A new paragraph was added to Article 5B of the current Law on income tax (Law 4172 / 2013), concerning the possibility of alternative income taxation of individuals, beneficiaries of pensions of foreign origin. More specifically:
It is possible for the individuals, beneficiaries of pension of foreign origin, to be subject to an alternative taxation of their total income from abroad in Greece, under particularly favourable terms.
For this to happen, they will have to transfer their tax residence to Greece.
For this transfer, the foreigners must meet the following two conditions. In particular:
- They must not have been tax residents of Greece for five (5) years from the previous six (6) years of their taxation, and
- There must be a transnational agreement of administrative cooperation in the tax sector (Treaty of Avoidance of Double Taxation) in place, between the State of origin and Greece.
If the above two conditions are met, the foreign pensioner must submit a relevant Application until 31st of March of each tax year, to the competent tax authority of our country, by submitting, at the same time, a document from the foreign social security organization or other public authority of his / her country, certifying his / her status as a foreign pensioner and the payment of a relevant pension.
In the relevant application, the foreign pensioner shall also state the State, in which he / she maintains his / her tax residence.
The competent Tax Administration of Greece shall examine the request of the foreign pensioner and within sixty (60) days, shall issue a relevant decision, by which it accepts or rejects his / her relevant application. In case of acceptance of his / her request, the Greek Tax Administration shall inform the Tax Authority of the State of the foreign pensioner about the transfer of his / her tax residence in Greece.
It should be noted, that the period of inclusion in the alternative taxation starts from the tax year following that, in which the application was submitted and lasts for the next fifteen (15) years.
In this case, a tax is charged on the total income of the pensioner from any source (pensions, rents, interests), calculated at a rate of 7%.
This income is exempt from the taxation of the special solidarity contribution.
Any income tax, which will have been paid abroad for any of his / her income, is deducted in full, but cannot exceed the corresponding tax for this income in Greece. Any excess tax is non - refundable.
The relevant tax is paid at once, in one installment, until the last working day of the month July of each year. By the payment of the tax, the pensioner will be subject to no other tax obligations in respect of these incomes.
Additionally, it should be noted, that the individual, who transfers his / her tax residence in Greece, but while maintaining immovable property abroad, is not exempt from paying taxes of inheritance or donations abroad, which are related to his / her immovable property.
Finally, the taxpayer may, if he / she so wishes, revoke in the next tax years, his / her inclusion in the alternative taxation in Greece.
NOTE: This article does not cover advisory, but only informational purposes, and cannot serve, as a basis for further actions, on the part of the reader.
Reception of specialized advice is required.
Our company does not hold any responsibility for any actions, taken by the readers, based on the present article.