UHY Newsletter | Greece introduces a special ambitious tax regime aimed at attracting foreign tax residents

GREECE: 50% Exemption for New Tax Residents

Overview
In December 2020, the Greek government introduced a new tax regime aimed at attracting foreign tax residents willing to relocate to the country as employees or as freelancers. The new tax regime was further clarified recently in April 2021. The aim of this ruling is to support Greece’s fiscal base and to bring back some of the Greeks who left during the debt crisis to pursue careers abroad. The main feature of this regime is a very substantial tax exemption of 50% for all Greek source employment income. This concerns both income tax and the “solidarity contribution” tax. The expatriate thus becomes a Greek tax resident under this special regime.
For the rest of the income (i.e. the remaining 50% Greek source income, and all foreign source income), the expatriate is taxed according to the general tax rates, like any other tax resident. This also means that foreign tax credits for taxes paid abroad are applicable. This regime also provides an exemption from the imputed income criteria deriving from ownership or possession of employer-provided house or vehicle.

Requirements

• The expatriate cannot be a Greek tax resident for 5 of the last 6 years before being assigned to Greece and becoming a tax resident.
• Relocation must occur from an EU/EEA country, or from a country that has signed an tax cooperation agreement with Greece.
• The employer must be a local Greek entity or a permanent establishment of a foreign company.
• The expatriate needs to declare that the stay in Greece is intended for at least 2 years.
• The hiring of the expatriate needs to fill a new employment position.

Duration
The regime works for the tax year of the application, and for a total period of 7 years. After this maximum of 7 years, the special tax regime is no longer applicable, and the individual will be taxed as a normal resident. The regime will no longer be applicable if the employee ceases to work under the conditions established (Greek employer or permanent establishment in Greece), or if the duration of the stay ceases to be intended for at least two years. The expatriate will from then on be taxed for all Greek income as a normal resident.

Other Relevant Information

Freelancers
This regime is also applicable for natural persons who transfer their tax residence to Greece in order to carry individual business activities there. Thus, 50% of their income made in Greece will be exempted from income tax and special solidarity contribution for a period of 6 years. This applies provided the rest of conditions are fulfilled.

Change of employer or status
The expat can change employer and remain under the new regime throughout these 7 years. He/She can even have a “pause” up to 12 months without working in Greece and still remain under the regime. However, if there is a change in employers or employment status (e.g. from employment goes to freelancing or vice versa), this needs to be reported into the tax authorities.

Special Tax Regime for High Net-Worth Individuals
Greece also has in place a special tax residence for those individuals relocating to the country who can prove that they weren’t residents for 7 of the previous years, and that they or a close relative made an investment of at least €500,000 in the Greek market. Under this regime, the new residents pays a flat rate of €100,000 annually on income earned worldwide.