Island of Santorini, Greece

Retire in Greece: Greek Flat Tax for Pensioners

("On the alternative taxation of income of natural persons, beneficiaries of income from pensions arising abroad, who transfer their tax residence to Greece")

Apply for the Greek flat tax regime

Description of the Greek Flat Tax Regime

In an effort to attract foreign pensioners, Greece offers a flat tax regime of 7% on all foreign-source income of retired foreigners of all ages who (i) earn foreign pension income (ii) have not been Greek tax residents during the previous 5 of 6 tax years and (iii) transfer their tax residence to Greece from (iv) the EU/EEA or a state that has an agreement with Greece on administrative cooperation in tax matters.

Foreign retirees can benefit from the preferential Greek tax regime for a duration of 15 years.

The special tax must be paid in a lump sum by the last working day of July.

Benefits of the Greek Flat Tax for Pensioners

• Since his election in 2019, reformist and pro-business Greek Prime Minister Kyriakos Mitsotakis was building on the brand name Greece. He wants European retirees to relocate to Greece and contribute to the economy mainly through daily expenses. To quote the Prime Minister's advisor, "Brits go to Spain, Americans move to Florida, so why not Greece?" (here).
• According to the Greek government, "the 7 per cent Greek flat rate will apply to whatever [foreign] income a person might have, be that rents or dividends as well as pensions" (here)
• Any foreign tax paid abroad on foreign-source income can be claimed back as a foreign tax credit (FTC) against the tax due in Greece if (i) a Greek Double Tax Treaty (DTT) stipulates the right of taxation of both countries or (ii) no such DTT exists. Greece has concluded double tax treaties with 57 countries (see list below).
• The beneficial Greek tax of 7% is not imposed on exempt income in either jurisdiction pursuant to a Greek Double Tax Treaty (see list below)

Downsides of the Greek Flat Tax for Retirees

• Worldwide reporting requirement: unlike in the case of the Greek Alternative Taxation (here), taxpayers under the Greek flat tax for pensioners must report every year both Greek and foreign-source income in their Greek tax declaration
• Successful applicants are not exempt from Greek inheritance tax, or Greek gift tax for moveable assets located abroad, where applicable
• There is no standing practice so far on the applicability of bilateral double taxation agreements to the income of foreign investors. However, Greek taxpayers are entitled to file specific queries to the Independent Authority of Public Revenue (IARP), the key Greek regulatory tax authority, with regard to specific tax matters of concern.
• If the full amount of the Greek alternative tax is not paid in any given tax year the special tax regime is discontinued and full Greek taxation on worldwide income applies instead
• The Greek flat tax is not suitable for US citizens who are taxed on worldwide income
• The Greek flat tax is less attractive to persons earning income derived from Greek source which is taxed normally at a rate of up to 44%

Tax Residence in Greece

An individual who is present in Greece for a period exceeding 183 days cumulatively during any twelve-month period is a Greek tax resident as of their first day of presence in Greece.

Who Can Apply for the Special Tax Regime for Pensioners in Greece

In order to be eligible for the Greek alternative tax for pensioners all of the following conditions must be met:

1) The successful applicant earns foreign pension income.

• Evidence of foreign pension income may take the form of any document issued by a foreign social security institution or another public authority or occupational pension fund or private insurance company which certifies that the applicant receives a pension (lump sum or annuities)

2) The successful applicant becomes a Greek tax resident.

3) The successful applicant (and family members) was a tax resident outside Greece for at least 5 out of 6 years preceding the day of application.

• Evidence of foreign tax residence must be submitted in the form of a tax residence certificate for each year. Absent a foreign tax residence certificate for each year, a proof of permanent address issued by an authorized government body may be submitted.

4) The successful applicant relocates to Greece from a country with which Greece has a valid administrative cooperation agreement in tax matters.

Costs of the Greek Flat Tax Regime for Pensioners

Submission Timeline

Applications for the Greek flat tax for pensioners must be submitted in by physical mail or electronically by 31 March with the competent tax authority while supporting documents must be submitted by 31 May.

The Greek tax authorities have a deadline of 60 days to issue their decision, that is, to accept or reject the application.

The successful outcome of the application for an individual does not affect the tax residency status of any relatives who are examined separately.

Successful applicants are considered Greek tax residents (i) in the meaning of the tax treaties that Greece has enacted with foreign jurisdictions and (ii) for the tax year in which the application for the Greek alternative taxation was submitted.

The Greek Tax Authorities will notify the tax authorities of the applicant's country of last tax residence concerning the transfer of the tax residence to Greece.

The Greek flat tax must be paid in one installment before the last working day of July each year at a rate of 7% on the total income obtained abroad unless it is exempt from tax under a double tax treaty.

Double Tax Treaties Concluded by Greece (DTTs)

(last update June 2023)

Greek Double Tax Treaties (DTTs)

Greece has entered into double taxation treaties with 57 countries (here) which are:

Albania, Armenia, Austria, Azerbaijan, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Hungary, Iceland, India, Ireland, Israel, Italy, Kuwait, Latvia, Lithuania, Luxembourg, Malta, Mexico, Moldova, Morocco, Netherlands, Norway, Poland, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Serbia, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uzbekistan.

Double tax treaty UK-Greece (here)