Portugal’s Non-habitual Tax Residency (NHR) program is fairly famous – and very much in demand. But Greece’s offering is nothing to be sneezed at either. Today, we look at three of the country’s most attractive tax incentives that might put Greece on the top of your Plan B list…
Three attractive tax incentives to put Greece on your radar
Looking to combine a Mediterranean lifestyle with effective tax optimization as part of your Plan B? Greece is already famous for its attractive Golden Visa program. Priced from only €250,000, with no restrictions in terms of where you can buy property, the Greek Golden Visa is one of the most popular programs of its kind.
The country also offers a range of attractive tax incentives for foreigners. But whereas Portugal’s Non-habitual Residency (NHR) scheme needs no introduction, Greece’s incentives are relatively new and far less well-known internationally.
Why were these tax incentives introduced?
Over the past decade, Greece experienced one of the greatest “brain drains” in Europe. Tired of perpetual economic crises and high taxes, the country’s most productive citizens left in droves.
The Greek economy’s fortunes started turning around over the past few years – but then the pandemic delivered a fresh blow. The country has held the record for the highest unemployment rate among all states in the European Union, and its government debt pile is among the highest in the euro area.
So in 2020 the Greek government decided to do something different. During the pandemic period, a number of new tax regulations were introduced to the country’s tax legislation. (See Articles 5A, 5B and 5C of the Greek Income Tax Code. It’s in Greek, so you may need to translate it accordingly.)
These paved the way for the creation of a range of tax incentives that will no doubt appeal to wealthy foreigners, professional employees, self-employed individuals and foreign retirees alike.
Let’s get into the details below…
Incentive 1: €100,000 Flat Tax (Article 5A)
Also known as the Greek non-dom tax regime, the flat tax program is one of the most noteworthy tax incentives launched during this period. It is arguably also the initiative that is most likely to lift the needle on the country’s tax collections.
Targeting high net worth foreign earners, this 15-year tax incentive is available to individuals who move their tax residency to Greece. To qualify, you must not have been a tax resident in Greece for seven out of the past eight years.
In addition, you must have either:
- Invested €500,000 (~$524,135) in Greek enterprises, stocks, real estate, shares or other securities within a period of three years, OR;
- You must already hold a Greek Golden Visa.
Under this program, you will be subject to a flat tax payment of €100,000 (~$104,800) per year. The flat tax status can be extended to your family members too, and will cost an additional €20,000 (~$21,000) per year for every dependent. Moreover, you won’t be obligated to declare your foreign income to the Greek government either.
Any income earned inside Greece, however, will be subject to their normal tax rates.
So if you’ve always wanted to own that fancy Greek villa overlooking the beautiful Mediterranean sea, then this option could potentially work for you.
But considering the pitiful state of economic affairs in Greece, we would definitely skip purchasing government bonds, for example. (Moreover, given the Greek banks’ poor handling of the 2008 financial crisis, we’d personally seek to limit how much money we hold in a Greek bank…)
Incentive 2: 7% Flat Tax on Pensions (Article 5B)
Under this incentive, Greece levies a flat 7% tax rate on the pension earnings of foreign pensioners who transfer their tax residency to Greece. And if you’ve already paid taxes on that income in your homeland, you can use it as a tax credit in Greece, potentially paying nothing to the Greek authorities.
But the deal will not apply to everyone. To qualify, you must meet every one of the following requirements:
- You must not have been a tax resident in Greece for five of the past six years, AND
- You must be officially retired, AND
- You must come from a nation that has a double taxation treaty with Athens (the US, Canada and the UK are on the list), AND
- You must agree to live in Greece for more than six months per year.
Once approved, you will be able to enjoy low taxes on your pension for up to 15 years. That’s an even better deal than you’d get under Portugal’s NHR program, which will see you paying a flat tax of 10%, with a maximum incentive validity of only 10 years.
NOTE: This incentive does not automatically apply if you hold a Financially Independent Person (FIP) residency or a Greek Golden Visa; you must apply for it separately.
Incentive 3: Incentives for Freelancers and Self-Employed Individuals (Article 5C)
If you’re a freelancer or self-employed person, this incentive program should interest you the most. We intend to cover it in greater detail in a future episode, but for now, let’s look at the basics…
You can benefit under this special tax framework for a period of seven years. During that time, you can enjoy a 50% reduction in taxable income you earn from Greek sources.
In order to qualify, you must:
- Not have been a tax resident in Greece for five out of the past six years, AND
- Transfer your tax residency to Greece from a country that has entered a tax treaty with Greece, AND
Offer services in Greece via a local company, or as the subsidiary of a foreign entity, AND
- Declare your intention to reside in Greece for a minimum period of two years.
So regardless of your personal situation, chances are that there’s a Greek tax incentive that could work for you.
Whether you’re an ultra high net worth individual or a regular retiree, Greece’s tax incentives could be well worth a look. Besides, living on a Greek island is not hardship in itself, hence a move to Greece could tick two Plan B boxes in one go.
But as is the case with the residency programs we frequently discuss, these incentives may not be around forever. So if you think you could benefit, today is the best time to take action.