7% flat tax in Greece: tax benefits for pensioners

Dreaming of spending your retirement under the Mediterranean sun? Greece not only entices with its climate, but also with an attractive tax programme for foreign retirees: the 7% flat tax.

In recent years, Greece has become a popular destination for foreign retirees - not only because of its scenic beauty, cultural diversity and Mediterranean lifestyle, but also for tax reasons. Since 2020, the Greek government has offered foreign retirees an extremely attractive taxation model: a flat-rate income tax of just 7% on all foreign income.

This tax incentive programme was introduced to attract wealthy foreign retirees to the country, who spend their pension income in Greece and thus support the economy.

If you move your tax residence to Greece as a pensioner, you can apply to have all of your foreign income - i.e. not just pensions, but also rental income, dividends, interest and capital gains - taxed at a flat rate of just 7% for a period of 15 years.

Important key points:

• Validity: 15 years from the date of application
• Tax rate: Standardised 7% on all foreign income
• Mode of payment: The tax is payable annually in one lump sum by the last working day in July
• Solidarity surcharge: Not applicable for participants in this programme

Example:

A German pensioner with an annual pension of €30,000 pays only €2,100 income tax in Greece - regardless of the amount of income.

To qualify for this tax programme, certain requirements must be met:

Prerequisites:

1. You receive a pension or pension-like income from abroad.
2. You have not been a Greek tax resident for 5 of the last 6 years prior to the application.
3. You are moving to Greece from a country with which a double taxation agreement (DTA) or an information exchange agreement exists - this includes all EU and EEA states as well as many other countries.
4. You spend at least 183 days per year in Greece or your centre of life is demonstrably located there.

Non-EU citizens also require a residence permit, e.g. a Golden Visa.

The application for participation in the flat tax programme must be submitted by 31 March of the current tax year at the latest to the relevant Tax Office for Foreign Taxpayers in Athens.

Among other things, the following are required:

• Proof of receipt of a foreign pension
• Registration certificate of residence in Greece
• Proof of the last tax residences
• Documents of identity and, if applicable, right of residence
  
  

Tip: It is advisable to consult a lawyer or tax advisor specialising in international tax law in order to submit the application correctly and in full.

In addition to the low tax rate, there are a number of additional advantages:

• Double taxation agreements: Greece has concluded agreements with many countries that prevent pension income from being taxed twice. In many cases, the tax liability is transferred to Greece.
• Reclaiming foreign taxes: If taxes have already been paid on income abroad, it may be possible to apply for a refund.
• No Greek special levy (solidarity contribution): This does not apply to participants in the flat tax programme.
• No progression: The tax rate remains constant at 7%, no matter how high the income is.

Even if you spend less than 183 days a year in Greece, the programme can still apply - provided that your so-called centre of life (centre of vital interests) is in Greece. This means, for example:

• Your spouse lives permanently in Greece
• You own residential property there
• Your social and economic ties are predominantly in Greece

Not everyone benefits equally from the 7% flat tax. In particular, US citizens should be careful: they are generally subject to taxation of their worldwide income by the USA - regardless of their place of residence. This often results in a double tax burden. Although it is possible to apply for the Greek programme, it generally offers no financial advantage for US citizens.

Other countries without a double taxation agreement with Greece may also experience tax disadvantages or unnecessary administrative burdens.

Note: The figures are approximate values and may vary depending on tax bracket, allowances and other income.

Example: Mr Müller from Hamburg emigrates to Crete

Mr Müller, 67 years old, receives a monthly statutory and occupational pension totalling €2,800. After selling his house in Germany, he decides to move to Crete. He buys a small property there, reregisters his residence and applies for the 7% flat tax. Following successful approval, he now pays €2,352 a year in tax on his entire income. Previously, it was almost €7,000 in Germany.

His conclusion: "I pay significantly less tax, live in a warm climate, enjoy good food - and have regained my attitude to life."

• US citizens: The programme is less suitable for US citizens as they are subject to tax worldwide and therefore may not be able to take advantage of the Greek flat tax.
  
  
• Public service pensioners: In some cases, such as German civil servant pensions, the double taxation treaty may provide for taxation in the country of origin, making the Greek flat tax inapplicable.

The 7% flat tax programme in Greece is ideal for foreign pensioners who:

• Draw most of their income from abroad
• Are flexible in terms of tax
• Want to spend their retirement in Greece
• Want to benefit from a transparent, predictable tax system
  
  

With careful preparation and the right advice, retirement in Greece can be not only enjoyable but also tax-efficient