Are you thinking of moving to Greece, but not sure how it will impact your pension? This article will explain one way to shift your tax residence to Greece.
When retiring in Greece in your golden years, the last thing you want to think about is taxes. This is understandable because according to the country you are coming from, you don’t want to be double-taxed and spend your life’s salary on tariffs.
Foreign Pensioner Program
Back in 2020, Greece started a new program to attract new pensioners to Greece. If you shift your tax residence to Greece, you will be taxed at a flat rate of 7%.
What does this mean? You make a foreign pensioners application, and if this is approved, all your income from abroad is taxed at a flat rate of 7% for the next 15 consecutive years. “Income from abroad” includes all income with a foreign source – pension income, rent, capital gains, dividends.
How does the Greek government benefit at all from this system? It seems like they would not collect any taxes. For the Greek government, they expect relocating pensioners to spend a large portion of their pension in Greece, and even buy a house.
How Do I Qualify?
Earn a pension or pension-like income from a country other than Greece.
You were not considered a tax resident of Greece for 5 out of the last 6 years before transferring tax residency to Greece.
You must transfer your tax residence from a country which has an active administrative cooperation agreement in Tax matters with Greece or a EU/EEA member country. If you are not a EU citizen, you also need to apply for a Golden Visa.
You must spend more than 183 days a year in Greece to hold to your tax residency. If you do not spend more than 183 days a year in Greece, your tax residency is decided under the center of vital interest test.
When Do I Apply?
The application should be filed before 31 March with the Tax Office of Foreign Tax residents in Athens. The tax is paid in a lump sum for each tax year until the last business day of July.
How Else Do I Benefit?
As a foreign pensioner who transfers your tax residence to Greece, you benefit from the full implementation of double taxation treaties between Greece and other countries.
For instance, a lot of double tax treaties between Greece and other countries like The Netherlands and the UK exempt pensions in the country of origin from tax and credit the income entirely to Greece. This implies that the full pension is taxed at 7%.
In case of foreign tax paid abroad on foreign sourced income, you can claim it back if certain conditions are met.
As a foreign pensioner who transfers your tax residence to Greece, you are also exempt from the special solidarity contribution in Greece.
Is the Flax Tax Scheme Suitable for Americans?
The flat tax scheme is NOT suitable for US citizens who are taxed on their world wide income. You can technically apply for the flat tax scheme as an American, but you would ultimately pay the same amount of total tax. So, it takes more paperwork, time, and money, but gives no benefit financially.
How Long Do Benefits Last?
The tax regime is in force for the tax year in which you file the application, and for 15 tax years in total. It can be terminated if you don’t pay your taxes or decide to withdraw.
Do you Have More Questions?
If you are Dutch and have more questions about shifting your tax residence to Greece, contact Ralf Ramakers and his team at M&R Adviseurs for a consultation (costs may apply).
Mr. Ralf Ramakers has been a tax adviser and member of the Dutch Association of Tax Advisers for 27 years. He specializes in emigration law for Dutch people moving to Greece.
Find out more about M&R Adviseurs here.
