How Income Tax Works in Greece for Expats and Residents

Table of Contents

1. Introduction to Greek Income Tax System
2. Tax Residency in Greece
3. Income Tax Rates and Brackets
4. Types of Taxable Income in Greece
5. Tax Deductions and Credits
6. Filing Income Tax Returns in Greece
7. Special Tax Regimes for Expats
8. Double Taxation Treaties
9. Social Security Contributions
10. Tax Implications for Different Types of Income
11. Tax Planning Strategies for Expats and Residents
12. Common Mistakes to Avoid
13. Recent Changes in Greek Tax Laws
14. Conclusion
15. FAQs

1. Introduction to Greek Income Tax System

Greece, known for its rich history, stunning landscapes, and Mediterranean lifestyle, has become an increasingly popular destination for expats and international residents. However, navigating the Greek tax system can be challenging for newcomers and long-term residents alike. This comprehensive guide will walk you through the intricacies of how income tax works in Greece for both expats and residents.

The Greek tax system is based on a progressive tax rate structure, meaning that higher earners pay a larger percentage of their income in taxes. The system is administered by the Independent Authority for Public Revenue (IAPR), which is responsible for collecting taxes and enforcing tax laws in Greece.

Understanding the Greek tax system is crucial for anyone living and working in the country, as it affects your financial planning, compliance obligations, and overall cost of living. This article will cover everything from determining your tax residency status to filing your annual tax return and taking advantage of available deductions and credits.

2. Tax Residency in Greece

Before delving into the specifics of income tax in Greece, it’s essential to understand the concept of tax residency. Your tax residency status determines the extent of your tax obligations in Greece and can have significant implications for your overall tax liability.

2.1 Criteria for Tax Residency

In Greece, you are considered a tax resident if you meet one of the following criteria:

• You spend more than 183 days in Greece during any calendar year.
• Your center of vital interests (personal, economic, or social ties) is in Greece.
• You are a Greek civil servant posted abroad.

It’s important to note that tax residency is determined on a year-by-year basis, and your status can change from one year to the next depending on your circumstances.

2.2 Implications of Tax Residency

If you are considered a tax resident of Greece, you are subject to taxation on your worldwide income. This means that you must report and pay taxes on income earned both within Greece and from foreign sources. Non-residents, on the other hand, are only taxed on income sourced from Greece.

Becoming a tax resident of Greece may also affect your tax obligations in your home country, especially if there is no double taxation treaty in place between Greece and your country of origin.

3. Income Tax Rates and Brackets

Greece employs a progressive tax system, with different tax rates applied to various income brackets. The current income tax rates for individuals in Greece are as follows:

It’s important to understand that these rates are applied progressively, meaning that each portion of your income is taxed at the corresponding rate. For example, if you earn €25,000 per year, the first €10,000 would be taxed at 9%, the next €10,000 at 22%, and the remaining €5,000 at 28%.

4. Types of Taxable Income in Greece

In Greece, various types of income are subject to taxation. Understanding what constitutes taxable income is crucial for accurate reporting and compliance with Greek tax laws. The main categories of taxable income include:

4.1 Employment Income

This includes salaries, wages, bonuses, and other compensation received from employment. For expats working in Greece, employment income is typically the primary source of taxable income.

4.2 Business Income

Income derived from self-employment, freelance work, or business activities is taxable. This includes profits from sole proprietorships, partnerships, and other business structures.

4.3 Investment Income

Dividends, interest, and capital gains from investments are subject to taxation in Greece. The tax rates for investment income may differ from those applied to employment or business income.

4.4 Rental Income

Income earned from renting out property in Greece is taxable. This applies to both residential and commercial properties.

4.5 Pension Income

Pensions received by retirees living in Greece, whether from Greek or foreign sources, are generally subject to income tax.

