In Greece, the non-dom regime provides some opportunities for pensioners with a 7% tax rate.
Are you wondering how you can transfer your tax residence to Greece if you are a pensioner? Let us list the options you have:
- If you have been a non-Greek tax resident for 5 out of the last 6 years,
- If you have a tax residency of a country and this country is in agreement with Greece on administrative cooperation in taxation,
- If you earn non-domestic income that you derive from a pension, if it is payable as a lump-sum amount or as periodically.
Do you also wonder where it connects with the Golden Visa? It is connected indeed; for instance, if you are about to apply for non-dom residency and you are a non-EU citizen, the initial requirement is to apply for a Greece Golden Visa Program.
What else are you expected to do officially? You have a need to spend more than 183 days in Greece. This way, you can hold on to your Greek tax residence status. If we think about the otherwise, it means that you already have the possibility to risk being considered as a tax resident of another country.
Expectations from the Flat Annual Tax Rate in Greece
Here is how it works.
First, you need to make a payment of a 7% flat annual tax rate for any of your non-domestic income that is derived from any source. You can pay this amount in a lump sum, and the deadline is the last working day of July of each year.
What happens if you fail to pay the full amount of the lump-sum tax? In this case, the special regime ceases to apply, and you will need to pay income tax on your worldwide income. Also, you will be required to comply with the general provisions of that tax year.
Double Taxation in Greece’s Non-Dom Regime
You cannot be affected by any treaties for avoiding double taxation through the non-dom regime for pensioners. It means that if you pay any tax abroad, that kind of tax is deducted from the lump-sum payment. This deduction is based on these treaties or the local tax regulations.
You can also find some double taxation treaties that are in effect and active between Greece and many countries. For example, Canada, Ireland, and the UK in most cases exempt pensions in the country of origin from tax and credit the income entirely to Greece. However, the UK’s non-dom regime is about to end, as announced in 2024.
There is a maximum of 15 years to go before the retirement of the special non-dom regime for pensioners.
There is no limitation on when to terminate the Greek non-dom tax regime in Greece. So, it may be terminated at any time if you meet the conditions below:
- In case you fail to fulfill your obligations needed for the non-dom tax regime,
- Also, in the case that you request to have your non-dom tax regime revoked.
When do you apply for Greece’s non-dom status? The applications continue until the 31st of March of any calendar year to transfer your tax residence from another country to Greece.
So, how do you complete your application? You need to file your completed application with the Tax Office of Foreign Tax Residents of Athens.
You will have 60 days to provide all of your relevant supporting documents to the Greek tax authorities from the time you file your application.
Then, once you apply, you will hear about the notification from the Greek tax authorities from the corresponding authorities in your country of origin.
The tax process, especially when it’s international tax matters, it is more complicated. Each pensioner may need to complete different forms or have different process. So your non-domicile status is also specifically tailored according to your needs and the rules of the prospective country.
Alternative Taxation Regime for Relocated Employees
When answering this question, we can also talk about the non-dom regime for investors in Greece.
The non-dom regime of Greece became effective on 12 December 2019, when it was introduced. From the start, it provides an alternative way of taxing income that is derived abroad. For whom? It is for individuals who are transferring their tax resident status to Greece (as a non-dom).
These individuals are subject to the conditions that you can explore below:
- The tax players are expected not to be Greek tax residents. It is expected for the previous seven of the eight years before they become a tax resident in Greece
- They need to invest at least EUR 500,000
If you are under this tax regime, you will need to pay a lump-sum tax of EUR 100,000 per tax year. It must be irrespective of the amount of income you earn abroad, and it can be for a maximum of 15 fiscal years. What’s more, you can also extend the tax regime to any of your relatives. You can do it by paying an additional tax that’s worth EUR 20,000 per person per tax year. When this kind of case occurs, it is better to understand that the provisions of inheritance, gift, and also parental grant tax will not apply to those.
There is also a situation when the alternative taxation program will not be offset against the tax liability of the persons in Greece, as mentioned above. This happens when any tax paid abroad on income is covered by the alternative taxation regime.
Moreover, let’s assume that you opted for the non-dom regime and that you earn the taxable income that arises in Greece. It means that this will be taxed according to the general provisions of the ITC. Furthermore, if the non-payment of the full amount of the lump-sum tax occur, then the special regime biomes abolished. So you, in this case, are taxed for your worldwide income and the general provisions of the tax year in question onwards.
As a taxpayer, when you opt for the regime, you are not required to declare any income you earn abroad. So you will be able to justify the imputed income that is calculated based on your deemed expenses and also the acquisition of your assets when you import funds from abroad.
The Wrap Up
In this article, we looked at how Greece’s non-dom regime offers attractive chances for pensioners looking for a tax-efficient retirement. In comparison to other jurisdictions, a flat 7% tax rate on foreign-derived pension income allows for significant savings.
However, it is important to note that double taxation treaties may still apply, potentially it reduces the tax benefit. Furthermore, the non-dom system is not permanent and has a maximum length of 15 years.
You can also read to learn how the UK’s non-dom regime used to work and why it is being phased out.
If you are interested in having a secondary residency in Greece, you might be interested in these articles as well:
Frequently Asked Questions
What are tax incentives to angel investors in Greece?
With effect from 29 July 2020, if you contribute capital to a duly registered start-up company, you can deduct from your taxable income an amount equal to 50% of the amount of your contribution in the tax year in which it took place.
What are the principal tax benefits?
The percentage Greece offers a flat 7% tax on foreign pensions for retirees under the non-domicile regime. Under Greece’s non-dom status, you can pay a flat tax on your foreign income. This way, you can simplify your tax obligations. Choosing Greek non-dom status, you pay a flat tax on foreign income instead of the standard Greek personal income tax rates.
Which categories of income qualify for reduced taxation?
Reduced taxation is for foreign pensions for residents under the non-dom program.
What is the 50 tax reduction in Greece?
The 50% tax reduction you mentioned likely refers to a different program for individuals who relocate to Greece for work or business ventures, not for pensions.
Do foreigners pay tax in Greece?
Although the expected answer is no, actually foreign residents with income sources in Greece generally pay taxes.
Is Greece a high-tax country?
Greece’s tax rates depend on income level and category. It can be lower than some European countries while it is higher than others.
What is Greek Income Tax Code?
It is officially known as Law 4172/2013. It includes the rules and regulations that govern income tax in Greece.
