In December 2019, the Greek parliament adopted Law 4646/2019, which introduces for the first time the “non-dom” (non-domiciled resident) scheme to the Greek tax regime. The aim of this legislation is to formulate a complete legal framework and provide incentives in order to attract investment funds through a favourable tax environment for “high-net-worth individuals” who want to invest and choose Greece as the centre of their economic activities. The Law is part of a set of legislative initiatives, brought about by the centre-right Mitsotakis government in accordance with its efforts to create a friendly fiscal and tax environment for business actors.
The scope of the Law is limited to individuals and does not apply to legal entities. The main provision is that an individual who will transfer his tax residence in Greece will be subject to an annual lump sum (100.000€) for the income acquired abroad, without any further tax charges and regardless of the total amount of this income. It should be noted that the relevant provision does not cancel any tax liabilities based on income earned in Greece.
The duration of this privilege is fifteen (15) years, without the possibility of extension. In case of non-compliance with the obligation to pay, the individual shall lose the status of “non-dom” and will be taxed in compliance with the Greek Revenue Tax Code.
Conditions for eligibility
To become a Greek tax resident, two requirements need to be satisfied cumulatively:
- The individual should not have been a Greek tax resident for the previous seven out of eight years.
- The individual has to prove that he/she is to undertake an investment estimated no less than 500.000€. There is no particular prerequisite regarding the type of the investment. For instance, it can be a real estate purchase or a purchase of a shares’ package, either individually or through a legal entity based in Greece. The investment(s) need to be concluded within three years from the submission of the application to fall under the “non-dom” status.
The reformist nature of the legislation is also evident in the provisions concerning the submission and processing of the request to transfer tax residency, which are in compliance with the OECD suggestions regarding double taxation avoidance. Firstly, there is a statutory deadline of sixty (60) days for the tax administration to provide a response, accepting or declining the individual’s request. More importantly, the Greek tax authority bears the obligation to contact and inform the foreign tax authority within whose jurisdiction the individual falls for the change in his tax residency. The latter provision is in compliance with the international efforts to avoid double taxation, establishing administrative responsibility. This is a measure aiming to facilitate the free flow of capital and income declaration. Simultaneously, it contributes to the creation of a safe and beneficiary administrative environment, in accordance to the principles of good governance.
The scheme presented briefly above can be combined with other legislative provisions, such as the Golden Visa Program, as well as the expected legislation on Family Offices. In order to make the best possible use of these newly introduced regulations, each interested party must carefully consider all relevant regulations and combine them with their individual aspirations in order to arrive at solutions that best serve their interests.