Taxation of director’s remuneration received by a Greek tax resident from the United Kingdom
According to Articles 3, 5 and 15 of the Income Tax Code, natural persons who are tax residents in Greece are subject to tax on their taxable income derived from both Greece and abroad, i.e. on their worldwide income earned in a tax year.
Income arising abroad is defined as any income that does not arise in Greece. Income from employment is considered to be of Greek origin when it is earned in Greece and of foreign origin when it is earned abroad.
Income from employment is taxed in Greece according to the following scale:
|
Income (€)
|
Tax Rate (%) |
| 0-10,000 | 9 |
| 10,001-20,000 | 22 |
| 20,001-30,000 | 28 |
| 30,001-40,000 | 36 |
| 40,001 | 44 |
Furthermore, as analysed above in point 1, if during the tax year a taxpayer – natural person who is a tax resident in Greece earns income abroad, the income tax payable by that taxpayer in respect of that income is reduced by the amount of tax paid abroad on that income. The payment of the tax abroad is proven by the relevant supporting documents.
Specifically, with regard to the declaration of income from foreign employment in the annual income tax return (Form 1), which is submitted via the digital portal “myAADE”, this is declared in codes 389-390, where the net amount from foreign salaries that Greece has the right to tax is entered.
Furthermore, codes 651-652 also include the amount of tax that has been proven to have been paid in total abroad, i.e. both the tax that may have been withheld at source and the tax that may have been paid additionally afterwards abroad, for the same income mentioned above (“income from foreign salaries that Greece has the right to tax”). It should be noted that in the tax code that was withheld orpaid abroad on form E1 will be selected if the tax amount was withheld and/or paid in countries with which there is a DTA and if the DTA provides for the credit method.
Furthermore, according to the applicable administrative circular POL.1026/22.01.2014, any taxpayer who is a tax resident in Greece and during the tax year acquires income abroad, for which they have been taxed abroad, in order to benefit from the income tax reduction , they are required to submit the following supporting documents for countries with which there is a DTA:
- Certificate from the competent tax authority showing the tax paid abroad or
- in the case of tax withheld by a legal or natural person, a certificate from that person, certified by the competent tax authority, or a certificate from a chartered accountant is required.
Please note that all foreign public documents issued in the United Kingdom must bear the Hague Apostille for the purposes of certifying their authenticity and be accompanied by an official translation into Greek.
In this case, according to the applicable provisions of the Greece-United Kingdom Double Taxation Convention, the following applies:
- In cases where income is subject to tax in both (2) countries, relief from double taxation will be granted.
- UK tax paid, either directly or through withholding, on income derived from sources in the UK is recognised as a credit against any Greek tax due on that same income.
Consequently, income from employment arising in the United Kingdom due to the position as Director in a company based in the United Kingdom is taxed both in the United Kingdom as United Kingdom source income (if exercised in the United Kingdom) and in Greece (country of residence) as worldwide income.
However, under the Greece-United Kingdom Double Taxation Convention – United Kingdom, exemption from double taxation is provided and the United Kingdom tax paid on income from employment is recognised as a credit against the Greek tax on the same income, up to the amount of the corresponding Greek tax, which is calculated according to the above-mentioned scale of Article 15 of the Income Tax Code.
With regard to the procedure and the required supporting documents, we note the following in summary:
- The income tax return (form E1) is submitted using the online tax return submission service via the “myAADE” digital portal.
- Codes 389-390 of E1 are filled in with the net amount of foreign-source salaries that Greece has the right to tax.
- The amount of tax that has been proven to have been paid in total abroad, i.e. both the tax that may have been withheld by the company and any additional tax paid subsequently in the foreign country.
If the foreign tax has been paid in a currency other than the euro, the euro-foreign currency exchange rate as it stands on the date of payment of the foreign tax, as stated in the relevant certificate issued by the competent tax authority or chartered accountant. However, in the case of periodic payments, the conversion should be based on the average annual exchange rate as determined by the Bank of Greece
In cases where foreign tax is declared in E1, the taxpayer is invited, in accordance with standard practice, to have their supporting documents checked by the competent tax authority, and the supporting documents must be submitted within fifteen (15) days from the date of electronic submission of the return and receipt of the message requesting the audit.
The Tax Administration verifies the truth of the claims and the accuracy of the evidence and supporting documents submitted by the taxpayer, finalises the return, clears it and issues the administrative tax assessment notice. Otherwise, after the expiry of the above fifteen (15) day period, the Tax Authority shall clear the tax return on the basis of the information at its disposal.
With regard to the required supporting documents, in this case we distinguish the following cases that apply to countries with which there is a double taxation agreement:
- If the tax paid in the United Kingdom was withheld by the employer, a certificate from the company, certified by the competent tax authority, or a certificate from a chartered accountant is required.
- If the tax paid in the United Kingdom was paid by the taxpayer on the basis of their tax return, a certificate from the competent tax authority is required.
* The information is accurate to the best of our knowledge as at the time of writing. We have no obligation to update it. We accept no responsibility against any third party who is not a client of the firm and has not signed the terms of our engagement.