Greece’s beneficial tax regime for foreign residents

In December 2020, Greece introduced tax incentives to attract foreign tax residents. Specifically, the provisions of Article 5C of the Greek Income Tax Code (ITC), which came into force on 1 January 2021, stipulate that foreign employees or foreign freelancers becoming Greek tax residents can enjoy a 50% tax exemption from income derived in Greece from employment or business activities.

To qualify for the beneficial tax regime, interested individuals must have not been a Greek tax resident for five of the previous six years before tax residency was transferred. In addition, any transfer of tax residence from an EU/EEA member state or country will need that country to have a valid agreement of mutual administrative tax cooperation in place with Greece. There must also be a signed employment contract governed by the Greek Labour Law that shows the provision of employment services to a Greek legal entity or a Greek branch of a foreign legal entity, or an intent to establish a business activity in Greece.

A declaration must be made to the Greek tax office of the intention to stay in Greece for at least two years, starting from 1 January of the year in which the application is submitted. Applications to the Greek tax authorities must be submitted by 31 July of the year during which employment commences or a business is set up in Greece.

The competent tax authorities shall issue a decision to either accept or reject the said application within 60 days. The details of the above procedure are provided and explicitly stated in the joint decision that was issued in April 2021 by the Ministry of Finance and the Governor of the Greek Independent Authority for Public Revenue.

According to the new beneficial tax regime, the income deriving from employment services provided in Greece, or an individual’s business activity in Greece, will enjoy a 50% tax exemption and, moreover, the taxpayer shall be exempt from the payment of a special solidarity contribution on the above income.

In addition, individuals subject to the above tax regime shall be exempt from the annual imputed income arising from maintaining a residence or a private car in Greece. Finally, taxpayers shall be subject to the above favourable tax regime for a total of seven years, with no possibility of further extension.