Navigating Greek Tax Declarations: A Guide for New Expats
Table of Contents
- Introduction to Greek Tax System
- Understanding Tax Residency in Greece
- Greek Tax Identification Number (AFM)
- Types of Income Taxed in Greece
- Greek Tax Rates and Brackets
- Tax Deductions and Credits for Expats
- Filing Your Greek Tax Declaration
- Important Deadlines and Penalties
- Double Taxation Agreements
- Special Tax Regimes for Expats
- Seeking Professional Help
- Common Mistakes to Avoid
- Future Changes in Greek Tax Laws
- Conclusion
- FAQs
1. Introduction to Greek Tax System
As an expat moving to Greece, understanding the local tax system is crucial for ensuring compliance and avoiding potential legal issues. The Greek tax system, while complex, is designed to be comprehensive and applies to both residents and non-residents who derive income from Greek sources. This guide aims to provide new expats with a thorough understanding of Greek tax declarations and the necessary steps to navigate the system effectively.
Greece, like many European countries, operates on a progressive tax system where higher incomes are taxed at higher rates. The tax year in Greece follows the calendar year, running from January 1st to December 31st. The Greek tax authority, known as the Independent Authority for Public Revenue (AADE), oversees tax collection and administration.
2. Understanding Tax Residency in Greece
Determining your tax residency status is the first crucial step in understanding your tax obligations in Greece. Tax residency affects the extent to which your worldwide income is subject to Greek taxation.
Criteria for Tax Residency
You are considered a tax resident of Greece if you meet any 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.
If you do not meet these criteria, you are generally considered a non-resident for tax purposes. Non-residents are only taxed on income derived from Greek sources.
3. Greek Tax Identification Number (AFM)
Obtaining a Greek Tax Identification Number, known as AFM (Αριθμός Φορολογικού Μητρώου), is essential for all individuals living and working in Greece. This unique number is required for various financial transactions, including opening a bank account, purchasing property, and filing tax returns.
How to Obtain an AFM
To obtain an AFM, follow these steps:
- Visit your local tax office (Eforia) with your passport and proof of address.
- Complete the M1 and M7 forms, which are available at the tax office or can be downloaded from the AADE website.
- Provide additional documentation such as your residence permit or work contract if applicable.
- Submit the forms and wait for processing, which usually takes a few days.
Once issued, your AFM will be your permanent identification number for all tax-related matters in Greece.
4. Types of Income Taxed in Greece
As an expat in Greece, it’s important to understand which types of income are subject to Greek taxation. The Greek tax system categorizes income into several categories:
- Employment income
- Business income
- Capital gains
- Rental income
- Dividends
- Interest
- Pensions and other benefits
Each category may be subject to different tax rates and rules. For example, employment income is taxed at progressive rates, while dividends are subject to a flat rate of taxation.
5. Greek Tax Rates and Brackets
Greece employs a progressive tax system for employment and business income. The tax rates for the current tax year are as follows:
| Taxable Income (€) | Tax Rate |
|---|---|
| 0 – 10,000 | 9% |
| 10,001 – 20,000 | 22% |
| 20,001 – 30,000 | 28% |
| 30,001 – 40,000 | 36% |
| 40,001 and above | 44% |
It’s important to note that these rates are subject to change, and expats should always check the most current rates when preparing their tax declarations.
6. Tax Deductions and Credits for Expats
Greece offers various tax deductions and credits that can help reduce your overall tax liability. As an expat, you may be eligible for certain deductions specific to your situation. Some common deductions include:
- Social security contributions
- Medical expenses
- Charitable donations
- Mortgage interest for primary residence
- Rent payments for primary residence
- Education expenses
Additionally, there may be tax credits available for dependents and certain types of income. It’s crucial to keep detailed records and receipts to support any deductions or credits you claim on your tax declaration.
7. Filing Your Greek Tax Declaration
Filing your Greek tax declaration accurately and on time is essential to avoid penalties and ensure compliance with Greek tax laws. The process has become increasingly digitized in recent years, with most declarations now submitted electronically.
Steps to File Your Tax Declaration
- Gather all necessary documents, including income statements, receipts for deductions, and proof of foreign income if applicable.
- Access the AADE online portal using your AFM and password.
- Select the appropriate tax form (usually E1 for individuals).
- Fill in all required information, including personal details, income sources, and deductions.
- Review the pre-filled information provided by the tax authority and make corrections if necessary.
- Submit the declaration electronically.
- Pay any tax due or arrange for payment in installments if eligible.
If you’re unsure about any aspect of the filing process, it’s advisable to seek assistance from a Greek tax professional or accountant.
8. Important Deadlines and Penalties
Adhering to tax deadlines is crucial to avoid penalties and interest charges. The main deadlines for Greek tax declarations are:
- Filing deadline: Usually between May and July of the year following the tax year.
- Payment deadline: Typically, the last working day of July, with options for installment payments.
Late filing or payment can result in penalties ranging from 100 to 500 euros, depending on the delay. Additionally, interest is charged on unpaid taxes at a rate set by the government.
9. Double Taxation Agreements
Greece has signed double taxation agreements (DTAs) with numerous countries to prevent individuals from being taxed twice on the same income. These agreements determine which country has the right to tax specific types of income and provide methods for eliminating double taxation.
