For whom Greece… a tax haven

Greece perhaps hardly qualifies as a tax haven. According to the index of the American think tank “Tax Foundation” In terms of the competitiveness of tax systems, Greece will be ranked 25th out of 38 developed OECD countries in 2023.

And the so-called “tax freedom day” in 2023, according to estimates by the Center for Liberal Studies (KEFIM), will fall on June 27, or the 177th day of the year. That is, Until this day, Greeks work only to pay taxesand the income from other days of the year goes into our pockets. Almost 48% of income goes to taxes!

Who decides to come to Greece to be subject to taxation?

With a series of amendments to the Income Tax Code (ITA) and the latest law 4714/2020, Greece is providing incentives for Greeks to repatriate taxes and is also attracting foreign investors and retirees. The different categories are defined by Articles 5A, 5B and 5C of the Tax Code, which refer to large investors, pensioners, employees and self-employed persons respectively. Lawyer Theodoros Skouzos, who handles tax residency transfer cases in Greece, explains how attracting “rich people”:

“The 5A program is aimed at attracting “high net worth” taxpayers who have not been residents of Greece for the previous seven years and provides for a payment of €100,000 per year after an individual’s tax liability on their worldwide income has been exhausted.”

That is By paying 100,000 euros per year, the millionaire investor is exempt from paying any other income tax on his international activitiesHowever, there are other conditions:

“The individual must also make an investment of €500,000, which can be invested in real estate, bonds, participation in a company, etc. The maximum period of stay in the program is 15 years. The maximum length of stay is related to the concept of “non-dom”, an English term that distinguishes the place where a person chooses to live from the place they consider “home”, – adds Theodoros Skouzos.

However, if the same person earns income in Greece, he is taxed in the normal manner, like any Greek taxpayer. The special regime can be extended to relatives of the new tax resident, with an additional “fee” of 20,000 euros per person. Thus, if we are talking about a married couple with high incomes from abroad, it is sufficient to pay a total of 120,000 euros annually – of course, in combination with a minimum investment of 500,000 euros.

The second category of benefits concerns pensioners. The lawyer explains: “5B is aimed at attracting foreign retirees by offering them a tax rate of 7%. And in this scheme, any income from a Greek source is subject to normal tax, and the maximum duration of the scheme is again 15 years.”

Incentives… for return

Finally, the incentives described in point 5C of the CST mainly concern Greek workers who have left abroad and want to return. “The 5C aims to attract workers or self-employed persons who have not resided in Greece for at least five years by providing a benefit in the form of a 50 percent deduction from income tax for work in Greece. There is also a maximum benefit period of seven years, and an additional requirement that the job must be “new.”explains Theodoros Skouzos, who considers the last point to be quite erroneous.

But how many people have taken advantage of these provisions? According to data obtained by TA NEA from AADE, the number of tax residency changes reaches 8,350. Most of them (6,817) fall into the third category (5C), the least profitable for the state treasury. However, the 293 people (3.5%) who are taxed in Greece under the non-dom status provided for in paragraph 5A are not so few, especially considering how much money they invested in the country to obtain this status.

By simple calculations, these individuals have invested a total of at least 146.5 million euros in Greece, through investments in shares, bonds, real estate, etc. In addition, they contribute at least 29.3 million euros in annual tax revenues, thus providing significant liquidity to the state.

Finally, the number of foreign pensioners who have become tax residents of Greece in accordance with the provisions of Article 5B of the CCT is 1240 people. Since these are mostly wealthy pensioners from European countries who have decided to spend their retirement years in Greece, the tax revenue from their “translation” to the Greek tax registers are not insignificant. “In our experience, most pensioners settle in island Greece, approximately Lesbos, Corfu and Crete,” – says lawyer Christina Georgaki.

Moreover, according to ADSE sources, rejection of applications is a rare occurrence as interested parties are usually well informed about the opportunities and incentives offered to them and applications are submitted by professionals with relevant experience.

Source link