Procedure and supporting documentation for application to the Greek non-dom taxation regime

Theodoros Skouzos  

Skouzos & Partners, Athens

tskouzos@taxlaw.gr

Article 5A of Law 4172/2013, which applies from the 2020 tax year onwards, states that an individual who transfers their tax residence to Greece using the new procedure outlined in this article can be subject to an alternative method of taxation for income generated abroad.

An individual may join this scheme under the following conditions:

• they were not tax resident in Greece in seven of the eight years prior to the transfer of their tax residence to Greece; and
• they can prove that:
  1. they invest personally;
  2. a relative does so (meaning their spouse and relatives in the ascending or descending line); or
  3. they do so via a legal person or a legal entity in which they hold the majority of shares;
• ​​​​​they invest in real estate, businesses, transferable securities or shares in legal persons or legal entities whose registered offices are in Greece,
• they invest at least €500,000, an investment which must be completed within three years from the date on which the application is submitted.

For each tax year, that person pays tax at a flat rate of €100,000, and each related person (eg, family member) pays the sum of €20,000. Upon payment of that tax, all tax liabilities of natural persons for income generated abroad are exhausted. However, they continue to be subject to tax for income arising in Greece, namely all income from sources in Greece, in accordance with the Greek Income Tax Code. They are also exempt from inheritance or gift tax for assets located abroad.

As far as the procedure and documents required are concerned, the individual concerned must submit an application no later than 31 March of each tax year to the Department for Alternative Taxation of Residents of Greece/the Residents Abroad Tax Office.

Where the records of the Tax Administration do not show the taxpayer as being a tax resident abroad in seven of the previous eight years prior to the application for transfer of tax residence to Greece, they must submit the following information for each year for which there is no available data:

• A tax residence certificate from the competent tax authority of the state in which they declare tax residency, showing that they are tax resident in that state. If the taxpayer was a resident of a state with which there is a convention on the avoidance of double taxation (the 'Convention') instead of the certificate, they may submit the requisite application to apply the Convention, which incorporates the tax residence certificate (dual forms) duly filled out, signed and stamped by the competent foreign tax authority;
• Where it is not specified that the competent tax authority will issue the above, a copy of the statement of income tax payable or, in the absence of such statement, a copy of the income tax return submitted to the other state by that person as a tax resident in that state;
• Where it is not possible to submit some of the said supporting documents referred to above, a certificate from any other public, municipal or other recognised authority is required that demonstrates that the person has had a fixed and permanent establishment in the other state for that time period.

The foreign public documents, as defined in the provisions of Article 1 of Law 1497/1984 (Government Gazette 188/A), must be submitted in accordance with international law (Regulation (EU) 2016/1191: an Apostille stamp, consular stamp or attestation by the Greek consulate in accordance with the provisions of international conventions ratified by law by Greece, as appropriate).

The applicant may submit the relevant supporting documents to supplement their dossier within the 60-day deadline specified by law for issuing the decision. In practice, the Tax Administration accepts supporting documents until the last working day of May each year.

Supporting documents need not be submitted where the taxpayer requests a Tax ID No for the first time, or if they appear in the records of the Tax Administration as being tax resident abroad in seven out of the eight years prior to the application to transfer their tax residence.

The Tax Administration will examine the application within 60 days and issue a decision approving it or rejecting it. Where the supporting documents for the application are submitted by the applicant by 31 May, the decision of the Tax Administration will be issued no later than the last working day of June of the relevant year.

For that year, the applicant shall be obliged to pay the lump sum amount of tax within 30 days of application approval and issue of the relevant tax calculation. For each of the years after the provisions of Article 5A of Law 4172/2013 are applied, an administrative tax calculation shall be issued no later than the last working day of June of each tax year. Tax under this article is paid each year in one instalment by the last working day of July, and is not offset against other tax liabilities or any credit balances of persons who have been included in the alternative taxation arrangements.

After the end of three years from the date on which the application for inclusion in the scheme is submitted, the taxpayer will be obliged to appear before the Residents Abroad Tax Office and Alternative Taxation for Greek Tax Residents, with the relevant supporting documents demonstrating that the investment has been completed, in order to update the electronic application and to continue to be subject to the alternative taxation regime.

The eligible investments for inclusion in this scheme are limited to:

1. Acquisition of real estate in Greece;
2. Purchase of existing or establishment of new fixed facilities in Greece to carry on business activities via a sole trader enterprise;
3. Acquisition of:
   1. equity instruments in a company not listed on a regulated market;
   2. the purchase of equity instruments in a legal person or legal entity, in particular, the purchase of shares in a société anonyme established in Greece and not listed on a regulated market; or
   3. shares in a general or limited partnership, limited liability company or private company established in Greece.

The investment may either relate to the acquisition of new securities by participating in a share capital increase of the company (increase in share capital) or the purchase of existing securities (shares) from shareholders or partners, as appropriate. The company in which the securities are acquired must carry on business activities in Greece, which must be documented based on financial data and the staff employed.

4. Purchase of Greek Treasury bonds.
5. Capital contribution for the purpose of participating in an alternative investment fund.
6. The purchase of securities traded on regulated markets: the purchase of shares and/or bonds of companies whose registered offices are in Greece, mutual fund units (ETFs) and/or Greek Treasury bonds that are admitted to trading, or are traded on regulated markets or multilateral trading facilities which operate in Greece.

The body responsible for ascertaining that an investment has been made up to completion thereof and for monitoring whether the investment has been maintained is the Foreign Capital Directorate/Companies, Transfer Pricing Services and Direct Investment Department of the Private Investments Directorate General of the Ministry of Development and Investments.

In order to prove implementation of the investment, the relevant request shall be accompanied by an Investment Documentation Annex. This must include:

• a presentation of the investment and its stage of implementation, both in terms of physical and financial scope;
• the budgeted amounts for completion of the investment;
• the sources of financing;
• the completion deadline; and
• the information and supporting documents required by Article 5 of Ministerial Decision No 147269 ΕΞ (Government Gazette 5789/B/2020).

Inclusion in the alternative taxation scheme cannot be extended beyond 15 tax years and is automatically withdrawn after that time has elapsed. Moreover, it is possible to withdraw from the scheme in any tax year: the natural person may submit an application by 31 March of the relevant tax year requesting withdrawal of their inclusion in the scheme.