Alternative taxation of income earned abroad for individuals who transfer their tax residence to Greece

Date: January 11, 2021

By Martha Papasotiriou

Greek tax law has introduced the alternative taxation of income earned abroad for individuals who transfer their tax residence to Greece [Article 5A of Law 4172/2013]

According to the said provisions, a taxpayer, individual, who transfers his or her tax residence to Greece can be taxed in an alternative way for income generated abroad, provided that the following conditions are met cumulatively:

  • a) he or she was not tax resident in Greece during 7 of the previous 8 years prior to transfer of his or her tax residency to Greece, which is examined based on the records held by the tax administration and
  • b) he or she proves that he/she or his/her relative (e.g. spouse) invests in real estate in Greece or undertakings or transferable securities or shares in legal persons or legal entities whose registered seats are in Greece. This investment may not be less than € 500,000. The investment must be completed within 3 years from the date on which the application is submitted.

The investment should have taken please from 12 December 2019 onwards. Applications for inclusion under these arrangements may be submitted either when investments start to be made or at the latest 3 years after completion.

The individual who is subject to the alternative regime should pay a flat tax of € 100,000 for the taxpayer and € 20,000 for each relative, every year, in one installment, by the last working day of July.  Any tax paid abroad by the same persons for income included in the alternative taxation method shall not be offset against any Greek tax liability.

If in any tax year, and no later than 31 December of that year, the taxpayer does not pay the entire amount of tax, he or she ceases to be subject to the provisions of the alternative taxation and from the relevant tax year onwards will be taxed on his or her global income according to the general provisions of the Greek Income Tax Code (Law 4172/2013).

Upon payment of the flat-rate tax, all tax liabilities of the individual for income arising abroad are exhausted and he/she is exempt from inheritance or gift tax for assets located abroad.

The application to transfer tax residence to benefit from the alternative method of taxing income generated abroad must be submitted to the competent tax office until 31 March of each tax year.

The regime of the alternative taxation applies for a period of 15 years and cannot be extended.

Within a deadline of 6 months from the end of the 3-year deadline from the date on which the application for the alternative taxation is submitted the taxpayer should submit to the relevant authorities all the relevant supporting documentation proving the completion of the investment.