Alternative taxation of income earned abroad by individuals who transfer their tax residence to Greece
- A taxpayer, a natural person, who transfers his tax residence to Greece may be subject to an alternative method of taxation, if cumulatively:
(a) was not a tax resident of Greece for the previous seven (7) of the eight (8) years prior to the transfer of his/her tax residence to Greece, and
(b) proves that he or she or a related person or through a legal person or legal entity in which, respectively, he or she holds the majority of shares or units, invests in real estate or businesses or securities or shares or units in legal persons or legal entities domiciled in Greece. The amount of such investment may not be less than EUR 500,000. The investment must be completed within three (3) years from the date of submission of the application.
It is not required to meet the conditions of case b., if the person is a natural person who has obtained and maintains a residence permit for investment activity in Greece.
The natural person then is subject to tax on his or her taxable income arising in the territory of the country in accordance with the general provisions of the KFE
- If the taxpayer is accepted to be subject to an alternative method of taxation for the income arising abroad, the natural person shall pay a lump-sum of tax every tax year, regardless of the amount of income earned abroad, in the amount of one hundred thousand (100,000) euros. The natural person may request the extension of the application of this article to a related person, in which case an amount of tax equal to twenty thousand (20,000) euros shall be paid for each related person and the provisions of the tax on gifts, inheritance and parental benefits shall not apply. The tax referred to in this paragraph shall be paid each tax year in one (1) instalment by the last working day of July and shall not be offset against other tax liabilities or any credit balances of persons subject to the alternative method of taxation. Any tax paid by the same persons abroad on the income covered by the alternative method of taxation shall not be offset against any tax liability in Greece.
For the first year, the natural person must pay the lump sum tax within thirty (30) days of the approval of his/her application.
- The application for the transfer of tax residence with inclusion in the alternative method of income taxation arising in a foreign country shall be submitted to the Tax Administration by the natural person by March 31st of the tax year concerned and shall be accompanied by proof of the transfer of the minimum amount of the investment to an account of a financial institution established in Greece. Within the same deadline, natural persons who meet the requirements and have already transferred their tax residence to Greece within the previous tax year may apply for the alternative method of taxation of income earned abroad in accordance with this Article. The Tax Administration shall examine the application and issue a decision approving or rejecting it by the last working day of the month of June of the year of submission of the application. Upon approval of the taxpayer’s application, an administrative tax assessment act shall be issued for the first year of inclusion for the taxpayer and each of his/her relatives.
The natural person declares in his/her application the state in which he/she had his/her last tax residence until the submission of his/her application. The Tax Administration shall inform the tax authorities of that State of the transfer of the tax residence of that taxpayer in accordance with the provisions on international administrative cooperation as applicable.
- The provisions of this regulation shall apply from the first tax year for which the application of the individual for inclusion is submitted and shall expire after the expiration of fifteen (15) tax years. The affiliation can not be extended beyond fifteen (15) tax years.
- The natural person who is included in the provisions hereof, in the event that:
(a) in any tax year he/she does not pay the full amount of 100.000€ shall cease to be subject to the provisions of this regulation and from the relevant tax year onwards he/she shall be taxed on his/her worldwide income under the general regulations of the Code or
(b) if it is found after the expiry of the three-year period that he has not completed the investment, he shall cease to be subject to the provisions of this Article from the year of his accession and shall be taxed on his worldwide income under the general regulations of the Code
In the above cases, the total amount of domestic tax payable on income of foreign origin for the relevant tax years may not be less than the amount of one hundred thousand (100,000) euros per year.
- The natural person may in any tax year submit an application for the withdrawal of his/her inclusion in those tax laws. In the event of withdrawal, the natural person shall be subject to taxation in accordance with the general provisions for the tax year in which the application for revocation is submitted and thereafter shall not be liable to pay the fixed flat-rate amount of tax for that year.
- The income tax return for the taxable income of a person subject to the provisions hereof, which may arise in the home country, shall be filed and the payment of the tax shall be made in accordance with the relevant provisions of the ΚΦΕ
- Upon payment of the lump sum tax of €100,000, any tax liability of a natural person subject to the provisions hereof for income arising abroad shall be terminated and the individual shall be exempt from inheritance or gift tax on property located abroad.
- A joint decision of the Ministers of Finance and Development and Investment determines the eligible categories of investments, the period of their maintenance in Greece, the granting of the possibility to change the investment once within the three-year period, the procedure for determining the completion of the investment within the three-year period, the supervision of the maintenance of the investment, the procedure for the submission of the request of the subject person for the determination of the completion of the investment, the deadlines for issuing the acts of the administration, the procedure for notifying the tax administration of the act establishing whether or not the investment has been completed and any other details necessary for the application of this regulation.