Greece aims to become the Florida of Europe by enticing foreign high-net-worth individuals and pensioners to make the country their home.
Many baby boomers approaching retirement age and hunting for a warmer climate to call home in their golden years are looking at Greece.
The demand of foreign nationals for second or even primary homes on the Greek mainland and the islands from foreigners has increased sending prices even higher.
New tax regime aims to make Greece the Florida of Europe
In 2020, Greece put in place a favorable tax regime for foreign pensioners who decide to settle in Greece through two preferential regimes.
This includes a flat tax for foreign retirees who move to Greece and a non-dom for high net worth individuals, or an alternative taxation system.
The program, called “Tax reform with a development prospect for Greece’s future,” includes a new flat tax of 100,000 euros for the super-rich and a tax exemption and flat tax on income for foreign pensioners who move their residency to Greece.
The favorable provisions will apply to retirees who wish to live in Greece, transferring their tax residence in the country in an effort to turn Greece into “the Florida of Europe.”
In a strategy to attract high-net-worth retirees, Greece has devised a preferential tax regime for foreign pensioners that will allow new residents of Greece to live in idyllic locations such as Mykonos, Athens, Corfu, or Patras with almost no taxes.
What requirements must a pensioner fulfill?
To be eligible for the Greek foreign pensioners’ scheme, a person must fulfill the following conditions:
- Earn pension income from a foreign source,
- Transfer their tax residence to Greece, i.e. stay more than 183 days in Greece or more days in Greece than in any other country,
- Not be deemed a tax resident in Greece for five of the last six years prior to transferrin tax residence to Greece
- Move from a country with which Greece has a valid tax administrative cooperation agreement or double taxation avoidance treaty
How to apply for the Greek regime for foreign pensioners?
The keys to applying for the Greek scheme for foreign pensioners are as follows:
- Apply for the scheme before March 31st of the relevant tax year; applications submitted after this deadline will be considered for the following tax year.
- Greek tax authorities have sixty days to issue their decision, i.e. to accept or reject the application.
- Proof of foreign pension income may consist of any document issued by a foreign social security institution.
- The competent tax authority to receive and decide on such applications is the Athens Tax Office for Foreign Tax Residents and Alternative Tax Regimes for Greek Tax Residents.
- The application and supporting documents can be submitted electronically or on paper so that no transfer to Greece is necessary.
How is the pension taxed in Greece?
Pensions under the Greek foreign pensioners’ scheme will be taxed as follows:
- Annual flat rate of 7 percent on pensions and withdrawals from non-Greek private pension schemes
- Annual flat rate of 7 percent on foreign income (dividends, interest, capital gains);
tax credits and deductions for international double taxation will be applied against the above 7 percent if tax is paid at source
- The applicant will be taxed on his/her Greek personal income tax for all Greek source income under the general tax rules (with a progressive rate of up to 44 percent)
- The scheme may last up to fifteen years, which is a longer period than in the Portugal or Italy regimes.
- Successful applicants are not exempted from Greek inheritance tax, nor from Greek gift tax for movable property located abroad, where applicable.
It should be noted that the successful outcome of an individual’s application does not affect the tax residence status of his or her family members (e.g. spouse or relatives, etc.), which are examined separately. Thus, the law does not foresee any possibility to extend the application of the above-mentioned alternative tax regime to relatives related to the applicant.