I. Advantages
Greece offers several attractive special tax systems for newcomers. The Non-Dom regime allows wealthy individuals with foreign income to pay a flat tax of €100,000 annually on their worldwide income, regardless of its amount, for up to 15 years. Additionally, an extra €20,000 can be paid per family member to include them in the regime. For foreign pensioners, a separate special regime applies: they pay only 7% flat income tax on their foreign pensions and capital income for up to 15 years. Employees and self-employed individuals who move from abroad and have not been tax residents in the last five years can benefit from the so-called 50% regime, allowing them to receive half of their Greek income tax-free for up to seven years. All these special regimes require that the center of vital interests is moved to Greece and tax residency is established there.
Emigrating to Greece: When one thinks of Greece, it is certainly not primarily about the country being a tax haven. Especially since it is also an EU member state and is known not to be doing too well economically. The fact is, however, that Greece offers a territorial tax system for non-residents, also known as non-domiciled individuals. This means that they only have to pay tax on income they earn in Greece. And since the beginning of 2021, Greece has offered further exciting new tax incentives for both foreign investors and pensioners who move their retirement residence there. As part of the "Golden Visa" program, originally introduced in 2015, further optimizations have been made, making it even more attractive for investors. In addition, new incentives have also been created for foreign employees. That this is related to Greece's difficult financial situation in general, and with the government's attempt to bring foreign capital or money into the country, will surprise no one. The Golden Visa program will be discussed in more detail later here.
II. What Others Say
“If you are interested in ancient ruins, Corinthian and Ionic capitals, amphitheaters, and the like, then you must have your own Greece experience.”
“The Greek kitchen is considered one of the best in the world. It is also recognized by UNESCO as an intangible cultural heritage of humanity.”
“While the reception in some tourist places is often cool, the Greeks will always give you a friendly smile. Especially if you travel to places off the beaten track, you will experience the filoxenia, this typical Greek tradition of hospitality.”
III. Tax Benefits
Greece's tax system offers significant advantages for various groups. The Non-Dom regime is particularly appealing to high-net-worth individuals, allowing them to cap their global income tax at €100,000 per year for up to 15 years. This fixed amount provides predictability and substantial savings for those with substantial foreign earnings. For each additional family member included in the regime, an extra €20,000 is payable, making it a family-friendly option.
Pensioners moving to Greece can benefit from a highly attractive 7% flat tax rate on all foreign-sourced pension and capital income for up to 15 years. This makes Greece an ideal retirement destination for those looking to maximize their after-tax income. Furthermore, skilled workers and self-employed individuals who relocate to Greece and have not been tax residents for the past five years can take advantage of a 50% tax exemption on their Greek-sourced income for seven years. These incentives are designed to attract talent and investment, contributing to Greece's economic growth.
IV. Who It's For
Greece is particularly suitable for investors, freelancers, and retirees seeking significant tax advantages within the European Union. The Non-Dom regime targets wealthy individuals with substantial foreign income, offering a predictable and low tax burden. Pensioners will find the 7% flat tax on foreign income highly appealing, making their retirement savings go further.
Freelancers and employees with specialized skills can benefit from the 50% tax exemption on Greek-sourced income, providing a competitive edge. The country also appeals to those looking for a high quality of life, rich cultural heritage, and beautiful Mediterranean climate. However, it is crucial that individuals genuinely relocate their center of vital interests to Greece to qualify for these regimes.
V. Residency Notes
Establishing tax residency in Greece is a prerequisite for accessing its favorable tax regimes. This typically involves demonstrating a permanent home in Greece and spending more than 183 days in the country within a tax year. For the Non-Dom and pensioner regimes, applicants must not have been a tax resident of Greece for a significant period prior to their application (e.g., 7 out of the last 8 years for Non-Dom).
The Golden Visa program, while primarily an investment-based residency scheme, can also facilitate the path to residency for those seeking to benefit from Greece's tax incentives. It is essential to comply with all legal and administrative requirements to ensure a smooth transition and secure tax benefits. Professional guidance is highly recommended to navigate the complexities of Greek residency and tax laws.
VI. Tax Rates
While Greece offers attractive special regimes, it's important to understand the general tax landscape. The standard income tax rates can be progressive, reaching up to 44% for higher earners. Capital gains tax is generally 15%, and corporate tax stands at 22%. Wealth and inheritance taxes can be significant, with rates up to 40% depending on the relationship to the deceased and the value of assets.
However, the special regimes significantly alter these rates for eligible individuals. For instance, the 7% flat tax for pensioners on foreign income replaces the progressive income tax on those specific earnings. Similarly, the Non-Dom regime's flat €100,000 tax on worldwide income provides a substantial reduction for high-income individuals. It is crucial to assess eligibility for these programs to optimize your tax situation in Greece.
VII. Sham Relocation
The Greek tax authorities, like those in many other countries, are vigilant against sham relocations. A "sham relocation" occurs when an individual claims tax residency in Greece without genuinely moving their center of vital interests to the country. This can lead to severe penalties, including back taxes, fines, and even criminal charges.
