BUSINESS

Attracting retirees to Greece

PROKOPIS HATZINIKOLAOU

TAGS: Taxation

The government is formally inviting foreign pensioners to shift their tax residence to Greece with the introduction of a single tax rate of 7% for their entire income obtained abroad. The scheme is expected to rival those of fellow southern European Union countries.

According to a clause included in the draft law that the Finance Ministry submitted to Parliament last week, for pensioners to qualify for this beneficial rate, they should not have been tax residents of Greece over at least five out of the six financial years before their tax relocation from a country with which Greece has a valid agreement concerning administrative cooperation on tax issues.

As soon as a foreign pensioner’s application is approved, the sum of their income obtained abroad will be taxed at a flat rate of just 7% for the next 10 years.

The tax is payable every financial year in a lump sum.

For the applications of tax residence relocation to apply as of this year, the submission deadline is September 30, 2020.

What this means in practice is that for a period of 10 years any retirees coming over to Greece as new tax residents with revenues abroad via pensions, business activities or various investments will pay a very low tax.

It is noted that pensioners who are European Union citizens may relocate to any other EU state, and any country may introduce tax breaks both for EU pensioners and non-retirees.

So far Portugal, Malta, Italy and Cyprus have been the main European Union member-states to have introduced special tax incentives for foreign pensioners, and to a lesser extent Romania and France.

Greek government officials point out that international surveys have shown that when pensioners choose where they are going to retire, they appear to take into account a range of parameters, which besides tax incentives also include a country's climate conditions, its way of life, culture, healthcare and governance.

Greece is praised, they note, for its climate, culture and way of life; however, the country’s tax framework was until recently quite discouraging, and confidence in its governance and health system low.

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