Alternative taxation method pursuant to Article 5A of Law 4172/2013, as added by Law No 4646/2019 (Greek Government Gazette No A’ 201/12.12.2019)
Pursuant to the recent legal framework [Article 5A of Law 4172/2013], an individual who transfers his/her tax residence in Greece may be subject to an alternative income tax regime.
The requirements which must be met are the following:
a) The individual concerned has not been a tax resident in Greece for the previous seven (7) of the last eight (8) years;
• Whether the individual appears in the records of the Tax Administration as a foreign tax resident for the previous seven (7) of the last eight (8) years, no supporting documentation is required.
• Whether information proving the individual’s tax residence during the previous seven (7) years of the last eight (8) years is not available to Tax Administration, then a tax residence certificate issued by the competent tax authority abroad is required for each of the years for which information is not available.
b) The individual proves that he/she is investing in real estate based in Greece. The amount of this investment may not be less than five hundred thousand (500,000) euros and shall have been completed within three (3) years beginning from the date of the application. After the expiry of three (3) years and no later than six (6) months after the expiration of the three-year deadline, the individual must submit the relevant supporting documents proving the completion of the investment before the Tax Office for Residents abroad, in order to continue to be qualified for the alternative taxation, unless the completion results from the data which are available to the Tax Authority.
If the individual is a holder of a residence permit in Greece for investment activity, the above condition b) is not required.
• The application must be filed before the competent Department of the Tax Office for Residents abroad until March 31st of each tax year, together with the relevant supporting documents (where appropriate).
• His/her application must clearly refer to the State of his/her last tax residence and thereafter the Tax Administration shall inform the competent foreign Tax Authority of that State, in accordance with the international administrative cooperation rules, as in force.
• The application can be filed without any relevant supporting documents. In any event, the documentation must be filed complementary to the application no later than the last business day of May of each tax year.
• The individual may request the extension of the alternative taxation to a relative (i.e. his/her spouse, parents and children) following his/her relevant written consent.
• Upon filing of the application and the required supporting documentation, the Tax Administration submits a relevant online application.
• Within sixty (60) days of the filing of the application and no later than the last business day of June of the same year, the Tax Administration issues a relevant decision.
• The alternative taxation may not be extended beyond fifteen (15) tax years.
Tax treatment of the individual:
• The individual is subject to income tax in Greece only for the income derived from Greek sources, according to the Income Tax Code (ITC). A relevant income tax return must be filed only for the income derived in Greece, but there is no obligation to declare the worldwide income.
• The individual must pay a flat tax of one hundred thousand (100,000) euros, in one installment, no later than the last business day of July of every tax year (regardless of the amount of income earned abroad). A flat tax of twenty thousand (20,000) euros must also be paid for each relative who is subject to alternative translation as well.
• For the 1st year of alternative taxation, an administrative tax assessment notice including the total tax liability and the amount of the flat tax is issued both for the individual concerned and his/her relatives. The payment deadline is thirty (30) days beginning from the approval of the application.
• The flat tax must be paid every tax year no later than December 31st of that year, otherwise the alternative taxation will not be applied hereafter and the individual will be taxed on its worldwide income for the tax year concerned, under the general provisions of ITC.
• Payment of the above tax exhausts any income tax liability of the individual and he/she is also exempt from inheritance or gift tax related to property abroad.
• The above flat tax is not offset against other tax liabilities or any credit balances. Also, any tax paid abroad is not offset against any tax liability in Greece.
• The difference between the imputed and the total income is determined by the Tax Administration and is taxed. As regards the determination of the difference, the taxpayer has the obligation to prove the income included in the relevant tax return, including the importation of foreign exchange, which is not necessarily assigned to the Bank of Greece. The justification for the acquisition of such foreign exchange is not required for individuals who have been subject to the above described alternative tax regime.
In any tax year, the individual may apply for the revocation of his/her application until the 31st of March and hereafter for the tax year concerned, the individual will not be not required to pay the flat tax for that tax year, but he/she will be subject to taxation in Greece accordance with the general provisions of ITC.