To avoid the "Boris Becker trap" – a reference to high-profile cases of individuals facing legal repercussions for tax evasion through alleged sham relocations – it is imperative to establish a genuine connection to Greece. This includes spending a significant amount of time in the country, having a permanent home, engaging in local economic activities, and integrating into the community. Simply registering an address without actual presence and intent to reside will not suffice. Professional legal and tax advice is crucial to ensure full compliance and avoid any missteps.
VIII. What Makes It Attractive
Beyond its attractive tax regimes, Greece offers a compelling lifestyle that draws individuals from around the globe. Its rich history, vibrant culture, and stunning natural beauty provide a unique backdrop for both personal and professional life. The Mediterranean climate, with its long, sunny summers and mild winters, is a significant draw, as are the beautiful beaches and picturesque islands.
The cost of living in Greece, while varying by region, can be significantly lower than in many other Western European countries, particularly outside of major tourist hubs. This allows for a higher quality of life and greater purchasing power. The warmth and hospitality of the Greek people, combined with delicious Mediterranean cuisine, further enhance the appeal of making Greece your home. The country's strategic location at the crossroads of Europe, Asia, and Africa also offers excellent connectivity.
IX. Cost of Living
The cost of living in Greece is generally lower than in many Western European countries, though it can vary significantly between Athens, Thessaloniki, and the islands versus smaller towns and rural areas. Housing, especially outside of prime city centers or popular tourist islands, can be quite affordable. Utilities, transportation, and groceries are also typically less expensive.
For example, a decent apartment in a mid-sized city might cost significantly less than a comparable one in Paris or Berlin. Eating out, particularly at traditional tavernas, offers excellent value for money. While imported goods might be pricier, local produce and products are abundant and affordable. Overall, Greece provides an opportunity to enjoy a high quality of life without the exorbitant costs often associated with other European destinations.
X. Exit Tax
When considering a move to Greece, it's also important to be aware of potential tax implications upon leaving your current country of residence. Many countries impose an "exit tax" or "emigration tax" on individuals who cease to be tax residents, particularly if they hold significant assets. This tax is often levied on unrealized capital gains, treating the departure as a deemed disposal of assets.
The specifics of exit tax vary greatly by country, including thresholds, asset types covered, and calculation methods. It is crucial to consult with a tax advisor in your current country of residence to understand any potential exit tax liabilities before making your move to Greece. Proper planning can help mitigate or even eliminate such taxes, ensuring a smoother transition of your financial affairs.
XI. Preparation
Thorough preparation is key to a successful relocation and optimization of your tax situation in Greece. This includes gathering all necessary documentation for visa and residency applications, such as passports, birth certificates, marriage certificates, and financial statements. It's also advisable to obtain certified translations of these documents if they are not in Greek or English.
Financially, you should plan for the costs associated with relocation, including travel, initial accommodation, and legal/administrative fees. Opening a local bank account in Greece is an early and essential step. Furthermore, understanding the Greek healthcare system and arranging for appropriate health insurance coverage is vital. Engaging with experienced legal and tax professionals early in the process can streamline your move and ensure you meet all requirements for the special tax regimes.
XII. CRS
Greece, as a member of the European Union and the OECD, participates in the Common Reporting Standard (CRS). The CRS is an international standard for the automatic exchange of financial account information between tax authorities worldwide. Its purpose is to combat tax evasion and ensure tax transparency.
Under CRS, financial institutions in participating jurisdictions are required to identify tax residents of other countries and report their financial account information to their local tax authorities. These authorities then exchange this information with the relevant foreign tax authorities. This means that your financial accounts in Greece, and in other CRS-participating countries, will be reported to your country of tax residence. It is crucial to be fully compliant with tax obligations in all relevant jurisdictions to avoid any issues arising from CRS reporting.
XIII. Formalities
Relocating to Greece involves several administrative formalities. Upon arrival, you will need to register with the local authorities, obtain a Greek tax identification number (AFM), and potentially a social security number (AMKA). If you are an EU citizen, the process for residency is generally simpler, involving registration with the police or alien's department.
Non-EU citizens will typically need to apply for a long-stay visa and then a residence permit, often facilitated through programs like the Golden Visa. Opening a bank account, registering for utilities, and potentially converting your driver's license are also part of the process. Navigating these formalities can be complex, and professional assistance from local lawyers or consultants is highly recommended to ensure all steps are completed correctly and efficiently.
XIV. How We Help
Our firm specializes in assisting individuals and families with their international relocations and tax planning. We provide comprehensive support tailored to your specific needs, ensuring a smooth and compliant transition to Greece. Our services include:
- Strategy Session
- Residency Application
- Company Formation
- Bank Account Opening
- Real Estate Acquisition
- Tax Compliance
- Citizenship by Investment
- Ongoing Support
From initial strategy sessions to ongoing support, we are your trusted partner in navigating the complexities of Greek residency and taxation. Our goal is to help you maximize the benefits of Greece's attractive tax regimes while ensuring full legal compliance.