Greece: Greece introduces an attractive tax status for wealthy foreign individuals
Taking effect on December 12, 2019, Greece put in place new tax legislation which initially seeks to encourage high net worth individuals to move their tax domicile to Greece and choose to be subject to an alternative tax regime for their source. not Greek. Income.
Being subject to Law 4646 / 12.12.2019 will mean that these people:
- Will be considered tax residents of Greece and will be eligible for protection under the 57 international tax treaties aimed at avoiding double taxation that Greece has adopted with foreign countries;
- Will be exempt from the obligation to declare and taxed locally on their foreign source income (depending on the progressive tax rates applicable locally, the highest charge could reach 54%) while being required to pay a lump sum tax each year on their foreign source income, regardless of its origin;
- However, will be subject to Greek income tax according to local rules and progressive tax scales only on their Greek source income.
The above reflects an attempt by the Greek government to introduce a special tax regime loosely based on the ‘non-dom’ program, which has been applicable in Italy since 2017, and to offer tax incentives to wealthy individuals wishing to reside in Greece . This is on condition that they pay an annual flat tax amount on their non-Greek source income without being required to declare it on a Greek income tax return and without the need to justify or document its origin.
It should be noted that Greece already runs a “golden visa” program which issues five-year residence permits to non-EU citizens in exchange for an investment in Greece (minimum thresholds apply depending on the type of investment made) without a minimum length of stay set by the government.
In order for a person to benefit from the tax regime of Law 4646, he must meet the following conditions:
- They have not been Greek tax residents during the last seven years out of the eight years preceding the transfer of their tax residence to Greece; and at the same time.
- They prove that they or a relative have made an investment of at least € 500,000 in real estate, businesses or legal persons in Greece, or securities or shares in legal persons based in Greece or through legal entities in which they hold the majority of shares; this last obligation would be waived if they already have a “golden visa” or another residence permit obliging them to make an investment in Greece (thresholds apply depending on the type of investment made).
The filing of the request for transfer of tax residence according to the above process is March 31 of each respective fiscal year.
Provided that the request for transfer of tax residence according to the above process is successful: a) the individual will have to pay an amount of € 100,000 per tax year for income from abroad, b) the individual will have to declare and be taxed in Greece only for Greek source income, c) all assets held abroad by that person will be exempt from inheritance / gift tax.
The natural person who chooses to be subject to the alternative method of taxation above may request that the request be extended for his relatives also on condition that he pays the sum of € 20,000 per tax year and per relative.
For taxpayers subject to the alternative taxation regime, they can cover their deemed income by importing foreign currency from abroad, without it being necessary to justify the origin of the funds.
A maximum of 15 years is set for eligibility for the alternative tax regime from the first year of the application and it can be revoked at any time.
We expect the Greek Ministry of Finance to issue detailed guidelines for the practical application of the above-mentioned regime in due course.
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