Your domicile is normally the country you regard as your permanent home and where you live most of the year. For example, a foreigner working in Greece for a Greek company who has taken up residence in Greece and has no income tax liability abroad, is considered to have his tax domicile in Greece.
A person can be resident in more than one country at any given time, but can be domiciled only in one country. The domicile of a married woman isn’t necessarily the same as her husband’s, but is determined using the same criteria as an independent person. Your country of domicile is particularly important when it comes to inheritance tax. You’re considered to be a Greek resident and liable to Greek tax if any of the following apply:
- Your permanent home, i.e. family or principal residence, is in Greece.
- You spend over 183 days in Greece during any calendar year.
- You’re employed or carry out paid professional activities in Greece, except when secondary to business activities conducted in another country.
- Your centre of vital economic interest, e.g. investments or business, is in Greece.
You must complete an income tax return in Greece if your annual income is over €3,000. Even if you have no taxable income at all, you must file a tax return if you meet any of the following conditions:
- You own a private car, a motorcycle with an engine capacity of more than 500cc, a pleasure boat or an aircraft.
- You own a property (see below).
- You’re a partner in a Greek partnership, limited liability company or joint venture.
- You earn income from the letting of property or land.
- You’re buying or constructing a building.
- You own a swimming pool of over 25m2 (you must declare an income of at least €11,600 for an outdoor pool and at least €17,400 for an indoor pool).
These conditions were introduced by the tax authorities in an attempt to prevent tax fraud. When you declare your assets (including details such as the size of your home), the tax authorities apply a coefficient to each asset and from the resulting figure assume you have enough income to buy and maintain the asset. For example, if you declare a new car over 2,000cc, the authorities assume your annual income to be at least €21,000. Therefore you should declare at least this amount on your annual income tax return.
This is a complicated matter and in order to avoid any nasty surprises you should consult a tax advisor.
Non-resident Property Owners
To avoid paying income tax on funds from abroad used to buy property, non-residents must produce the official import certificate (the ‘pink slip’) from the bank. This proves that the funds for the purchase were imported into Greece and are therefore exempt from income tax.
Greek residents are taxed on their world-wide income, subject to certain treaty exceptions, although citizens of most countries (the US is a rare exception) are exempt from paying taxes in their home country when they spend a minimum period abroad, e.g. one year. The Greek government has double taxation treaties with many countries (see below), which are designed to ensure that income that has already been taxed in one treaty country isn’t taxed again in another.
Treaties establish a tax credit or exemption on certain kinds of income, either in the country of residence or the country where the income is earned, and where applicable a double taxation treaty prevails over domestic law. Many people living abroad switch their investments to offshore holdings to circumvent often complicated double taxation agreements.
If you’re in doubt about your tax liability in your home country or another country where you have assets or from where you receive income, contact the tax authorities there for a ruling. Note that if you aren’t living in Greece but have assets there, you’re obliged by law to file a tax return listing your assets and any income you receive from them.
Greece has double taxation treaties with many countries, including Argentina, Austria, Belgium, Canada, Cyprus, the Czech Republic, Denmark, Egypt, Finland, France, Germany, Hungary, Iceland, Ireland, Italy, the Republic of Korea, Luxembourg, the Netherlands, Norway, Poland, Romania, the Slovak Republic, Sweden, Switzerland, the United Kingdom and the US.
Before leaving Greece, foreigners should pay any tax due for the previous year and the year of departure by applying for a tax clearance. A tax return should be filed prior to departure and includes your income and deductions from 1st January of the departure year up to the date of departure. Your local tax office will calculate the tax due and provide a written statement or certificate. When departure is made before 31st December, the previous year’s taxes are applied. If this results in overpayment, a claim must be made for a refund.