Transfer of tax residence and non-domiciled tax residents
In the field of strengthening the conditions of the economic growth and maintaining the social and financial cohesion, the new non domicile regime for foreign tax payers was adopted by our tax law pursuant the Law No 4646/2019. The purpose of these provisions is the application of a lower tax rate, which is supposed to attract foreign investors to transfer their tax residence in our country.
The regime of the non-domiciled resident («non-dom») is applicable to the foreign tax residents, who due to economic interest, are willing to transfer their tax residence in Greece, having as a further consequence any tax liability on foreign source income to be exhausted. For the implementation of this favorable and alternative way of taxation, certain substantive conditions, provided by Law, should be cumulatively met. In particular:
The taxpayer was not a Greek tax resident for the past seven (7) of the eight (8) years prior to the transfer of his tax residence in Greece, and
It must be proved that they or their relatives (namely wife and any direct ascendants / direct descendants) or any legal entity in which they hold the majority of shares are investing at least five hundred thousands (500.000) euros in real estates or companies or securities or shares of legal persons or legal entities based in Greece,. Since the present regime is applicable and for a maximum period of fifteen (15) tax years, the natural person shall pay a lump sum tax of one hundred thousand (100,00) euros on an annual basis, regardless of the level of their foreign source income.
The investment, must be completed over a period of three (3) years commencing on the date that his/her application was submitted. The application for the transfer of the tax residence subject to the alternative way of taxation of foreign income in accordance with the Law No 4646/2019 shall be submitted to the Tax Administration by the natural person by March 31 of each tax year. Respectively, the administration’s competent department (Tax Office of Foreigners and Alternative Taxation Residence of Domestic Residents) is obligated to respond to the present application within sixty (60) days from its submission.
In case the application is accepted, as a special tax resident, he/she is subjected to the same tax regime as Greek tax residents, though the applicant shall pay a lump sum tax of a hundred thousand (100.000) euros. After the aforementioned payment any tax liability for his/her total foreign source income shall be exhausted, regardless the level of the earned income, whereas at the same time his/her tax exemption of inheritance tax or donations tax for property owned abroad is achieved. As a result, they are subject to tax for the income acquired in Greece, while for the income earned abroad paying the amount of 100.000 euros exhausts any further tax liability on their foreign source income. It must be noted that for the first year of inclusion in the provisions of the present Law, the natural person must pay the lump sum tax within thirty (30) days from the approval of his application.
In case of non-payment of the full amount of the flat tax or failing to complete the investment, the special regime is not applicable from the relevant tax year and thereafter and the person is taxed for his/her worldwide income according to the general provisions of law.
Noted that the amount of flat rate tax, which has already been payed is not refundable. Furthermore, the natural person has the opportunity to request the extension of the present tax arrangement for his depended family members, through paying an extra amount of 20.000 euros. This tax shall be paid in an annual basis in one installment and this tax arrangement expires after the end of fifteen (15) years with no possibility for further extension.