Changing Your Tax Residence in Greece for Permanent Residents Abroad: A Guide for Greek & Cypriot Citizens

Alt Title: Navigating Greek Tax Residency: A Guide for Expats

Alt Description: An expat meticulously reviews a map of Greece and tax documents, symbolizing the detailed planning required to change tax residence.

Are you a Greek or Cypriot citizen living and working abroad, wondering why you should change your tax residence to Greece? Many overseas Greeks and Cypriots are concerned about these issues, especially when they already declare and pay taxes on their income in their country of residence. Unfortunately, many Greek taxpayers are not fully aware of the tax implications of foreign income in Greece. In this article, we cover everything you need to know.

Why Change Your Tax Residence to Greece?

A Greek tax resident, registered with a local tax office (DOY) based on their address in Greece, is obligated to declare their worldwide income in Greece. This means foreign income from any source (e.g., salaried employment, self-employment, dividends, interest, etc.) must also be declared in Greece, regardless of whether it has been declared and taxed in the country of origin.

To prevent double taxation, which would be unfair to taxpayers, most countries have signed Double Taxation Treaties (DTTs). These treaties specify which country has the right to tax certain types of income, based on various criteria such as the type and source of income. In Greece, the foreign tax imposed on declared foreign income is typically credited against the Greek tax. However, for higher incomes where Greek tax rates and solidarity contributions are higher, additional tax may still be payable in Greece.

In contrast, a Greek tax resident abroad, registered with the DOY KatoikonExoterikou (Tax Office for Residents Abroad), only declares and is taxed in Greece on their Greek-sourced income, if any. Therefore, many Greeks and Cypriots earning income abroad who have transferred to the DOY KatoikonExoterikou upon request, file an annual zero tax declaration, perhaps including any vehicles or properties they maintain in Greece. Otherwise, they declare their annual Greek-sourced income from various sources like real estate, deposit interest, pensions, etc., and are taxed exclusively on these incomes in Greece, without the obligation to declare their foreign income.

Alt Title: Avoiding Double Taxation: Greece and Cyprus Agreement

Alt Description: A handshake over a table adorned with Greek and Cypriot flags, representing the international agreements that help expats avoid double taxation.

How to Change Your Tax Residence to DOY KatoikonExoterikou

According to current legislation, an individual qualifies to be aGreek tax residentif they have:

1. A physical presence in Greece for more than 183 days within any twelve months, continuously or intermittently. They are considered a Greek tax resident for the tax year in which the twelve monthsare completed.
2. Permanent or primary residence, usual abode, or center of vital interests (personal, financial, or social ties) in Greece.

Anindividual who permanently resides abroad, whose physical presence in Greece does not exceed 183 days, works in a foreign country, and whose vital interests are located abroad, can apply to transfer to the DOY KatoikonExoterikou and be considered a tax resident abroad in Greece, even if their spouse and family remain in Greece.

The change of tax residence involves a highly bureaucratic process with the local tax authorities, who examine all documents and supporting evidence provided by the taxpayer. If there are no impediments, the application is accepted. From the tax year of the application onwards, until their return to Greece, they are registered as a Greek tax resident abroad with the DOY KatoikonExoterikou.

Application Process for Tax Residence Transfer

Timeframe and Deadlines

Individuals wishing to transfer their tax residence abroad must submit an application (forms M0, M1, and M7) and the necessary solemn declarations to their competent DOY department no later than the last working day of the first ten days of March of the tax year following the year of departure. Simultaneously, they are required to submit any supporting documents proving their tax residence in a foreign country. However, since this is often not feasible in practice, especially for the most important evidentiary document (Tax Residence Certificate issued by the foreign country), the taxpayer has until the last working day of the first ten days of September to submit all supporting documents for their request.

The officer then examines the request and the accompanying documents for their legality, content, and sufficiency, and issues a decision on the applicant’s tax residence within two months.

To facilitate taxpayers applying for a change in tax residence, and given that the decision on their request is typically issued towards the end of the year, the deadline for submitting their annual tax declaration is shifted from June 30th to December 31st of the current year.

Required Documents: Foreign Documents, Copies, Originals, Translated?

• Tax Residence Certificate: Issued by tax authorities of the foreign country, explicitly stating the year it commences.
• Proof of Employment Abroad: Documents proving permanent or long-term employment, such as copies of employment contracts. If self-employed, a copy of registration with the foreign tax authorities for commencement of operations. If not working abroad, a certificate from any other public, municipal, or recognized authority proving usual residence.
• Copy of Rental Agreement for Residence Abroad: If hosted, a solemn declaration from the host with a certified signature (from a Greek public authority like KEP, police station, or consular authority), along with the host’s rental agreement or utility bill proving their residence.

In addition, the following documents are also submitted, though they vary by case:

• Certificate from foreign municipal authorities stating the taxpayer is a citizen of their city of residence.
• Copy of a utility bill abroad showing the residential address.
• Copy of foreign tax declaration or tax assessment.
• Copy of foreign bank accounts (one is sufficient).
• Copy of Social Security Number abroad.

