to ensure compliance and optimize their tax liabilities. This article outlines the key aspects of how foreigners are taxed in Greece.

1. Residency Status

The tax obligations of foreigners in Greece primarily depend on their residency status. According to Greek tax law, an individual is considered a tax resident if they spend more than 183 days in the country within a calendar year. This rule includes temporary absences from Greece. Tax residents are subject to tax on their worldwide income, while non-residents are taxed only on their Greek-sourced income.

2. Income Tax Rates

For tax residents, the personal income tax rates in Greece are progressive:

Income (€) TAX Rate

0,00????? ????up to? 10.000,00 9%

10.000,01? up to? 20.000,00 22%

20.000,01? up to? 30.000,00 28%

30.000,01? up to? 40.000,00 36%

Over 40.000,01 44%

Singles and couples have an allowance of? € 777.00 up to 20.000,00 € income.

For tax residents with children and income up to 12.000,00 €, there are more allowances

Non-residents are taxed at the same progressive rates but only on their Greek-sourced income.

?3. Special Tax Regimes

Greece offers special tax regimes aimed at attracting foreign taxpayers, particularly retirees and high-net-worth individuals:

Non-Dom Regime: Foreign retirees who transfer their tax residence to Greece can benefit from a special regime where they are taxed at a flat rate of 7% on their foreign pension income for the first ten years of their residency.

High-Net-Worth Individuals (HNWI): This regime allows HNWIs to pay a lump sum tax of €100,000 per year on their worldwide income, provided they invest a minimum of €500,000 in real estate, businesses, or securities in Greece.

4. Double Taxation Treaties

Greece has signed double taxation treaties (DTTs) with several countries to prevent individuals from being taxed twice on the same income. These treaties provide mechanisms to eliminate double taxation, such as tax credits or exemptions. For example, income that is taxed in a foreign country can often be credited against Greek tax liabilities.

5. Social Security Contributions

Foreigners working in Greece are subject to social security contributions. The contributions are shared between the employer and the employee. Self-employed individuals, including freelancers, also pay social security contributions based on their declared income.

6. Value Added Tax (VAT)

The standard VAT rate in Greece is 24%, with reduced rates of 13% and 6% applicable to certain goods and services. Non-resident businesses providing services or goods in Greece may need to register for VAT and comply with local VAT regulations.

7. Real Estate Taxation

Foreigners owning property in Greece are subject to property taxes, including the Unified Real Estate Tax (ENFIA). ENFIA consists of a main tax calculated on the property's square meters and a supplementary tax based on the total value of the property.

8. Filing Requirements

Foreigners with income from Greece must file an annual tax return. The deadline for filing is typically at the end of June following the tax year. Non-residents earning income from Greece should also file a return, usually declaring only their Greek-sourced income.

9. Penalties for Non-Compliance

Failure to comply with Greek tax laws can result in penalties, including fines and interest on unpaid taxes. It is crucial for foreigners to stay informed and seek professional advice to navigate the complex tax landscape.

?Conclusion

Understanding the taxation rules in Greece is vital for foreigners to ensure compliance and optimize their tax position. Greece offers attractive tax regimes for retirees and high-net-worth individuals, making it an appealing destination for relocation. However, the complexities of the tax system necessitate careful planning and, often, professional advice.

References

Hellenic Republic - Independent Authority for Public Revenue

Greek Ministry of Finance

PwC Greece - Tax Services

EY Greece - Personal Taxation

KPMG Greece – Taxation

By understanding these rules and staying compliant, foreigners can enjoy the benefits of living and working in Greece without facing unexpected tax liabilities.