ECONOMY

Great weather and a favorable tax regime

great-weather-and-a-favorable-tax-regime

European Union states have not failed to notice Greece’s two recent legal clauses that provide strong incentives for wealthy foreigners and pensioners from abroad to transfer their tax residence to this country.

Sources say more than 30 applications from multimillionaires have already been submitted and approved (half of them at the height of the health crisis). These individuals want to live and invest in Greece, taking advantage of the favorable legislation for them and their families. About 10 are among the world’s richest people, worth several hundred million euros. They have in fact begun fulfilling their obligations by law already, investing in Greece through the luxurious property market.

Data also show Greece may be a tax haven for Europe’s pensioners too. Within days of the legal clauses being introduced, 10 applications for relocation to Greece had been submitted by European pensioners, while quite a few have come from pensioners who had already moved their tax domicile to Greece by 2019 and now qualify for the favorable tax status.

The tax office for taxpayers based abroad appears to have received more than phone calls and emails from pensioners or their lawyers with inquiries about the process and the necessary documents. Even more pensioners have directly contacted the Finance Ministry.

Most of the interest is from Scandinavia, especially Sweden and Denmark, as well as from Germany. There has also been significant interest from Greeks based in the US and Australia.

Sources say one country was taken aback by its pensioners’ interest in relocating to Greece and was concerned at the outflow of taxable material; this is because pensioners not only have their pensions taxed in their home country, but also revenues from other sources, as well as real estate assets. That country went on to contact the competent authorities in Greece for information about its program.

Of course besides the competitive 7% tax rate for the first 10 years, covering all incomes of retirees moving to Greece, this country also boasts the sunshine, the warm climate and a lifestyle that Northern European countries cannot possibly match, to say nothing of the cheap real estate assets that make their decisions that much easier.

The following three eligibility criteria will apply for pensioners from abroad to secure tax residence in Greece with a flat income tax rate of 7% for the next 10 years:

1) They should not have been Greek tax residents for any more than one of the last six years.

2) They must shift their tax domicile from a state with which Greece has a valid agreement for administrative cooperation on tax issues.

3) To prove that they are recipients of pensions from abroad, they must produce any document from their social security fund or another public authority or professional fund or insurance company that illustrates the payment of a state or private pension abroad.

Any individuals who meet the criteria for the new program and have already shifted their tax residence to Greece since 2019 will need to submit their income tax declaration for the 2019 financial year by October 31, 2020. In this case the 7% tax will be paid in a lump sum within a month of the approval of their application to enter the program – i.e. by November 26.

The tax that foreign pensioners have to pay will come due in one tranche each tax year, with the deadline set for the last working day of July.