Greece’s tax administration, the Independent Public Revenues Authority (AADE), is set to audit taxpayers who, although they have declared their permanent residence outside Greece, live and work in the country.
Most of them have chosen a country with low tax rates and at the same time avoid the presumed income that applies in Greece and the inspection of their bank deposits.
The auditors of the Independent Authority for Public Revenue (AADE) are looking for those who normally live in Greece, but declare themselves tax residents abroad, in order to avoid taxes and audits. They are particularly focusing on those in the service sector who can work simply with a laptop from anywhere.
Sending a circular to the auditors, AADE has made it clear what the basic conditions are to qualify as a genuine tax resident abroad: The taxpayer must reside abroad for at least 183 days per year, be able to prove it by presenting the appropriate supporting documents, and entrust their tax representation to a trusted person – i.e. a tax representative.
According to the legislation, those who move their tax residence abroad are exempt from the presumed cost of living (“tekmiria”) for the assets they have in Greece. In other words, the tekmiria for houses, cars and recreation boats do not apply to them. Also, the tekmiria of acquisition of assets (real estate, vehicles, etc) do not apply provided that they do not acquire real income in Greece. If they do obtain income in Greece, for example from rent or interest on deposits, then they fall under the regime of presumed incomes.
On the other hand, many Greeks who left during the years of the financial crisis and the bailouts and had become tax residents abroad are returning with favorable terms; they make the most of the provisions that stipulate that those (Greeks or foreigners) who relocate in tax terms to Greece will have a discount of 50% from the taxation of their incomes, provided that they will be employed in new jobs or start an activity as self-employed professionals. [kathimerini.com]
PS They don’t seriously want to audit and punish “digital nomads” they hearty invited to Greece last year, do they?
Taxes are used to fund all the public services that we rely on so, in general, I think people should pay taxes where they live. I am tax resident and declare all my income to the Greek tax authority. The government does need to think about the law of unintended consequences, however.
A percentage of foreign pensioners declare themselves as non-tax resident and this avoids them paying Greek income tax on their pensions but those pensions are taxed in their country of origin so they are not really avoiding tax. On the other hand they are bringing those pensions into Greece and spending them here, which benefits the Greek economy. They pay VAT on the goods and services they buy. If they own a house they pay ENFIA. If they own a vehicle they pay circulation tax. They pay local taxes through their electricity bills. They are not entitled to any of the benefits that a tax resident person would qualify for. Many pay for their healthcare privately or any use of the public health system can be recouped from their country of origin so they are not really a burden on the Greek state.
If forcing them into the Greek income tax system causes them to leave Greece and relocate elsewhere has Greece really benefited?
Some countries have special agreements with Greece. Certain governmental pensions can only be taxed in the country where it has been accumulated. So Greece can’t get their hands on it. Don’t know why they signed the agreement.
I’m not Greek but lived in Greece for years and still come to Greece often. But to be a non-tax resident, it takes a huge effort in paperwork and official translations. It took me at least 6 months.
I know many Greeks that live outside Greece that should do this procedure. But if you are not in Greece that often, it’s almost impossible.