As the famous Greek poet Odysseas Elytis who won the Nobel Prize in Literature (1979) once said “If you disconnect Greece, in the end you will see an olive tree, a vineyard and a boat. Which means: with so many more you make it again”. A phrase which summarizes the pure beauty of Greece and warmly welcomes retirees to spend their twilight years.
Greece with its waterfront real estate on sunny beaches is the perfect choice for a pensioner who wishes to enjoy a peaceful pace of life. Breathtaking landscapes, tranquility and a quiet lifestyle are among the numerous advantages that Greece has to offer.
However, the most vital reasons for an expatriation are the low-cost of living and the tax system for foreign pensioners. More specifically, the Greek Government ratified Law 4714/2020 introducing a favorable extension to the tax provisions of Law 4172/2013 (Income Tax Code) regarding a 7% flat tax for foreign retirees who move to Greece.
For an individual to be able and apply for the above-mentioned favorable tax scheme, the following conditions shall be met according to Article 5B of L. 4172/2013:
• The tax residence must be abroad for at least five (5) years within the six (6) last years before the transfer of the permanent residence to Greece;
• Pension income from a foreign institution/source;
• Transfer of the tax residence in Greece (stay in Greece for at least 183 days per year);
• Agreement of a valid tax administrative cooperation between the country of the pensioner’s origin and Greece.
*Either an EU citizen or a non-EU citizen can benefit from the 7% flat tax program simply by renting or buying a house in Greece. For any further information regarding the residence permit required for the non-EU citizen, please do not hesitate to contact us.
• The boat owned by the pensioner cannot be considered as a residence address in Greece even if it is anchored in a Greek marina.
• If the pension is provided by the State or by a Private Insurance company the 7% tax regime does not apply; the pensioner had to have been either self-employed or employed in the private sector.
• Foreign pensioners who have acquired Greek citizenship and Greek citizens who live permanently abroad are not qualified for the program.
• An individual is not exempt from inheritance or gift tax on property located abroad.
Duration of the favorable tax regime
According to par. 4 of the Article 5C of L. 4172/2013, an individual can be benefited from the 7% flat tax for a maximum of fifteen (15) years. However, the duration of the 7% tax regime can be terminated as follows:
• If someone fails to pay his tax obligations (par. 5 of Article 5C);
• Upon someone’s wish to withdraw from the program (par. 6 of Article 5C).
How will a pension be taxed?
According to par. 2a of the Article 5C of L. 4172/2013, the flat tax 7% applies on the global income of a pensioner earned outside Greece (including the pension and any kind of income a person might have, be that rents or dividends etc.).
How can someone apply?
In view of Article 5C par. 3 of L. 4172/2013, the procedure to be followed can be briefly described below:
• The application for the transfer of tax residence under the attractive taxation regime is submitted by the natural person to the tax administration by 31 March of each tax year.
• The tax administration examines the application and issues a decision approving or rejecting the application within 60 days of the submission of the application. In his/her application, the natural person declares the State in which he/she had his/her last tax residence until the submission of his/her application. For this reason, a Tax Residence Certificate from the competent Tax Authority of the taxpayer’s country of origin shall be required.
• Lastly, the Tax Administration shall inform the tax authorities of the taxpayer’s country of origin regarding the transfer of the tax residence in accordance with the provisions on international administrative cooperation.
In conclusion, the tax incentives provided by the Greek Government for foreign pensioners are more than appealing making it easier for them to take the leap of faith and relocate in Greece!
*Our office has extensive experience in immigration law and international law (residence permits, citizenship, naturalization, deportation, asylum applications, etc.). For more information or legal advice, please do not hesitate to contact us at +30 2313 079293 or by email at email@example.com*
Dafni I. Siopi
Attorney at Law, LLM
52 Tsimiski Str, Thessaloniki
T. +30 2313 079293, +30 6977 568673
E. firstname.lastname@example.org, email@example.com