Greece operates a dual taxation system for foreign income based on tax residency status. Greek tax residents face worldwide taxation on all income sources, while non-residents are only taxed on Greek-sourced income. This distinction is crucial for international property owners who may trigger residency obligations through extended stays or property investments in Greece.
Understanding Greece’s approach to foreign income taxation
Greece’s tax system follows international standards by distinguishing between residents and non-residents when determining taxation obligations. Tax residents must declare and pay tax on their worldwide income, including earnings from employment, business activities, investments, and property rentals abroad.
Non-residents benefit from territorial taxation, meaning they only pay Greek taxes on income generated within Greece’s borders. This approach protects foreign property owners from double taxation whilst ensuring Greece collects appropriate revenue from domestic economic activities.
The system becomes particularly relevant for international property investors and holiday home owners who spend significant time in Greece. Extended stays can inadvertently trigger tax residency, creating unexpected obligations for foreign income reporting and taxation.
Does Greece tax foreign income?
Yes, Greece taxes foreign income for individuals classified as Greek tax residents. The taxation applies to all worldwide income sources, including employment wages, business profits, rental income, dividends, interest, and capital gains earned outside Greece.
Greek tax residents must include foreign income in their annual tax declarations and pay the applicable rates according to Greece’s progressive tax system. However, Greece provides foreign tax credit mechanisms to prevent double taxation when income has already been taxed in another country.
Non-residents remain exempt from Greek taxation on their foreign income. They only face Greek tax obligations on income sourced within Greece, such as rental income from Greek properties or business profits generated through Greek operations.
What determines tax residency in Greece?
Greek tax residency is determined through several criteria, with the 183-day rule being the primary test. Individuals spending more than 183 days in Greece during a calendar year automatically become tax residents, regardless of their intentions or other circumstances.
The “centre of vital interests” test examines where an individual maintains their strongest personal and economic connections. Factors include family residence, business activities, property ownership, and social ties. This test can establish residency even without meeting the 183-day threshold.
Additional considerations include:
- Habitual abode in Greece, indicating regular presence over multiple years
- Primary residence location and family circumstances
- Business management and professional activities
- Location of significant assets and investments
Property owners should carefully monitor their annual stays in Greece, as exceeding the day threshold creates immediate worldwide taxation obligations.
How does Greece tax different types of foreign income?
Greece applies varying taxation approaches to different foreign income categories for tax residents. Employment income from abroad is taxed at progressive rates ranging from 9% to 44%, depending on total annual earnings.
Foreign rental income faces the same progressive rates as employment income, with property expenses and depreciation allowances available as deductions. Business profits from international operations are taxed similarly, with comprehensive expense deduction opportunities.
| Income Type | Tax Treatment | Special Considerations |
|---|---|---|
| Employment Income | Progressive rates 9-44% | Foreign tax credits available |
| Rental Income | Progressive rates 9-44% | Expense deductions permitted |
| Dividends | 5% withholding tax | Treaty rates may apply |
| Interest | 15% withholding tax | Some exemptions available |
| Capital Gains | 15% flat rate | Holding period exemptions |
Investment income, including dividends and interest, often benefits from lower flat rates or withholding taxes. Capital gains typically face a 15% rate, though long-term holdings may qualify for exemptions.
What are the tax rates for foreign income in Greece?
Foreign income for Greek tax residents is subject to progressive tax rates identical to domestic income taxation. The rates begin at 9% for lower income brackets and increase to 44% for high earners, with additional solidarity contributions potentially applicable.
Greece’s foreign tax credit system allows residents to offset taxes paid abroad against their Greek tax liability. This mechanism prevents double taxation by recognising foreign tax payments as credits against the Greek tax obligation on the same income.
Special rates apply to specific income types. Dividends from foreign companies typically face a 5% rate, whilst interest income is taxed at 15%. Capital gains from foreign investments are generally subject to a 15% flat rate, though exemptions exist for long-term holdings.
The credit system operates by calculating the Greek tax on foreign income, then reducing this amount by foreign taxes already paid. Any excess foreign tax cannot be refunded but may be carried forward in certain circumstances.
How do double taxation treaties affect foreign income in Greece?
Greece maintains an extensive double taxation treaty network covering over 50 countries, including major European nations, the United States, and many other jurisdictions. These treaties override domestic tax rules to prevent double taxation and provide clarity on taxation rights.
Treaties typically allocate taxation rights between countries based on income type and circumstances. Employment income is usually taxed in the country where work is performed, whilst rental income is taxed where property is located. Investment income often faces reduced withholding tax rates.
For property owners, treaties become particularly relevant when considering residency planning and income structuring. German and Dutch nationals, common Greek property owners, benefit from comprehensive treaties that provide clear guidance on taxation obligations and available reliefs.
Treaty benefits often include reduced withholding tax rates on dividends, interest, and royalties, alongside tie-breaker rules for determining tax residency when individuals qualify as residents in multiple countries.
What reporting obligations exist for foreign income in Greece?
Greek tax residents must declare all foreign income in their annual tax returns, typically due by 30th June following the tax year. The declaration must include detailed information about income sources, amounts received, and foreign taxes paid.
Required documentation includes foreign tax certificates, bank statements, employment contracts, and rental agreements. Translation into Greek may be necessary for official documents, adding complexity and cost to the compliance process.
Failure to declare foreign income carries significant penalties, including fines and interest charges. The Greek tax authorities have increased enforcement activities and information exchange with other countries, making non-compliance increasingly risky.
Additional reporting obligations may include wealth declarations for high-value assets and specific forms for certain income types. Professional assistance becomes valuable given the complexity and potential consequences of errors.
Key takeaways for international property owners in Greece
International property owners must carefully monitor their time spent in Greece to avoid inadvertent tax residency. The 183-day rule creates clear obligations, but other factors can also trigger residency status and worldwide taxation requirements.
Those considering selling my home in Greece should understand the tax implications, particularly regarding capital gains and residency status at the time of sale. Professional guidance helps navigate complex rules and optimise tax outcomes.
Planning becomes essential for managing tax obligations effectively. This includes structuring property ownership, timing visits to Greece, and understanding treaty benefits available in your home country.
Given the complexity of Greek tax rules and the significant consequences of non-compliance, seeking professional advice is highly recommended. Expert guidance ensures proper compliance whilst identifying opportunities to minimise tax burdens through legitimate planning strategies.
For personalised advice on Greek tax obligations and property matters, please contact our experienced team who can provide tailored guidance based on your specific circumstances.
Disclaimer: This content is for informational purposes only and does NOT constitute legal or tax advice. For any issues relating to specific cases, it is highly recommended to consult a lawyer, an accountant or a notary depending on your needs.
