Gift and Inheritance Taxation in Greece

Introduction

Thanks to the new tax incentive schemes, such as 5B and 5C, many people relocate to Greece to pass their lifetime. The transfer of their assets to descendants is a crucial matter and requires accurate planning to avoid double taxation.

Inheritance tax is applied on any property acquired due to a person’s death, specifically targeting assets located in Greece. This tax applies to both citizens and foreigners, including movable assets situated abroad owned by Greek nationals or foreign nationals living in Greece at the time of their death.

The gift or donation tax is imposed when an asset is donated or transferred by parental provision to a natural or legal person. It is imposed on assets of any kind (movable and immovable), located in Greece, on immovables located abroad and belonging to a Greek as well as on movables located abroad of a foreign national that are donated to a Greek or to a foreigner who has his residence in Greece.

Inheritance tax – Calculation

The tax is determined according to the net value (assets value minus debts) of the inherited share and the relation of the inheritor with the deceased person. The law provides for 3 relationship categories and different tax scales for each one of them. In particular, Category A includes close relatives; the spouse or civil partner of the testator, the children, the grandchildren; and the parents of the testator. The tax payable by beneficiaries of Category A is calculated on the basis of the following scale.

Inheritance Tax – Exemptions

Under Greek Law, there are specific exemptions from inheritance tax. The most common of them are analyzed below:

1. Joint Bank Accounts/ Portfolios:

• • Surviving beneficiaries of joint bank accounts or portfolios of financial assets are exempt from inheritance tax; savings and securities are automatically transferred to the ownership of co-beneficiaries.
  • This exemption does not apply to accounts held in non-cooperative tax jurisdictions.

2. Exemption Limit for Family Members:

• • A tax exemption of up to €400,000 per beneficiary applies to spouses, registered partners, and minor children of the deceased, provided the marriage lasted at least five years.

3. Foreign Movable Property:

• • Movable assets located abroad and belonging to a Greek citizen residing there for at least ten consecutive years are exempt.

4. First Residence Acquisition:

• • Exemptions apply for the acquisition of the deceased’s first residence by a spouse, registered partner, or child, under specific conditions.
  • This applies to Greek citizens and EU/EEA nationals, who no longer need to be permanent residents of Greece.

5. Shipping shares

• • The inheritance of ships, shares, or stakes in domestic or foreign ship-owning companies, with a total capacity of over one thousand five hundred (1,500) gross tons, is not taxable.

Donation/Gift Tax

The gift taxation follows the same classification of beneficiaries to the 3 aforementioned categories. A tax incentive scheme was introduced in October 2021 to facilitate parental grants. In more detail, donations to a relative belonging to Category A are tax-free for assets up to 800,000 EUR. The amount of gift that exceeds 800,000 EUR is taxable at a flat rate of 10%. Regarding money gifts, it is required that the funds are transferred via bank accounts (gift of cash in hand is taxable at 10% losing the benefit of the tax-free threshold).

It should be noted that donations and parental grants that fall under the tax incentive scheme (analyzed above) are not counted in the calculation of the estate that is subject to inheritance tax.

Bonus: Tax treatment on trusts

The cases below highlight how Greek tax law interacts with the framework of foreign trusts, and the implications for both Greek and foreign nationals. Particularly:

1. Trusts Established by Will

• • Taxable in Greece: Concerning trusts set up by the deceased’s last will, beneficiaries pay inheritance tax on any income they receive from the trust. Accordingly, the final beneficiaries are also subject to inheritance tax when acquiring full ownership of the assets.
  • Non-taxable in Greece: Movable assets held by a foreign trust, established by a Greek national who has been living abroad for more than ten years, are exempt from Greek inheritance tax.

2. Trusts Established Inter Vivos

• • During Settlor’s Lifetime: Any asset acquired, or income received by beneficiaries, either periodically or at a specific time, are deemed as donations. Thus, the tax payable depends on the relationship between the settlor and the beneficiary and the relevant brackets.
  • Upon the Settlor’s Death: Trusts’ assets, which are distributed after the settlor’s death, are treated as donations upon death. The trustee is considered as an executor or administrator, and beneficiaries are taxed as heirs.

3. Trusts with Foreign Immovable Property

• • Non-taxable: Foreign immovable property transferred by inheritance, donation, or parental grant is not subject to tax in Greece.