There is a loophole in some European countries where you can pay a single digital tax to live. They offer special tax regimes for foreigners that allow high earners to reduce their tax rates without compromising their quality of life.
In this article, we look at the tax advantages and opportunities of one of the most fascinating countries in the Mediterranean. One of the main reasons why investors are attracted to Greece is its flat tax regime, which offers a competitive advantage to those seeking tax efficient residency options.
What is the Flat Tax?
It is a tax programme where everyone pays the same tax rate, regardless of income. If you are a high net worth individual looking to relocate to Greece, you may be interested in the Alternative Residence Scheme for Foreign Income.
This scheme allows you to pay a flat annual tax of €100,000, regardless of how much you earn abroad. This makes sense if you earn more than €1 million a year, as normal tax rates in Greece can be as high as 45%.The good news is that this regime lasts for 15 years, longer than in Portugal or Italy, and no physical presence is required. You can enjoy the benefits of living in Greece without spending more than 183 days a year there. You can also bring your spouse and children under this scheme for an additional €20,000 per person.
The bad news is that you will not be exempt from Greek inheritance tax or Greek gift tax on movable property located abroad. This means that when you die or transfer your assets to someone else, they may be subject to taxation in Greece. You must also apply for this scheme before the end of the tax year and pay the lump sum tax in advance.
This country offers 2 types of programmes to obtain this benefit, one for pensioners and the other for high net worth individuals.
Requirements for high net worth individuals
Under this scheme, as a Greek tax resident, you will pay a flat tax of €100,000 per tax year, regardless of the amount of income you earn.
In addition, you must invest at least €500,000 to qualify for this special tax regime. The investment can be an apartment, a house, legal entities based in Greece or securities/bonds/funds of Greek entities or the Greek state.
You must continue to hold this investment and not liquidate it. For each relevant tax year, you must provide evidence that you are still the owner of this investment.
The following documents are required for this type of residence
Receipt of the tax registration number and application for inclusion in the scheme
A copy of your passport
A notarised and apostilled Power of Attorney (PoA) or, if you are in Greece, a power of attorney signed in front of the relevant Municipal Civil Service Centre, stating that you meet the requirements of the applicable tax law and that you undertake to invest €500,000 in Greek assets within three years or provide proof that the investment has been made in the year in which you apply to become a tax resident.
If you wish to include your spouse, parents or adult children (for an additional annual lump sum tax of €20,000 per person for whatever income they may have earned abroad during the relevant tax year), a solemn declaration signed by them before a notary or the above-mentioned authority that they wish to be included.
In the case of the above, an apostilled certificate of family relationship.
Foreign tax residence certificates for previous years, if you have lived in Greece for any of the previous seven years.
Requirements for pensioners
This alternative tax domicile taxes foreign pension income at a flat rate of 7%. This pensioner visa only applies to pensioners from countries with which Greece has a double taxation treaty.
As a retired person from abroad, you must meet the following three criteria in order to change your tax domicile to Greece with a flat income tax rate of 7% for the next ten years:
You should have been a Greek tax resident for no more than one of the last six years.
You must change your tax domicile from a country with which Greece has a valid double taxation treaty.
You must prove that you receive pension income from abroad through your foreign social security institution, another public authority, a professional fund or an insurance company that shows the payment of a state or private pension abroad.
The following documents are required for this type of residence
Receipt of the tax identification number and the application for inclusion in the scheme
A copy of your passport
A notarised and apostilled power of attorney to represent you in signing and submitting the application and obtaining your Greek tax registration number.
A statement from you, included in the PoA, regarding your current country of tax residence
A certificate issued by the legal entity that is the pension payer, which must be apostilled (and notarised if the pension payer is not a government agency), certifying that you are the beneficiary of a pension.
Foreign tax residence certificates if you have lived in Greece for any of the last five years.
Greece's flat tax regime offers a compelling opportunity for foreigners seeking a tax-efficient residence in an attractive destination. With its rich history, beautiful scenery and growing economy, Greece offers an ideal blend of business and leisure for investors and expats alike.
So, if you are interested in finding out more about tax friendly countries and its opportunities to develop business, contact us today! Below this article, you will find a link to set up a free ten-minute consultation with us to discuss your options further.
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