24/07/20

EUROPE: Greece set to lure pensioners with 7% income tax.

As published on accountancydaily.co, Friday 24 July, 2020.

Greece is looking to woo foreign pensioners – including British retirees – by introducing a single tax rate of 7% for those shifting their tax residence to live in the country.

The proposal is included in a draft law that the finance ministry has submitted to Parliament, and invites overseas nationals above working age to move their tax residence to Greece and pay 7% on their entire income obtained abroad.

To qualify pensioners should not have been tax residents of Greece over at least five out of the six financial years before their tax relocation. They will need to prove their pension status and will need to come from a jurisdiction that has a double taxation treaty with Greece. They will also have to agree to live in Greece for more than six months every year.

As soon as a foreign pensioner’s application is approved, the sum of their income obtained abroad will be taxed at a flat rate of 7% for the next 10 years.

For the applications of tax residence relocation to apply as of this year, the submission deadline is 30 September 2020.

The tax is payable every financial year in a lump sum.
Athina Kalyva, head of tax policy at the Greek finance ministry, said: ‘The logic is very simple: we want pensioners to relocate here.
‘We have a beautiful country, a very good climate, so why not?’

If passed, the legislation would mean foreign retirees paying less tax than their Greek counterparts, but the finance ministry suggested this would be balanced by the fact the overseas pensioners would be spending money during their stay in the country, and so boosting the economy.

Greece, which has seen extreme austerity in recent years, has lost some 500,000 of its younger population who have moved abroad to improve their work prospects. The finance ministry said the proposals would not reduce local opportunities, as they are specifically aimed at the retired.