5C Tax Regime – Special regime of taxation for income from employment and business activity earned in Greece by individuals who transfer their tax residence to Greece

Article 5C of Law 4172/2013 – Income Tax Code (“ITC”) provides for a special tax regime for income from employment and business activity earned in Greece by individuals who transfer their tax residence to Greece.

Special regime of taxation

The individual who will be subject to the 5C tax regime shall be exempt from income tax and special solidarity contribution of article 43A (for the tax years that was in effect) for 50% of the income from employment and business activity earned in Greece within the tax year, for a maximum period of seven (7) consecutive tax years.

Moreover, the individual covered by the 5C regime shall be exempt from deemed income calculated based on expenses for maintaining a place of residence, such as a house or an apartment, and a private car, which would apply to ordinary Greek tax residents.

Required conditions

The conditions that an individual must meet to qualify for the special tax regime of Article 5C are as follows:

• They must not have been a tax resident of Greece for five (5) out of the six (6) years preceding the transfer of their tax residence to Greece.
• The transfer of tax residence must be from an EU or EEA member state or from a country that has an active administrative cooperation agreement in the field of taxation with Greece.
• They must provide services in Greece under an employment relationship either with a Greek legal entity or legal person or with a permanent establishment of a foreign company in Greece. Based on a recent amendment of the law for the purposes of simplifying the regime, the employment position is no longer required to qualify as “new”, as previously provided. The abolition of the requirement for exclusively creating new job positions as a condition for applying for the 5C regime also applies to applications that are pending before the Tax Administration as of the publication date of the amending law, i.e. 28/7/2025.
• For individuals transferring their tax residence in order to engage in self-employed business activity in Greece, a declaration of commencement of business activity must be submitted to the competent authority for the provisions of the special tax regime to apply.
• They must declare that they will remain in Greece for at least two years, starting from January 1 of the first year of inclusion in the regime.

Deadlines

• For commencement of employment or business activity taking place up to July 2 of the respective year, the application must be submitted by the end of that year and will be assessed for inclusion in the 5C tax regime for that year. If the application is submitted within the following year, it will be assessed for inclusion in the regime for the year following the commencement of employment or business activity.
• For commencement of employment or business activity taking place after July 2 of the respective year, the application must be submitted by the end of the following year and will be assessed for inclusion in the regime for the year following the commencement of employment or business activity.

Procedure for inclusion

Based on a recent amendment of the law, aiming to improve the procedure for inclusion in the tax regime, it is provided that the application for inclusion can now be submitted digitally through a dedicated application of the Independent Authority for Public Revenue (IAPR) on the digital portal “myAADE.” Through this portal, the verification of whether the conditions for inclusion in the regime are met is carried out automatically, and the relevant decision of approval or rejection is issued digitally. If automatic verification of the required conditions is not possible, the individual will be asked to upload the necessary supporting documents digitally, which will then be reviewed by the competent tax authority, and the decision approving or rejecting the application will be issued at a later stage.

In specific, the procedure for inclusion in the special tax regime can be summarized as follows:

• The application is submitted through the dedicated digital platform of the IAPR using the applicant’s personal taxisnet credentials or via an authorized representative using their own taxisnet credentials and filling in the required fields. The individual must declare in the application the country of their last tax residence up to the time of submission, as well as their residential address in Greece.
• In cases where the fulfillment of the conditions for inclusion under the regime is verified immediately through the system, the relevant decision approving or rejecting the application is issued. If any condition cannot be verified automatically, the applicant may upload the appropriate supporting documents for review by the competent tax authority.
• If the application is rejected due to failure to submit the required supporting documents, and provided those are submitted no later than March 31 of the year following the year of the initial application, the tax administration will revoke its rejecting decision, re-examine the application, and issue a new decision within sixty (60) days from the submission of the documents. In such cases, inclusion will apply for the year of the initial application.
• After the lapse of seven (7) years, inclusion under the regime automatically ceases, and the individual will be taxed under the general provisions for income from employment or business activity earned in Greece. Inclusion cannot be extended beyond seven (7) tax years.
• The individual who has applied for inclusion in the regime regarding one income category can subsequently apply for an extension of the regime regarding also the other income category, provided that the application for extension concerns the year of the initial application and is submitted within the prescribed deadlines
• An application for extension can also be applied for income earned from a second employment relationship with a Greek legal entity or a permanent establishment of a foreign company in Greece. In such cases, a new decision will be issued for the remaining years of the 7-year period. For the expansion of business activity to new activity codes (KAD), no new application is required.
• If the individual terminates their employment relationship or ceases their self-employed business activity in Greece, they may continue to be subject to the regime provided they enter into a new employment contract or commence a new business activity within twelve (12) months and notify the tax authority accordingly, which issues a new decision for the continuation of the regime for the remaining years of the 7-year period. The same applies in the case of change of employer or in the case of cessation of employment followed by the commencement of business activity or the opposite. If no action is taken within twelve (12) months, inclusion in the regime ceases, and the individual will be taxed thereafter under the general provisions.
• In case of cessation of inclusion in the regime, the individual can apply anytime within the initial, 7-year period and for the years remaining for the completion of such 7-year period.

 

 

* 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.