The flat tax in Greece for foreigners is advantageous and is intended to draw in high-net-worth individuals. It can drastically lower their total tax obligation.
This post will discuss what the rule covers, who are eligible, and how it compares against the flat tax regime of certain other countries like Portugal.
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Some of the facts might change from the time of writing, and nothing written here is formal tax advice.
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Flat Tax in Greece for Foreigners Overview
Greece flat tax regime for investors
Under the Greek non-dom tax regime, foreign nationals who meet the requirements can pay a flat yearly tax of 100,000 euros on any income earned abroad. This is true regardless of aggregate income and is especially useful for those with high incomes.
This policy is also advantageous to family members, who pay an extra 20,000 euros flat tax each.
With a 15-year maximum duration, this Greece flat tax rate offers significant tax savings vs progressive income tax rates, which can reach up to 44%.
Non-domiciled residents can transfer money without incurring additional tax charges because they are exempt from inheritance or gift taxes on overseas assets.
Who’s eligible for this flat tax policy?
Individuals who have moved their tax residency to Greece must not have been tax residents in the country for seven of the previous eight years to qualify.
They also have to submit an application for this status by certain annual dates.
After submitting an application for non-dom status, the individual has three years to invest at least 500,000 euros in Greece.
This investment may come in different options, such as:
- Real estate
- Enterprises
- Movable property securities
- Interests or shares in legal entities
Greek flat tax regime for pensioners
Pensioners who decide to move their tax domicile to Greece might avail of significant tax incentives. Pensioners benefit from a flat 7% tax rate under this system on all foreign income, including pensions. The total amount of overseas income does not matter.
Eligibility
There are two main requirements to qualify for the program, namely:
Candidates must not have been Greek tax residents for at least five of the six years prior to relocating to Greece in order to meet the residency requirement.
They have to change their tax residence from a nation that has a tax administrative cooperation deal with Greece.
Pensioners are also obliged to record their foreign and Greek income under this initiative. Crucially, taxes paid outside may still be offset against Greek tax requirements when appropriate because the scheme does not supersede current double taxation treaties.
The 7% flat tax rate, however, offers a simple approach to tax duties because it is only assessed for foreign-sourced income and cannot be deducted from other tax liabilities or credits.
Flat Tax Greece vs Other Countries
Portugal Flat Tax Rate
Portugal offers certain tax incentives under the Non-Habitual Resident, or NHR program, although it doesn’t have a universal flat tax particular for foreigners.
Under the NHR regime, eligible persons can access a 20% flat tax rate on different income sources, including work, self-employment, and perhaps exempt income from foreign sources too.
The NHR status is effective for 10 years.
Under this system, foreign pensions are normally levied a flat rate of 10%.
Foreign non-residents pay a flat tax rate of 25% on their Portuguese-earned income. They are not entitled to the same foreign income exclusions as NHR residents.
Spain Flat Tax
The progressive tax rates in Spain vary based on income levels, from 19% to 47%.
The country has a special tax legislation known as the Beckham law that provides a flat tax structure to certain foreigners.
According to such law, international employees may choose to pay a flat rate of 24% on income up to 600,000 euros that originates in Spain for a maximum of six years.
Italy Flat Tax
High net worth individuals moving to Italy now have the option to pay a fixed yearly charge of 200,000 euros on their overseas income as Italy doubles its flat tax option.
The taxpayer’s international assets are unaffected, there is no need to declare global earnings in Italy, and wealth and inheritance taxes are waived.
This regime is accessible for a maximum of 15 years.
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