Greece introduces new tax regime for foreign retirees

The anticipated bill that invites foreign retirees to become tax residents of Greece by paying a very low annual tax at a rate of only 7% for the total income earned abroad, has been voted by the Greek Parliament a few days ago.

Who can benefit from the new tax reforms?

According to the bill 4714/2020, any natural person who is entitled to a pension from a foreign country can transfer his tax residence in Greece if the following two (2) conditions are met:

• Not to have been a tax resident of Greece in the previous five (5) of the six (6) years before the transfer of their tax residence in Greece.

• To transfer their tax residence from a state with which a Double Taxation Agreement (DTA) with Greece is in force.

How can someone apply for the transfer of their tax residence in Greece?

Interested parties must submit an application for the transfer of their tax residence by March 31 of the respective tax year. Especially for this year's applications, the deadline is set at 30.9.2020. The Greek tax administration informs the tax authorities of the state of previous tax residence of the interested party and within sixty (60) days the final decision is issued.

What do you need to know if you are transferring your tax residence in Greece?

In any case, the alternative taxation will start from the next tax year for which the application is submitted and the 7% tax will be paid in one (1) instalment until the last working day of July of each tax year. This tax is not offset against other tax liabilities of the natural person, while with its payment any tax liability of the natural person for this income earned abroad is exhausted.

For example: A foreign retiree who will apply for the transfer of their tax residence in Greece in January 2021 will be required to pay the relevant 7% tax for the income acquired abroad, in July 2022.

Submission to the above provisions on the transfer of tax residence is possible for the next fifteen (15) tax years. A ministerial decision is expected to come out soon that will specify the details of the implementation of the above new provision.

Finally, it is worth noting that the above tax reform does not affect the implementation of international conventions that have been ratified in Greece to avoid double income taxation and each case should be considered in the light of this Double Taxation Agreement with the country of origin.