Non Greek citizens TAX

Many people moved to Greece for employment purposes or for relaxation after their retirement. However, all these people know very little about Greek tax framework and the liabilities that emerge due to their living in Greece.

An individual is automatically classified as a Greek tax resident if he stays in Greece for more than 183 days per year. In this case, the worldwide income is taxed in Greece. In order to avoid double taxation, the foreigner has to submit to Greek tax authorities, with his annual tax return, a certification, issued by the foreign tax office, reporting the amount of income obtained in the other country and the corresponding tax paid.

From the other hand, if someone lives in Greece for a long period but has no intention to stay permanently (plans to return to his home country), is not considered as a Greek tax resident except there is objective evidence such as a house purchasing. Non Greek tax residents are liable to pay tax only for the income obtained in Greece and are not allowed any deductions or tax credits from their income.

First of all, individuals who own a car, a property or have any source of income in Greece ought to fill an annual tax return (form E1) independently if they are liable to pay tax or not. In order to obtain a Tax Registration Number (TRN), they should authorize a Greek accountant to represent them to the competent tax authority. Also, the TRN is required to create a bank account and transfer money legally from abroad.
Concerning married people, they must fill a joint tax return despite the fact that they are taxed separately, according to the Greek Income Tax Code. In addition, dependent children’s taxable income is added to the taxable income of the parent who declares the higher income.

The employment income is taxed according several scales while much of the tax is withheld and assigned by the employer. The interest income is taxed by 15% also withheld at source. Only for years 2010 – 2014, a solidarity tax was imposed on raw income over 12,000€ ranging from 1% to 5% for raw income over 100,000€ per year.

In Greece, in the context of tackling tax evasion, the institutional of imputed income was developed a couple of years ago. Imputed income is a theoretical   income which is assessed on the basis of living expenditure and the acquisition of certain assets, so if someone’s real income is lower than the theoretical one, the tax is imposed on imputed income. The imputed income is triggered only if the foreigner acquires real income in Greece due to employment, renting or other source.
More analytically, the owner of a property in Greece is liable to pay Greek income tax for any income that the property generates, regardless his permanent residence. For permanent or long term leasing, the owner should inform his Greek accountant about the name of the tenant and his tax number, the amount of rent per month and the renting months per year (over 3 months). Otherwise, if the renting period is shorter than 3 months, the case is more confusing as the income generated is considered as business income and the owner ought to issue an EOT (Hellenic Organization of Tourism) license and be registered in rental businesses at tax authorities.

Also, further liabilities are arising such as payments for chamber of commerce subscription, social security, VAT etc. and several bureaucratic burdens.

Income tax bracket for long term rental income
Range of income € Brackets of income Tax rates Taxes per bracket of income Overall income Overall tax liability Global tax rate
0-12,000 12,000 10% 1,200 12,000 1,200 10%
Over 12,001 Over 12,001 33%

Table C: Income tax bracket for business and other income (it is valid since 01/01/2013)
Range of income € Brackets of income Tax rates Taxes per bracket of income Overall income Overall tax liability Global tax rate
0-50,000 50,000 26% 13,000 50,000 13,000 26%
Over 50,001 Over 50,001 33%

Even if the property does not generate income, the owner has to pay tax on the property’s value which exceeds 200,000€. The relative scale starts from 0.2% and descends up to 1% for the amount that exceeds 1,000,000€.
In addition, during the property conveyance, a capital gain tax is imposed on difference between acquisition price and sale price. The relative tax rate is 20% but it is reduced by an inflation adjustment factor according to the years of ownership. This reduction factor ranges from 0.9 to 0.6 according to the time the property remained at the seller’s ownership. Moreover, the first 20,000€ of the property value is taxable by a rate of 8% while the overall value of 20,001€ is taxable by 10%. However, if the property is bought directly from the developer the only tax burden is VAT 23%.

A different form of property conveyance is the inheritance according which the property is transferred to a relative or a foreigner without imposing a price. The Greek lawmaker provides lower tax rates for first degree relatives (spouses, parents, grandchildren) and higher tax burden for second degree relatives or foreigners. For instance, if a child inherited from his parent a property of objective value 150,000€ no tax should be paid. From the other hand, if the transfer was realized by an uncle or a third party the amounts payable are 8,500€ and 36,600€ respectively. Monetary donations from parents to children are subject to 10% tax.

It is advisable in this point to define the meaning of objective value. Objective value is the minimum price of a property which is determined by Law, according to relative transactions that took place in a region. This practice is followed in order to prevent transactions with very low prices, leading to tax avoidance.

Also, if a foreigner owns a car or a motorbike, he is liable to prepay car tax during November or December, which depends on the size of the vehicle engine (measured in cc). For example, the tax pertaining to a 1,400cc car is 240€ while this amount comes up to 660€ for a 2,200cc car. It must be said that car tax rates applied to new passenger cars, registered for the first time in Greece from 1/11/2010 onwards, are exclusively based on carbon dioxide emissions.
It must be noted that an individual must keep contact with his Greek accountant for 7 years after his departure from Greece, since he changed his tax residence, as tax authorities can charge taxes within this period of time. The tax charged will be sent to the tax authorities of his country for collection on behalf of the Greek tax authorities.

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