For the authenticity of foreign public documents issued in a foreign country, the individual is required to submit an apostille (Hague Apostille)alongside an official translation into Greek from an approved translation center (or the Ministry of Foreign Affairs Translation Service) or a lawyer. Tax residence certificates issued by the tax authorities of the USA and Turkey are exempt from this process under their DTTs with Greece.

Alt Title: Official Forms for Greek Tax Residency

Alt Description: A person holding a Greek passport and a pen, diligently filling out official forms, representing the administrative process of changing tax residence.

Common Reasons for Application Rejection

1. Financial ties with Greece:
   • If the taxpayer is a manager in a company or a sole partner in an EPE or IKE.
   • Still a general or limited partner at the time of requesting tax residence change, or generally still participating in the management of a legal entity based in Greece (e.g., CEO in an AE).
   • Maintains open tax books in Greece (i.e., there is an active sole proprietorship in Greece).
2. Insufficient documentation: Failure to provide legally required supporting documents or additional evidentiary documents that the officer may request, resulting in an incomplete file. Often, the problem lies with the Tax Residence Certificate issued by foreign authorities not adhering to the mandatory legal formalities (e.g., not stating the specific tax year, not explicitly stating the applicant is a tax resident of that country, or lacking the Hague Apostille).
3. Taxpayer’s relationship with the Greek state: If the taxpayer is a civil servant, even if on leave without pay, etc.
4. Failure to declare foreign income in previous years despite an existing obligation: This usually becomes apparent during the examination of documents provided by the taxpayer to support the application, such as employment contracts, registration with the foreign tax authority, etc. In this case, the applicant is asked to retroactively declare their foreign income to avoid rejection of their application on this ground.
5. Taxpayer acting as a tax representative for another taxpayer residing abroad: In this case, before requesting the transfer of their tax residence and appointing a new tax representative in Greece, the taxpayer must resign as the tax representative for the other individual.

Spouses with Separate Tax Residence

In the past, marital ties with a Greek tax resident automatically implied that the personal ties maintained in Greece with their family, their center of vital interests was de facto in Greece, even if the individual permanently lived and worked abroad. Thus, they were automatically considered a Greek tax resident, and other parameters such as total days of stay abroad, economic ties, etc., were not examined.

However, with the issuance of a relevant circular by the Independent Authority for Public Revenue (AADE), the legal framework for separate tax residence for spouses and the conditions for their inclusion in this regime are fully explained. This now allows one spouse to request a change in their tax residence while the other remains a Greek tax resident. For this case, additional supporting documents are required, proving that the applicant for the change is indeed outside Greece and has organized their life abroad in a permanent or long-term manner.

Retroactive Change of Tax Residence

For taxpayers who, despite being abroad for several years, have not yet taken the necessary steps with the Greek tax authorities to inform them of their permanent residence abroad and be included in the tax resident abroad regime, there is now the possibility to retroactively request a change in their tax residence. Although there are no deadlines for submitting the required documents, the difficulty of gathering, certifying, and translating all documents submitted to the tax authorities makes the process quite time-consuming and demanding.

The Importance of Professional Assistance

Changing tax residence is not merely an obligation for all Greeks and Cypriots residing abroad to inform the Greek tax authorities and request their transfer to the DOY KatoikonExoterikou. It isthe only way or process to forward for all those living and working abroad. This is because it is the most financially beneficial option to avoid their foreign income being taxed in Greece and to escape the risk of administrative fines and criminal penaltiesdue to the exchange of information between tax authorities globally. For this reason, it is best to seek legal advice and representation from experienced Greek lawyers to help you achieve the desired outcome and avoid any rejection for any reason.

Our law firm has experience of experience in tax residence change cases. With speed, reliability, and effectiveness, we undertake:

Consultancy

Based on your specific history, we provide full information on all prerequisites, potential risks, and the collection of required documents. We will guide you on how to obtain them from foreign authorities, deadlines, and any other necessary information or clarification you need for a retroactive or non-retroactive change of your tax residence if you are already abroad, or even if you are considering accepting a job offer abroad and want to be informed fiscally what you need to do in Greece. Understand how beneficial it is to relocate abroad if your foreign income is to be taxed in Greece.

Procedural Support

We handle the entire process of changing your tax residence, from start to finish, until the issuance of a positive decision through your transfer and registration with the DOY KatoikonExoterikou. As part of our representation before the Greek tax authorities, we

• Appear before the competent local tax office where you are registered and perform all procedural actions on your behalf, such as filling out and submitting applications (M0, M1, M7)
• Conduct Solemn Declaration of the person appointed as your tax representative in Greece.
• Submit all required documents, translating and certifying them
• Discuss with competent officials during our visits
• Monitor the progress of the file, resolving any impediments related to your Greek Tax Identification Number (AFM) that threaten the rejection of your transfer request to the DOY KatoikonExoterikouwhile you were abroad