5. Tax Deductions and Credits

The Greek tax system offers various deductions and credits that can help reduce your overall tax liability. Some of the most common deductions and credits include:

• Social security contributions
• Medical expenses
• Charitable donations
• Mortgage interest for primary residences
• Child tax credits
• Education expenses

It’s essential to keep detailed records and receipts for all expenses that may qualify for deductions or credits. Consult with a Greek tax professional to ensure you’re taking advantage of all available tax-saving opportunities.

6. Filing Income Tax Returns in Greece

All individuals earning income in Greece, whether residents or non-residents, are required to file an annual income tax return. The Greek tax year follows the calendar year, running from January 1 to December 31.

6.1 Filing Deadlines

The standard deadline for filing income tax returns in Greece is June 30 of the year following the tax year. However, extensions are sometimes granted, and it’s advisable to check the current year’s specific deadlines as they may vary.

6.2 Documentation Required

When filing your tax return, you’ll need to provide various documents, including:

• Proof of income (e.g., salary statements, invoices for self-employed individuals)
• Bank statements
• Receipts for deductible expenses
• Property ownership documents (if applicable)
• Social security contribution records

6.3 Online Filing System

Greece has implemented an online tax filing system called TAXISnet. Most taxpayers are required to submit their returns electronically through this platform. To use TAXISnet, you’ll need to register and obtain access credentials.

7. Special Tax Regimes for Expats

Greece has introduced special tax regimes to attract foreign investors and high-skilled professionals. These regimes offer significant tax benefits to eligible individuals:

7.1 Non-Dom Tax Regime

This regime allows eligible individuals to pay a flat tax rate of €100,000 per year on their foreign-sourced income, regardless of the amount. To qualify, you must invest at least €500,000 in Greek real estate, businesses, or government bonds.

7.2 Special Tax Regime for Foreign Pensioners

Retirees who transfer their tax residence to Greece can benefit from a flat tax rate of 7% on their foreign pension income for a period of 15 years.

8. Double Taxation Treaties

Greece has signed double taxation treaties with numerous countries to prevent individuals from being taxed twice on the same income. These agreements typically provide methods for avoiding double taxation, such as tax credits or exemptions.

If you’re an expat living in Greece, it’s crucial to understand the provisions of any double taxation treaty between Greece and your home country. This can significantly impact your overall tax liability and reporting obligations.

9. Social Security Contributions

In addition to income tax, individuals working in Greece are required to make social security contributions. These contributions fund various social benefits, including healthcare, unemployment insurance, and pensions.

The rates for social security contributions can vary depending on factors such as employment status and industry. Generally, both employees and employers contribute to the social security system, with the employer typically bearing a larger share of the contributions.

10. Tax Implications for Different Types of Income

Different types of income may be subject to varying tax treatments in Greece. Here’s a brief overview of how various income sources are typically taxed:

10.1 Salary Income

Taxed according to the progressive tax rates mentioned earlier. Employers are required to withhold income tax and social security contributions from employees’ salaries.

10.2 Self-Employment Income

Taxed at the same progressive rates as salary income. Self-employed individuals are responsible for making quarterly tax prepayments based on their previous year’s income.

10.3 Dividend Income

Currently taxed at a flat rate of 5% for both residents and non-residents.

10.4 Interest Income

Taxed at a flat rate of 15% for both residents and non-residents.

10.5 Capital Gains

Capital gains from the sale of securities are generally taxed at a flat rate of 15%. However, gains from the sale of real estate may be subject to different rules.

11. Tax Planning Strategies for Expats and Residents

Effective tax planning can help you minimize your tax liability while ensuring compliance with Greek tax laws. Some strategies to consider include:

• Timing income and expenses strategically
• Maximizing available deductions and credits
• Utilizing tax-advantaged investment vehicles
• Considering the special tax regimes for expats
• Structuring your affairs to benefit from double taxation treaties

It’s advisable to consult with a Greek tax professional to develop a personalized tax planning strategy that aligns with your specific circumstances and goals.

