Tax Returns Guide 2016 Foreign Residents

Having considerable experience in matters concerning Foreign Residents and having stood by the Greeks expatriates for many consecutive years, the following points should be noted:

“New” residents abroad:
Taxpayers who have filed an application to be considered as residents abroad until 10/03/2016, and their request was accepted, may submit their income tax return until 31/12/2016 without penalty.

Code 320:
In the case of spouses who are registered to the Tax Office for residents abroad, the code 320 concerning the wife has been abolished.  From  now  on the legislator assumes,  a priori, that the family residence is located abroad for the whole family, based on vital interests identified in Article 4 of Law. 4172/2013.

Taxable income:
As a rule, the only taxable income is the one derived from sources in Greece (Article 5 of Law. 4172/2013).

Presumptions of living:
The objective costs (presumptions) of living such as having a secondary residence, car, boat, etc. shall not apply in the case of foreign residents, whether they acquire real income in Greece (article 33 of l. 4172/2013).

Evidence of purchase:
The objective costs (presumptions) of acquiring assets apply if a foreign resident receives income from Greek sources. Therefore, if a resident abroad makes a purchase not covered by his income, current and past through capital consumption, he must be taxed on the basis of evidence.

Loan installments:
If loans are taken out from a Greek bank or a Greek tax resident, the amortized installments paid are also evidence that need to be covered. This is because the loan installments fall into the category of property acquisition costs and not the annual presumptions of living.

The “magical” code 781:
However, foreign residents are allowed to import capitals through banks from abroad without mentioning the source of origin and to use them to cover evidence. These amounts must be reported under code 781, based on the relevant certificates by the credit institution involved.

Capital gains Tax:
Non-residents are exempt from capital gains tax (Chap. VI of Law. 4172/2013) if they can provide to the custodian a Certificate of Tax Residence, on which he will rely so as not to perform the withholding (see. Circ. Number 1032/2015) . Note that the exception is achieved if the foreign resident resides in a country with which Greece has signed a Double

Taxation Convention/Agreement.

Dividends from Greek companies:
Non-residents  are likely to be taxed on the dividends received from sources in Greece, only in Greece, in the country where they permanently reside or in both states. This depends on the relevant provisions included in the Double Taxation Convention/Agreement between Greece and the other state (see Circular Number 1042/2015). In order to resolve the issue, the foreign residents must present the Certificate of Tax Residence to the company which makes the distribution, which in turn will examine whether or not withholding shall be required (see. Circular Number 1011/2015). Generally speaking, dividends paid by Greek companies whether they are listed on the stock exchange or are deemed to be derived from sources in Greece and therefore are subject to 10% withholding tax. This means that if one resides in a country with which Greece has concluded a Double Taxation Convention/Agreement and receives dividends, he will pay 10% withholding tax which he will have to set off against the tax in the country where he is a tax resident.

Annual documentation:
Non-residents who acquire real income in Greece are not required to provide documents to the tax office where they submit their income tax return as non-residents to prove they are actually residing abroad. In any case, it Is recommended that these documents be issued on an annual basis so as to be readily available in case of audit.

To conclude, once again it should be noted that non-residents are those who are registered in the tax office for Foreign Residents or in the Department of Residents abroad of the Tax Offices of the region. The fact that the taxpayer resides abroad, which has not been disclosed to the Tax Office and  the necessary procedures of change of his tax status have not been performed, does not make him automatically a resident abroad. Therefore, he cannot enjoy such preferential treatment.