Greece Tax Residence Non-Dom Regime for individuals

Recently the Greek Parliament ratified the new Tax Bill 4646/12.12.2019, introducing significant amendments to the Greek Tax system.  This Greek tax law amendment triggers segments of Greek Taxation significant for both individuals and legal persons.  Other amendments include amendments to the Income Tax Code (ITC), the Tax Procedures Code (TPC), the Value Added Tax Code (VAT) with an intention to incentivise foreign investors to among the other things – move their tax residence to Greece by granting them with favourable tax regime on their foreign funds.

Greek personal tax changes

The most significant change to the Greek personal tax system introduced by this bill is the introduction of a Greek res non-dom tax regime for foreign residents in Greece, along with the implementation of new Greek tax rates for employment, business and pension income.  The Bill is furthermore determining the basis for certain tax credits, laying out the rules for the Greek tax treatment of stock options and suspends the Greek taxation on income from capital gains from sale of properties for individuals.

Greek Non-dom regime 

Like the Golden Visa Programmes of Malta, Portugal and Spain, Greece also decided to introduce a Greek Res Non-Dom Tax regime whereby persons who are tax residents of Greece will be subject to tax on a Greek source of income in Greece as per standard rules, while the foreign source of income shall be taxable by virtue of making a lump sum tax payment of €100,000 per fiscal year, irrespective of the amount of foreign income generated.  This favourable tax treatment is available for a maximum of 15 tax years.  Furthermore, the Greek res non-dom tax regime may be extended to any close relatives of the individual, by making an additional tax payment of €20,000 per person for the fiscal year in question. In these circumstances the inheritance and donation provisions shall not apply. 

In order to qualify for this favourable tax regime, the below requirements are to be met by the applicants: 

• Individual was not Greek tax resident for the previous seven (7) of the eight (8) years preceding the transfer of their tax residence to Greece; and
• The individual, or a close relative have invested a minimum of five hundred thousand (500,000) EUR in real estate or in shares or securities of Greek corporate entity. The investment would also qualify if the investment is made through a corporate entity in which the said persons hold majority of the shares.

When considering whether to opt for this regime, one is to keep in mind that any foreign taxes paid on the income falling within this scope, cannot be set off against the person’s tax liability in Greece.  It is to note that individuals who will opt for this regime, are not required to report their foreign income. 

Deadline for submission of applications for transfer of fiscal residence of for obtaining the non-dom tax status is by 31st March of the relevant fiscal year. 

More details and guidelines are expected to be published by the Greek Ministry of Finance, which will facilitate putting the theory into practice on this regime. 

Greek Tax residence 

The definition of a tax resident is being brought closer to the definition and terminology used by the OECD Model Tax Convention, and instead of considering a person to be a Greek tax resident in the light he/she spent 183 days continuously in Greece, now one can be considered to be Greek tax resident upon spending 183 days in one calendar year (cumulatively).  

Greek Personal Tax rates 

Other change introduced by this Bill which directly affects individual investors is the new progressive tax rates where the initial rate was reduced to 9% (being previously 22%) for the part of chargeable income of the individual up to ten thousand (10,000) EUR, whilst the rates applicable on income above 20,000 EUR are reduced by one per cent (1%) respectively.  Please see below the table reflecting the new tax rates for individuals: 

The above provisions apply on chargeable income earned in the fiscal years following 1 January 2020.