On 26.02.2020 the Greek Ministry of Finance has announced the procedure which should be followed by individuals who wish to transfer their tax residence in Greece under the provisions of the favorable Non-Dom tax regime, which was introduced for the first time in Greece by Law 4646/2019. Individuals may benefit from the Non-Dom taxation as from tax year 2020 onwards by submitting their application until 31st March 2020.
- In a nutshell, the special Non-Dom tax regime provides the exhaustion of tax liability for any foreign-sourced income by paying an annual flat tax of €100.000, regardless of the amount of income earned abroad and with no obligation to declare any foreign income in Greece. The special regime provides also for an exemption from any inheritance or donation tax, as regards any property abroad. The taxes, that may have been already paid abroad, do not decrease tax liability arising in Greece under the special Non-Dom regime. The special scheme may be also extended to family members of the individual by contributing for each member annually an additional flat tax of €20.000.
- The aforementioned alternative taxation starts at tax year (e.g. 2020) during which the application for the transfer of residence was submitted and expires in 15 years. The special regime will not impact the tax treatment of the Greek-sourced income. Therefore, the latter income shall be taxed according to the general tax rules applicable in Greece.
- There are two substantial requirements that should be met, to become a Greek Non-Dom tax resident:
(i) the individual was not a Greek tax resident in the previous 7 out of 8 years prior to the transfer of the tax residence in Greece, and
(ii) the individual himself/herself or through a legal entity or one of his/her relatives (i.e. spouse, direct ascendants or descendants) has invested or will invest an amount of at least 500.000 € in Greece. The investment may take different forms, such as investments in real estate, business, securities or shares in legal entities registered in Greece. The aforementioned investments should be completed within 3 years from the submission of the application of transfer. Individuals subject to the Golden Visa program under the provisions of Law 4251/2014 art. 16 are not liable to prove investments in Greece in order to become Non-Dom Tax residents.
- Non-Dom tax residents are subject to the aforementioned favorable regime, irrespective of whether or not they are physically present in Greece for more than 183 days and the center of their vital relations is in Greece, as the corpus and animus criterion is not included in the requirements prescribed by Art. 5A of Greek Income Tax Code. However, individuals spending more than 183 days in another country could risk being considered as tax residents in such other country.
- Individuals who wish to become Non-Dom tax residents should bear in mind the following dates:
(i) application of transfer of residence is submitted until 31st March before the Tax Authority of non-Greek residents,
(ii) relevant documentation is accepted by the Authority within 60 days from the filing and until 31st May at the latest,
(iii) the Tax Authority approves the application within 60 days from the filing and notifies the foreign Tax Authority regarding the transfer of the taxpayer’s residence in Greece,
(iv) the flat tax of €100.000 is assessed until 30th June, and
(v) the flat tax is paid as a lump sum until 31st July.
- Exclusively for the first tax year, the individual should pay the aforementioned amount within 30 days from the approval of his/her application for the transfer of his/her tax residence to Greece. The privileged Non-Dom regime, which lasts for a maximum of 15 years, may be terminated at any time, in case the taxpayer fails to fulfill his/her obligations under this tax regime or requests the revocation of the Non-Dom Tax regime.