Recent Greek Law 4758/4.12.2020 introduces a special tax regime aimed at attracting foreign tax residents, who wish to transfer their tax residency and relocate to Greece to work as employees in a “new employment position” or as freelancers.
In order for a prospective applicant to be eligible, they must cumulatively:
Not have the status of being a Greek tax resident for the previous five of the last six years before the transfer of their tax residence to Greece;
Relocate from an EU/EEA country, or a country with which Greece has a valid agreement concerning administrative cooperation on tax issues;
Provide employment services locally to a Greek legal entity or to a Greek branch of a foreign company; and
Declare that they intend to stay in Greece for a minimum of two years.
The favourable tax treatment also applies equally to those who apply and transfer their tax residency to Greece, in order to undertake a business activity locally, such as to set up a business as freelancers.
Provided that the application is successful, the individual:
Becomes a Greek tax resident under this special tax regime;
Becomes exempt from paying income tax and solidarity tax on 50% of their Greek source employment income or freelancer income;
Is taxed in Greece for any other Greek source and foreign source income according to the general tax rates (with a right to receive a foreign tax credit for taxes paid abroad on certain conditions etc.); and
Becomes exempt from the application of local tax rules on annual imputed income deriving from ownership or possession of a residence or a private use vehicle.
The application of this special tax regime is provided for the fiscal year of the application and for the following seven fiscal years. No further extension can be provided.
The deadline to apply for this regime is July 31 of the year during which the individual is commencing employment or business activity.
As of the guidance presented in December 2020, it was expected that the Greek tax administration would issue further guidelines to clarify a number of points, such as:
The meaning of “new employment position” in the above context;
Whether there is a requirement for the individual to remain employed by the same employer for all the above specified period (seven years) in order to remain subject to this tax regime; and if so, whether the change of employer or termination of the employment contract by the employer or resignation of the employee during the above period will result in revocation of the tax regime retrospectively or only for the future;
Whether the individual is expected to physically stay in Greece for as long as they remain subject to this tax regime;
Whether the individuals will be exempt from the application of imputed income deriving from the purchase of a residence or a private use vehicle; and
Whether the individual may apply to be subject to this tax regime for a shorter period than the seven year period provided by the law and whether they have the right to apply to have this revoked.
It appears that introduction of this tax regime aims to lure back some of the Greeks who left during the debt crisis to pursue careers abroad. Likewise, it is a method for attracting foreign talent and experienced professionals from abroad to relocate to the country.
The changes may also attract a number of investment banks intending to open or expand their existing offices in Greece, so as to expand their presence in the Eurozone, or other companies wishing to relocate their employees to the country.
Manos Tountas
Tax manager
