Greece Tax Residence Non-Dom Regime for individuals

Magdalena Velkovska | Published on 23 Mar 2020 | Updated on 24 Mar 2020

Greece-Golden-Visa

Legal Notice 


Recently the Greek Parliament had ratified the new Tax Bill 4646/12.12.2019, introducing significant amendments related to the Greek Tax system.  By virtue of this Law, triggered are segments of the Greek Taxation, significant for both individuals and legal persons and amended are few Legal Acts, namely the Income Tax Code (ITC), the Tax Procedures Code (TPC), the Value Added Tax Code (VAT) and other legislation, with an intention to incentivise foreign investors to among the other things – move their tax residence to Greece by granting them with favourable tax regime on their foreign funds.


Amendments triggered by the Bill (individuals)


The most significant changes this Bill stipulates in relation to natural persons, are related to introduction of a non-dom tax regime for foreign residents in Greece and implementation of new tax rates for employment, business and pension income.  The Bill is furthermore determining basis for certain group of tax credits, it structures rules for tax treatment of stock options, suspends the taxation on income from capital gains from sale of properties for individuals, etc.  


Non-dom regime 


Very similarly to few other Golden Visa countries (Malta, Portugal, Spain), Greece also decided to introduce a Non-Dom Tax regime, whereby persons who are tax residents of Greece will be subject to tax on a Greek source of income in Greece as per standard rules, while the foreign source of income shall be taxable by virtue of making a lump sum tax payment of one hundred thousand (100,000) EUR per fiscal year (irrespective of the amount of foreign income generated), for a maximum of fifteen (15) tax years. Furthermore, this regime may be extended to any close relatives of the individual, by paying an additional tax equal to twenty thousand (20,000) EUR per person for the fiscal year in question. In these circumstances the inheritance and donation provisions shall not apply. 


In order to qualify for this favourable tax regime, the below requirements are to be met by the applicants: 

  • Individual was not Greek tax resident for the previous seven (7) of the eight (8) years preceding the transfer of their tax residence to Greece; and
  • The individual, or a close relative have invested a minimum of five hundred thousand (500,000) EUR in real estate or in shares or securities of Greek corporate entity. The investment would also qualify if the investment is made through a corporate entity in which the said persons hold majority of the shares.


When considering whether to opt for this regime, one is to keep in mind that any foreign taxes paid on the income falling within this scope, cannot be set off against the person’s tax liability in Greece.  It is to note that individuals who will opt for this regime, are not required to report their foreign income. 


Deadline for submission of applications for transfer of fiscal residence of for obtaining the non-dom tax status is by 31st March of the relevant fiscal year. 


More details and guidelines are expected to be published by the Greek Ministry of Finance, which will facilitate putting the theory into practice on this regime. 


Tax residence 


The definition of a tax resident is being brought closer to the definition and terminology used by the OECD Model Tax Convention, and instead of considering a person to be a Greek tax resident in the light he/she spent 183 days continuously in Greece, now one can be considered to be Greek tax resident upon spending 183 days in one calendar year (cumulatively).  


Tax rates 


Other change introduced by this Bill which directly affects individual investors is the new progressive tax rates where the initial rate was reduced to 9% (being previously 22%) for the part of chargeable income of the individual up to ten thousand (10,000) EUR, whilst the rates applicable on income above 20,000 EUR are reduced by one per cent (1%) respectively.  Please see below the table reflecting the new tax rates for individuals: 

Income scale (EUR)Tax rate (%)
0 - 10 0009%
10 001 - 20 00022%
20 001 - 30 00028%
30 001 - 40 00036%
>40 00144%


The above provisions apply on chargeable income earned in the fiscal years following 1 January 2020.
 


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Dr Jean-Philippe Chetcuti

Senior Partner, Tax & Immigration

+356 22056411

Dr Antoine Saliba Haig

Legal Associate

+356 22056446

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