If you have income from sources outside Greece, it’s essential to understand the provisions of any applicable DTA. This may affect how you report foreign income on your Greek tax declaration and could potentially reduce your overall tax burden.
10. Special Tax Regimes for Expats
Greece has introduced special tax regimes to attract foreign investors and high-net-worth individuals. These include:
Non-Dom Tax Regime
This regime allows eligible individuals to pay a flat tax on their foreign-sourced income, regardless of the amount, in exchange for becoming tax residents in Greece. To qualify, you must invest at least 500,000 euros in Greek real estate, businesses, or securities.
Digital Nomad Visa
While not a tax regime per se, the digital nomad visa allows remote workers to live in Greece for up to 12 months. This can have implications for tax residency and obligations, depending on the length of stay and individual circumstances.
11. Seeking Professional Help
Given the complexity of the Greek tax system and the potential language barrier, many expats choose to seek professional assistance when dealing with their tax obligations. A qualified Greek tax advisor or accountant can:
- Ensure compliance with Greek tax laws
- Maximize available deductions and credits
- Handle communication with the Greek tax authorities
- Provide guidance on complex issues such as international taxation
When selecting a professional, look for someone with experience in handling expat tax matters and who is familiar with the tax laws of your home country as well.
12. Common Mistakes to Avoid
Expats often make certain mistakes when dealing with Greek tax declarations. Being aware of these can help you avoid potential issues:
- Failing to declare worldwide income if considered a tax resident
- Misunderstanding tax residency rules
- Overlooking available deductions and credits
- Not keeping proper records and receipts
- Ignoring Greek tax obligations on foreign pension income
- Failing to report changes in personal circumstances that may affect tax status
By staying informed and seeking professional advice when needed, you can navigate the Greek tax system more effectively and avoid these common pitfalls.
13. Future Changes in Greek Tax Laws
The Greek tax system is subject to frequent changes as the government adjusts policies to meet economic goals and align with EU directives. As an expat, it’s important to stay informed about potential changes that may affect your tax situation. Some areas to watch include:
- Possible adjustments to tax rates and brackets
- Changes in deduction and credit allowances
- Introduction of new tax incentives for foreign investors or specific professions
- Modifications to reporting requirements for foreign income and assets
Regularly checking the AADE website and consulting with a tax professional can help you stay up-to-date with any changes that may impact your tax obligations in Greece.
14. Conclusion
Navigating the Greek tax system as a new expat can be challenging, but with the right information and approach, it’s manageable. Understanding your tax residency status, obtaining an AFM, and familiarizing yourself with the types of income taxed in Greece are crucial first steps. By staying informed about tax rates, deductions, and filing procedures, you can ensure compliance with Greek tax laws while potentially minimizing your tax liability.
Remember that tax laws can be complex and subject to change. When in doubt, seeking professional advice from a qualified Greek tax advisor is often the best course of action. This can help you avoid mistakes, maximize your tax efficiency, and give you peace of mind as you settle into your new life in Greece.
By taking a proactive approach to your tax obligations, you can focus on enjoying the many benefits of living in this beautiful Mediterranean country, knowing that your financial affairs are in order.
15. FAQs
Q1: Do I need to file a tax declaration if I’m only living in Greece for part of the year?
A1: If you become a tax resident of Greece (e.g., by spending more than 183 days in the country), you will need to file a tax declaration for the entire year, even if you only lived in Greece for part of it. Your worldwide income for the full year will be subject to Greek taxation, although double taxation agreements may provide relief for income taxed elsewhere.
Q2: Can I file my Greek tax declaration in English?
A2: The official tax declaration forms and the online filing system are in Greek. While some English guidance may be available, the actual filing must be done in Greek. This is one reason why many expats choose to use a tax professional who can handle the language requirements.
Q3: How are pensions from my home country taxed in Greece?
A3: The taxation of foreign pensions in Greece depends on your tax residency status and any applicable double taxation agreement. Generally, if you’re a tax resident in Greece, your worldwide pension income is taxable in Greece. However, some DTAs may assign taxing rights to the country of origin. It’s advisable to consult a tax professional for specific advice on your situation.
Q4: What happens if I make a mistake on my Greek tax declaration?
A4: If you realize you’ve made a mistake after submitting your tax declaration, you can file an amended declaration. This should be done as soon as possible to minimize any potential penalties. If the tax authorities discover errors during an audit, you may face fines and interest charges. It’s always best to be proactive and correct any mistakes you discover.
Q5: Are there any special tax considerations for retirees moving to Greece?
A5: Greece has introduced some incentives to attract retirees, including a special tax regime for foreign pensioners. Under this regime, eligible individuals can opt for a flat tax rate of 7% on their foreign-sourced pension income for a period of 15 years. To qualify, you must not have been a tax resident of Greece for at least 5 of the 6 years prior to moving to Greece, and you must relocate from a country with which Greece has a valid administrative cooperation agreement in tax matters.
Article reviewed by Jean Dupont, Institutional Investment Advisor | ESG & Impact Investing Pioneer | Aligning Profit with Purpose for Pension Funds, on March 2, 2025
