Greece’s Council of State put an end to double taxation of Greeks living and working abroad but also to foreigners living in Greece but earn an income abroad.
The CoS ruled that “Greeks who live and work in foreign countries may be taxed in the places of residence for income from work, even if the family and their home is in Greece.”
This is a historic decision that is going to solve substantial issue of “taxation and residence”, the Greek scheme of “global income taxation” -but also labor in times of full speed internet.
In a pilot-trial process, the CoS ruled after hearing the case of a German national married to a Greek. The husband lives in Greece and is father of a child. However, the income he earns comes from Germany where he works as an architect. Last February, he appealed to administrative courts, objecting the Greek taxation office to have his German income taxed in Greece. He wanted to exempt his German income from the joint tax declaration with his wife.
The local tax office and the General Secretariat of Public Revenues insisted that he makes a joint income declaration with his wife, a judge, for the family income of 2014. Authorities justification was that as both taxpayers are considered tax residents in Greece and that all income earned in the ocuntry or abroad should be taxed here.
In a kind of express decision as the issue affects thousands of people the Council of State clarified that submitting a joint income tax declaration with a spouse solely based on criteria that someone is tax resident in Greece- is not enough to tax income in Greece when the income has been acquired from employment or other source outside the Greek territory. The criteria were based on the fact that the residence of the spouse and the child were in Greece. (source)
IT normally take some time until decisions of Council of State go into effect. If you are in some way affected by this decision, consult your accountant.
I note that it is an architect who inspired this change in the law. Those architects, always trouble-makers and trailblazers :-))
Actually, I wonder whether this ruling is in conformity with international practice. There are dual taxation treaties between Greece and most EU countries, and these should normally avoid dual taxation. Normally, your residence for taxation purposes is either defined by various national laws or chosen by you.
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However, there are possible exceptions. One is that you are an employee paying taxes (e.g. in Germany) and are living in Greece. If you declared the income from that employment in Greece, you could not be an employee and would have to pay much higher taxes (including VAT) as a self-employed person. The most logical thing for the Greek state to do, would be to negotiate a deal with the employee and the German state, so that there would be no penalty attacjed to being taxed in Greece. As we all know, the Greek tax authorities cannot even collect their own taxes properly, let alone deal with complex situations involving other EU countries.
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To be fair, though, this problem is caused by the EU not regulating personal taxation. It is left to national states to do as they like, as opposed to social insurance which has been regulated since 1971. This is all because European politicians won’t let go of any control of their taxation systems, when clearly people moving around and living between countries need EU protection. Yet another failure of the EU…
There is such thing as Fiscal Residence. One pays taxes to the country of which they are a fiscal resident.
It’s possible to obtain a document called Fiscal Resident Certificate. This doc is issued by tax authorities and can be translated and presented to the other country’s authorities to demonstrate that the person pays the taxes elsewhere.
If the income is generated let’s say in Germany, I guess the person needs to request the fiscal residence certificate from German tax department they’re registered with, Apostile it, translate it & present to the Greek authorities to avoid double taxation. Thus he is the resident of Greece but fiscal resident of Germany.
This is true, but… I know of Austrians who moved to Germany and for many years paid double taxation on their income. This was because there was no formal mechanism to deal with the issue: it most certainly did not require the translation of any documents! Basically, the EU remains a disorganised mess in many areas — and taxation is one of them.
I think double-taxation is solved via contracts between two countries not via EU
Yes, the EU treaties do not allow the EU to have anything to do with direct taxation — and even VAT has little to do with them. It is a mess, basically, because countries do not solve the problems.
I work over the internet to my employers Server in the UK. However I am resident in Greece. I have been paying tax on my income for the past 5 years, having been told by HMRC (UK tax authority) that I cannot pay tax in the UK and must pay where I reside. What happens now?
ask your accountant
You can pay tax in the UK only if you satisfy the criteria for tax residence. These are complex, but the simple version is that you must prove residence in the UK for 183 days of the tax year (not the chronological year). Part of the detailed rules can be downloaded here: https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt
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But basically, this complex horror of rules means that only the rich can benefit from UK tax laws — using costly lawyers and tax accountants. Unless you spend of lot of time in the UK, you will not be able to pay tax there. You also need to consult to dual taxation treaty between Greece and the UK; there are circumstance where you could end up paying tax in both countries — which this court ruling has at least stopped.