Date 21 November 2019
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Greece introduces “non-dom” tax regime -an option for efficient tax planning for individuals

As it has been announced by the new government, Greece introduces for the first time a tax regime, known as “non-dom”, an abbreviation of the term “non-domiciled resident”. This is an initiative included among the legislative measures of the last years, such as the “Golden Visa” Program, aiming to render the country attractive for investments, as well as for high net-worth individuals.  Following the example of other countries like Italy, Greece wants to offer incentive to individuals with high worldwide revenue to become Greek tax residents.

What does it mean to be a “non-dom” Greek tax resident?

According to the upcoming provisions, which will bring significant changes in the Greek Revenue Tax Code, individuals (i.e. legal entities are excluded) can transfer their tax residence in Greece and be subject to a standard flat tax for any income arising abroad.

This alternative tax regime provides the non-dom tax resident with the right to pay a total amount of 100.000 € per year, for any income arising outside the country, irrespective of the amount of this income. Therefore, that means that individuals with high worldwide revenue would pay taxes, which would not be commensurate with their revenue. Indeed, by paying the amount of 100.000 € -once and for all-, the individuals would be discharged of any tax liability for a whole year.

What is more, this status is applicable to relatives of a non-dom Greek tax resident, on the condition that the latter pays an extra tax of 20.000€ per person. The privileged “non-dom” regime can last for a maximum of 15 years and can be terminated any time during these years, in case the non-dom tax resident fails to fulfill his obligations or applies for revocation of this special tax regime.

Which are the requirements to become a non-dom Greek tax resident?

There are two substantial requirements that should be met, to become a Greek tax resident:

  • He/She should not be a Greek tax resident for the past 7 out of 8 years, prior to the transfer of tax residence in Greece and
  • He/She has to invest in Greece an amount of 500.000 € minimum. The investment could take different forms (e.g. investment in real estate or business etc., as an individual or through a legal entity, established in Greece) and it should be completed within 3 years, starting from the application date.

It is highlighted that an individual, who obtains a permit for investment activity, pursuant to Law 4251/2014 (Golden Visa Program), is not obliged to prove that the above-mentioned investment took place.

It is to be noted, that in case the individual has, already, transferred his/her tax residence to Greece, a year before the entry into force of the relevant law, he/she is able to apply for the non-dom resident status.

How can someone apply? What is the procedure of becoming a “non dom” tax resident in Greece?

Greek tax authorities are competent to examine the applications of the individuals, who are interested in becoming non-dom Greek tax residents. The applications should be filed until 31st March of each year and tax authorities have to accept or to decline them within 60 days. If the application is accepted, the applicant is considered as a non-dom Greek tax resident by the year he/she first filed the application and has to pay the tax (100.000 €) within 30 days from the acceptance of the application.

More details about the preferable investments, their duration, how the applicants should substantiate them, and in general additional information regarding the documentation and the procedure will be provided in the Ministerial Orders.

Tax residence and tax planning:

Although “non-dom” tax regime is, beyond doubt, attractive for individuals with high worldwide revenue, it is important for the potential applicants to draw up a “solid” tax plan, to be able to reap the benefits. It should not be forgotten that this regime is introduced for the very first time, and, hence, applicants should pay attention to all the procedural requirements. This new legislation is expected to be voted by the Greek parliament by the end of November 2019.