12. Common Mistakes to Avoid

When dealing with the Greek tax system, there are several common pitfalls that expats and residents should be aware of:

• Failing to report foreign income
• Misunderstanding tax residency rules
• Overlooking available deductions and credits
• Missing filing deadlines
• Incorrectly calculating taxable income
• Neglecting to keep proper records and documentation

By being aware of these potential mistakes and seeking professional advice when needed, you can avoid costly errors and ensure compliance with Greek tax laws.

13. Recent Changes in Greek Tax Laws

The Greek tax system has undergone several changes in recent years as part of efforts to attract foreign investment and simplify the tax code. Some notable recent changes include:

• Introduction of the non-dom tax regime for high-net-worth individuals
• Implementation of the special tax regime for foreign pensioners
• Reduction of corporate tax rates
• Simplification of the VAT system
• Enhanced digital tax filing and payment systems

It’s important to stay informed about any new tax laws or amendments that may affect your tax situation in Greece. Regularly consulting with a tax professional or monitoring official government sources can help you stay up-to-date with the latest changes.

14. Conclusion

Understanding how income tax works in Greece is crucial for both expats and residents to ensure compliance with local tax laws and optimize their financial situation. The Greek tax system, while complex, offers various opportunities for tax planning and potential benefits for those who navigate it correctly.

Key points to remember include:

• Determining your tax residency status
• Understanding the progressive tax rate structure
• Identifying all sources of taxable income
• Taking advantage of available deductions and credits
• Complying with filing requirements and deadlines
• Considering special tax regimes if eligible
• Staying informed about changes in tax laws

While this guide provides a comprehensive overview of income tax in Greece, tax situations can be highly individual. It’s always recommended to consult with a qualified Greek tax professional for personalized advice tailored to your specific circumstances. By staying informed and seeking expert guidance when needed, you can effectively manage your tax obligations while enjoying all that Greece has to offer.

15. FAQs

Q1: Do I need to pay taxes in Greece if I’m only living there part-time?

A1: Your tax obligations in Greece depend on your tax residency status. If you spend more than 183 days in Greece during a calendar year, you may be considered a tax resident and subject to taxation on your worldwide income. However, if you’re a non-resident, you’ll only be taxed on income sourced from Greece. It’s advisable to consult with a tax professional to determine your specific obligations based on your circumstances.

Q2: Can I file my Greek tax return in English?

A2: Official tax returns in Greece must be filed in Greek. While the online TAXISnet system may offer some guidance in English, the actual forms and submissions are in Greek. If you’re not fluent in Greek, it’s recommended to seek assistance from a bilingual tax professional or translator to ensure accurate filing.

Q3: How are cryptocurrencies taxed in Greece?

A3: As of 2023, Greece does not have specific legislation addressing the taxation of cryptocurrencies. However, profits from cryptocurrency transactions are generally considered taxable income. They may be treated as capital gains or business income, depending on the nature and frequency of the transactions. Given the evolving nature of cryptocurrency regulations, it’s crucial to consult with a tax professional for the most up-to-date guidance.

Q4: Are there any tax benefits for remote workers or digital nomads in Greece?

A4: While Greece doesn’t have a specific tax regime for digital nomads, it has introduced measures to attract foreign professionals. The non-dom tax regime, which offers a flat tax on foreign-sourced income, could be beneficial for high-earning remote workers. Additionally, Greece has been considering introducing a digital nomad visa, which may come with tax incentives in the future. Stay informed about new developments in this area.

Q5: How does inheritance tax work in Greece for expats?

A5: Inheritance tax in Greece is based on the relationship between the deceased and the beneficiary, as well as the value of the inherited assets. Close relatives (e.g., spouses, children) benefit from higher tax-free thresholds and lower tax rates. For expats, the tax treatment can depend on factors such as the location of the assets and the residency status of both the deceased and the beneficiary. It’s advisable to seek professional advice for inheritance tax planning, as the rules can be complex and subject to change.

Article reviewed by Michelle Hope, Real Estate and Investment Expert, on March 1, 2025