Greece’s brand name so far is linked with a picture of a tourist destination where one can enjoy livid vacations. Nonetheless, there is a less projected image of the country as a destination where one can enjoy his/her retirement years. The Mediterranean climate along with the peaceful and picturesque sceneries are the perfect combination for someone to make the Greek outdoor his refuge after a tense professional life. The Greek government has introduced a provision that would enable retired individuals who receive a pension from a foreign state to transfer their tax residence in Greece and make use of a favourable tax regime, following the examples of Italy, Portugal, Malta and Cyprus that have already introduced relevant legislation.

Legal Framework

The provision was put forward by Law 4714/2021 and reads as follows: An individual, who (1) is the recipient of a pension from a foreign state (2) with which Greece has an agreement on administrative cooperation and (3) who has not been a Greek tax resident for the previous five (5) out of six (6) years, can apply to the competent tax authority to fall under the privileged tax status. The latter provides for a tax rate of 7% for this income. The individual is obliged to declare all his income, whether obtained abroad or in Greece. Income obtained in Greece will be taxed in accordance to the Greek Revenue Tax Code.

There is a statutory deadline of sixty (60) days for the tax administration to provide a response, accepting or declining the individual’s request and the Greek tax authority bears the obligation to contact and inform the foreign tax authority within whose jurisdiction the individual falls. The duration of this privilege is fifteen (15) years, without the possibility of extension.

Points meriting special attention

The explanatory memorandum of the Law introduces two issues that need to be taken into consideration from the interested parties. Firstly, in a clear effort to avoid the abusive exercise of the provision as a tool for tax evasion/ avoidance, the foreign tax authorities can challenge the decision of the individual and the latter has to present evidence that Greece has become the center of his vital interests within the meaning of the Greek Revenue Tax Code.

Secondly, in accordance to the OECD’s model tax contract, there is a distinction between public and private sector pensions. For the former, there is a recognized right of the awarding state to tax them and that right is not circumvented by the provision set forward by Law 4714/2020. For the latter, to the extent that no such right is recognized by the OECD, the state which the individual declares as his residency retains an exclusive right for his taxation and therefore he will fall under the aforementioned privilege.

Moving to Greece after the conclusion of one’s professional life is a significant choice and various factors need to be assessed in tandem. For instance, access to health services, reliable connection of the chosen destination to the infrastructure and transport network, access to the Internet e.t.c. Furthermore, time and again, dealing with the Greek administrative authorities can prove to be a challenge. Therefore, one needs to cautiously prepare transferring his life in Greece and make sure that he has the proper legal guidance in doing so in order to reduce possibilities of unforeseen problems arising.

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