The digital nomad visa, introduced by virtue of Article 11 of Law 4825/2021, provides a viable immigration option for foreigners to reside in and work remotely from Greece. However, the new legislation does not include any tax provisions, thus its implementation raises questions in relation to tax risks.
In accordance with the new provisions of the Greek Immigration Code, third country (i.e. non-EU/EEA) citizens who are self-employed, freelancers or dependent employees, working remotely using information and communication technologies with employers or clients outside Greece (digital nomads), may apply for a visa to Greece with a validity period of up to 12 months. The applicants may be accompanied by their family members.
It is important to note that the digital nomad visa does not provide the right to dependent employment or independent business activities in Greece. In practice, this means that holders of a digital nomad visa may only provide services to employers and/or clients established outside Greece.
The digital nomad visa is issued by the Greek consular authority of the place of origin or the place of main residence of the applicant, on a fast-track process. Specifically, the competent consular authority is obliged to respond within 10 days of the relevant request and, on condition that the full documentation has been submitted, to complete the process for the issuance of the visa in one sitting.
The applicant is required to document that they shall provide remote work for clients or employers outside Greece. Additionally, the applicant is required to provide evidence that they have sufficient resources as a stable income, to cover their living expenses during their stay in Greece. The amount of sufficient resources is set at €3,500 per month. If the above-mentioned sufficient resources derive from dependent employment, provision of services or contractor work, the above minimum amount refers to the net income after the payment of the required taxes in the country where the employment or services are provided. The above minimum amount is increased by 20% for the spouse or cohabitant and by 15% for each child.
If the holder of the digital nomad visa estimates that they shall remain in Greece after its validity period lapses, they may apply for a respective two-year residence permit, provided that the prerequisites for the issuance of the digital nomad visa continue to apply. The respective residence permit is issued by the competent authority of the Greek Ministry of Migration and may be renewed for a period of two years, for each renewal. The family members of the main applicant may also issue a respective residence permit.
In both cases, the respective residence permits do not provide the right to dependent employment or independent business activity in Greece.
Taxation of the digital nomad in Greece
In accordance with the Income Taxation Code (Law 4172/2013) (ITC), taxpayers who have their tax residence in Greece, are subject to tax in Greece on their taxable income that arises both in Greece and abroad (i.e. their global income), earned within a tax year.
A natural person is considered a tax resident of Greece if they maintain their permanent or main residence in Greece or their habitual residence or the center of their vital interests, i.e. their personal and financial ties.
Furthermore, a natural person who resides in Greece for a period exceeding 183 days, cumulatively, over a 12-month period, is considered as a tax resident of Greece, retrospectively from the first day of his presence in Greece. This provision does not apply in the case of natural persons who reside in Greece exclusively for tourist, medical, therapeutic, or similar private purposes and their stay does not exceed 365 days, including short stays abroad.
As per the current legal provisions, taking into consideration that the initial digital nomad visa may be issued for a validity period of one year, with the possibility of extension of stay, the holder of the digital nomad visa is liable to taxation in Greece for income arising abroad, if their residence in Greece exceeds the limits set by the ITC.
The Greek tax authorities currently have not provided any clarifications on whether the respective legal provisions shall be amended to exempt holders of the digital nomad visa from being considered as tax residents of Greece.
Permanent establishment risk
As per the ITC, as a permanent establishment is considered the specific place of business through which the entity carries out all or part of its business activities.
Furthermore, in the event where a person acts on behalf of the entity and is authorised to enter into agreements on its behalf, then said entity shall be considered to have its permanent establishment in Greece as regards the business activities that such a person undertakes on its behalf, with the exception of those activities that are set out as exemptions by the ITC.
Depending on the circumstances, there is a considerable risk for a digital nomad to ‘trigger’ a permanent establishment in Greece for the company by which they are employed or which they represent.
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