Immigration consultant's notes. Greece takes a new step to attract foreign investors.
The new Greek tax law has been ratified by Parliament with some changes in tax rules regarding residency issues, an alternative taxation method, income tax tables, etc.
Why it's important.
One of the key provisions of the new legislation concerns the change in the definition of tax resident status. The tightening and modernization of the relevant rules are aimed at achieving clarity and certainty when considering tax obligations of high-income people living in Greece. According to authorities, the latter may find the new rules more attractive, which should help them in making decisions regarding investments in Greece.
Tax resident status.
As for the criteria for determining the tax resident status, the reference to “social relations” is excluded from the legislation, because on the basis of explanatory notes to the OECD Model Tax Convention, social relations are included in the concept of “personal relations”.
It is explained that a person who is in Greece for a period exceeding 183 days “cumulatively” (and not continuously, as was the case to date) for any 12-month period is a tax resident of Greece as of his first day in Greece.
A new paragraph has been added according to which the procedures for changing the status of a tax resident taxpayer, as well as any other details regarding the implementation of the relevant provisions, can only be accepted at the level of the Ministry of Economy of Greece.
Individual tax regime for financially independent individuals.
In order to attract people with high incomes, a system of "alternative taxation" of income from foreign sources received by individuals (and / or their relatives) who acquired the status of tax resident in Greece was introduced. In this case, the following conditions must be met:
a) An individual was not a tax resident of Greece for seven of the eight years preceding the acquisition of tax resident status in Greece.
b) An individual can prove that he (the person) or his relatives or the legal entity in which he (the person) owns the majority of the shares, invests in real estate or movable assets or shares of legal entities located in Greece. The amount of investment must not be lower than 500,000 euro and must be completed within three years.
Condition (b) is not required if an individual received a residence permit in connection with investment activity in Greece (based on Section 16 of Law 4251/2014).
In particular, individuals who will use an alternative (individual) tax regime must pay a one-time tax of 100,000 euro per year, regardless of their level of income from external sources. In cases where relatives also use this regime, they must pay a one-time tax of 20,000 euro per year. The term for applying the individual regime may not exceed 15 tax years.
Incomes of individuals subject to an alternative taxation method and received in Greece should be indicated in the annual tax return and taxed in accordance with its classification, while income from foreign sources is not subject to reporting and taxed on the basis of a one-time tax. In addition, the individual referred to above is exempt from inheritance tax and donations to any foreign assets.
