Flat 7% Tax on Foreign Income: Greece’s Attractive Offer for Retirees

Besides the stunning landscapes and Mediterranean climate, Greece offers more than just a superb quality of life for retirees and pensioners from across the globe. Greece provides attractive tax incentives for foreign pensioners, making it a highly appealing destination for those looking to enjoy their golden years.

As of July 31, 2020, new legislation allows retirees to pay a flat annual tax rate of 7% on foreign-sourced income. This simplified tax regime significantly reduces the tax burden for retirees, allowing them to retain more of their income and enjoy a comfortable lifestyle in one of the world's most beautiful countries.

👉 Not a pensioner? Read our guide about the 50% tax break for Greece.

Eligibility Criteria

To qualify for this favorable tax regime, pensioners must meet specific criteria:

1. Residency History: Applicants must not have been Greek tax residents for five out of the six years before moving their tax residence to Greece.
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2. Tax Residence Transfer: They must transfer their tax residence from a country that has a tax cooperation agreement with Greece.
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3. Employment-related pension: Applicants must demonstrate that their pension is tied to past employment. Other types of passive income i.e. rental, dividends etc. do not qualify.

This tax regime is not just limited to a flat 7% tax on foreign income. Greece also offers other financial advantages that make it an even more attractive option for retirees and investors alike:

• 0% Capital Gains Tax: Investors and retirees can benefit from a 0% capital gains tax, which means that profits from the sale of investments are not subject to taxation.
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• 5% Dividend Tax: Dividends earned from investments are taxed at a low rate of 5%, providing an additional incentive for those looking to invest their savings.

Additional Benefits

Living in Greece offers numerous other advantages beyond tax incentives. The country is known for its rich history, vibrant culture, and friendly locals. The cost of living in Greece is relatively low compared to other European countries, allowing retirees to stretch their pensions further. Additionally, the healthcare system in Greece is of high quality, with both public and private options available to residents.

Retirees in Greece can enjoy a slower pace of life, with plenty of opportunities for outdoor activities such as hiking, swimming, and exploring ancient ruins. The Mediterranean diet, known for its health benefits, is a staple in Greek cuisine, contributing to a healthy lifestyle.

Residency Programs

Before making the decision to move to your retirement destination, it is important to understand the different types of residency programs that exist in Greece.

For EU citizens

In order to become a legal tax resident of Greece as a member of the EU, retirees must obtain the EU card, which allows them to transfer their tax residency from their country of origin (or other) to Greece. Read how to obtain EU residency as an EU citizen in Greece.

For non-EU citizens

For third-country nationals, retirees must choose between a selection of residency programs, depending on their budget and needs.

1. FIP Residency: The first residency program to choose from is the Financial Independent Person's Visa or FIP, which allows retirees and pensioner from non-EU countries to stay in Greece for up to 3 years and is easily renewable. Check your eligibility requirements here.
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2. Golden Visa: Alternatively, you can opt for the Golden Visa program, which requires making a property investment. Effective August 31, the minimum investment amount for the Golden Visa has been raised to €800,000 in most regions of Greece. Read more about this here.

Frequently Asked Questions

Would self-funded pensions or annuity funds be accepted under the 7% tax break?

No. Investment pensions, self funded pensions, annuity funds, and similar arrangements that are not connected to a previous employment relationship are generally not eligible. To qualify under Greece’s 7% pension tax regime, applicants must demonstrate that they receive a recognized pension linked to prior employment. This can be from a state pension authority or a qualifying private pension provider. A certificate confirming the pension income will typically be required as part of the application.

Do you have to be an EU citizen to apply for Greece’s 7% tax incentive?

No, EU citizenship is not required. The pension tax incentive is open to any retiree relocating to Greece from any nationality or heritage, provided they meet the program requirements.

Is an IRA accepted under the Greek pension tax regime?

An IRA is considered a private retirement account. In some situations it may be accepted if it clearly relates to past employment contributions, such as funds rolled over from an employer sponsored retirement plan like a 401(k). Whether it qualifies depends on how the account is described in the official pension documentation and supporting certificates submitted during the application.

What is Greece's 7% flat tax for retirees?

As of July 31, 2020, Greece introduced legislation allowing retirees to pay a flat annual tax rate of 7% on all foreign-sourced income. This simplified tax regime significantly reduces the tax burden for pensioners, allowing them to retain more of their income while living in Greece.

Who is eligible for Greece's 7% pension tax regime?

To qualify, pensioners must not have been Greek tax residents for five of the six years before moving their tax residence to Greece, must transfer their tax residence from a country that has a tax cooperation agreement with Greece, and must demonstrate that their pension is tied to past employment. Other types of passive income such as rental income or dividends do not qualify.

Do you have to be an EU citizen to apply for the 7% pension tax incentive in Greece?

No, EU citizenship is not required. The pension tax incentive is open to any retiree relocating to Greece from any nationality or heritage, provided they meet the program requirements.

Are self-funded pensions or annuity funds accepted under Greece's 7% tax regime?

No. Investment pensions, self-funded pensions, annuity funds, and similar arrangements that are not connected to a previous employment relationship are generally not eligible. To qualify, applicants must demonstrate they receive a recognized pension linked to prior employment, from either a state pension authority or a qualifying private pension provider, supported by a certificate confirming the pension income.

What other tax benefits does Greece offer retirees beyond the 7% flat rate?

In addition to the 7% flat tax on foreign income, retirees and investors in Greece can benefit from a 0% capital gains tax on profits from the sale of investments, and a low 5% tax on dividends earned from investments. These additional incentives make Greece an even more financially attractive retirement destination.

A Strategic Decision

Choosing Greece as a retirement destination is an ideal choice for many pensioners. The combination of favorable tax laws, a welcoming environment, and the potential for a high quality of life makes it a great place to retire. Moreover, the country’s location provides easy access to other parts of Europe and beyond, making it convenient for retirees who wish to travel around Europe.

In conclusion, Greece’s flat 7% tax on foreign-sourced income, along with other tax benefits and the allure of a Mediterranean lifestyle, makes it an attractive destination for retirees from around the world.

Are you ready to make Greece your retirement destination? For more information, book a 15-minute discovery call to learn more about our services.