Residents abroad taxation

   May 17, 2021

Residents abroad taxation

1 Income tax

Persons who are registered as tax residents abroad in the competent Tax Office, are taxed in Greece and are required to file a return only for income that arises in our country. This applies both to Greeks who moved their tax residence abroad due to relocation and to foreigners.

The tax resident abroad will be taxed based on our domestic legislation, e.g. for rents they receive from real estate in Greece, for dividends from shares of Greek companies, for profits from participations in domestic limited liability companies, capital companies, personal companies, for interest on deposits in domestic banks, for salaries from an employer / company established in our country, etc. If the tax resident abroad does not obtain real income in Greece, they have no obligation to file a tax return in our country.

In the event, however, that the recipient of the income is a resident of a country with which Greece has entered into a Double Taxation Avoidance Agreement (DTAA) (all countries of the EU and the EEA, USA, Canada, China, etc.), the taxpayer will be taxed in accordance with the provisions of the relevant contract. According to a recent decision of the CoF (2465/2018), the special solidarity contribution also falls under the DTAA. Although not all bilateral agreements are the same, most usually stipulate that, for example, real estate income is taxed in the country where the property is located, dividends, interest and royalties are subject to tax deduction (with specific rates) in the resulting country, the income from the exercise of business activity is taxed only in the country where the tax residence of the professional is located, unless said person has a permanent professional base in Greece and so on.

Tax residents abroad are not entitled to tax deductions for income from paid work and pensions they earn in Greece, unless they are EU or EEA tax residents and obtain at least 90% of the world income in Greece or prove that their taxable income is so low that they would be entitled to a tax reduction under the tax legislation of their country of residence.

Also, the tax resident abroad should check in accordance with the tax legislation of the country of their tax residence, if they are obliged to declare there the income they acquired in Greece. In this case, the possibility of crediting the tax paid in our country for this income against the tax due abroad should be explored.

It is pointed out that for tax residents abroad presumptions of living do not apply, therefore such a person will not be taxed for any imputed income resulting from the keeping of e.g. a car or a holiday residence in Greece. Also, presumptions of acquisition of assets (real estate, vehicles, etc.) do not apply to these persons, provided that they do not acquire real income in our country (e.g. interest on deposits).

Tax residents abroad with tax liabilities in Greece must appoint a tax representative with a tax residence and address in Greece, who will receive their correspondence with the tax administration. The tax representative does not bear any responsibility for the fulfillment or not of the tax obligations of the tax resident abroad.

2 Real estate taxation:

Tax residents abroad are normally subject to real estate transfer tax or VAT when purchasing real estate or real estate rights (usufruct, bare ownership) located in our country. However, for EU and EEA citizens, for some expatriates etc. the possibility of tax exemption for the acquisition of a first home is provided under certain conditions.

Tax residents living abroad and holding property in Greece must have a VAT number (already at the time of preparation of the relevant purchase contract, etc.), submit electronically the declaration containing details (E9) of their property, declare the relevant changes etc. Based on this declaration, ENFIA (main and supplementary) is certified and owed annually, as it is done for tax residents of Greece.

OPEX is here to advise you on all procedures!