Understanding Greek Income Tax Brackets: A Resource for New Expats

Table of Contents

1. Introduction to Greek Income Tax
2. Overview of the Greek Tax System
3. Greek Income Tax Brackets
4. Tax Rates for Different Income Levels
5. Deductions and Allowances
6. Filing Requirements for Expats
7. Tax Treaties and Double Taxation
8. Social Security Contributions
9. Tax Planning Strategies for Expats
10. Recent Changes in Greek Tax Law
11. Comparison with Other European Countries
12. Challenges and Considerations for Expats
13. Conclusion
14. FAQs

1. Introduction to Greek Income Tax

As an expat considering a move to Greece or recently arrived in this beautiful Mediterranean country, understanding the Greek income tax system is crucial for your financial planning and compliance with local laws. Greece, known for its rich history, stunning islands, and vibrant culture, also has a complex tax system that can be challenging for newcomers to navigate.

This comprehensive guide aims to demystify Greek income tax brackets and provide valuable insights for expats. We’ll explore the structure of the Greek tax system, break down the various income tax brackets, discuss deductions and allowances, and address specific considerations for foreign residents. By the end of this article, you’ll have a solid foundation to understand your tax obligations and make informed decisions about your finances in Greece.

2. Overview of the Greek Tax System

The Greek tax system is administered by the Independent Authority for Public Revenue (IAPR), which is responsible for collecting taxes and enforcing tax laws. Greece operates on a progressive tax system, meaning that higher income earners pay a higher percentage of their income in taxes compared to lower income earners.

In Greece, the tax year aligns with the calendar year, running from January 1 to December 31. Residents are taxed on their worldwide income, while non-residents are only taxed on income earned within Greece. It’s important to note that residency status can significantly impact your tax obligations, so understanding the criteria for tax residency is crucial.

Tax Residency Criteria

You are considered a tax resident of Greece if you meet any of the following conditions:

• You spend more than 183 days in Greece during any calendar year
• Your center of vital interests (personal or economic ties) is in Greece
• You are a Greek civil servant posted abroad

If you qualify as a tax resident, you’ll be subject to Greek income tax on your worldwide income. Non-residents, on the other hand, are only taxed on income sourced from Greece.

3. Greek Income Tax Brackets

The Greek income tax system is structured into several brackets, with different tax rates applying to different levels of income. Understanding these brackets is essential for calculating your tax liability and planning your finances effectively.

As of 2023, the Greek income tax brackets for employment and pension income are as follows:

It’s important to note that these brackets apply to employment and pension income. Different rates may apply to other types of income, such as rental income or business profits.

4. Tax Rates for Different Income Levels

To better understand how the Greek income tax brackets work in practice, let’s look at some examples for different income levels:

Example 1: Annual Income of €15,000

For an annual income of €15,000, the tax calculation would be:

• First €10,000: 9% tax = €900
• Remaining €5,000: 22% tax = €1,100
• Total tax: €2,000

Example 2: Annual Income of €35,000

For an annual income of €35,000, the tax calculation would be:

• First €10,000: 9% tax = €900
• Next €10,000: 22% tax = €2,200
• Next €10,000: 28% tax = €2,800
• Remaining €5,000: 36% tax = €1,800
• Total tax: €7,700

These examples illustrate how the progressive tax system works, with higher incomes being subject to higher tax rates on the portions of income that fall into higher brackets.

5. Deductions and Allowances

The Greek tax system offers various deductions and allowances that can help reduce your taxable income. As an expat, it’s crucial to be aware of these opportunities to optimize your tax situation. Some common deductions and allowances include:

Personal Allowances

• Standard personal allowance: €8,636 (as of 2023)
• Additional allowances for taxpayers with children

Employment-Related Expenses

• Social security contributions
• Certain professional expenses

Housing Expenses

• Mortgage interest for primary residence
• Rent payments (subject to certain conditions)

Medical Expenses

• Out-of-pocket medical costs exceeding a certain threshold
• Health insurance premiums

Charitable Donations

• Donations to approved Greek charities
• Contributions to cultural or educational institutions

It’s important to keep detailed records and receipts for all expenses you plan to claim as deductions. Consulting with a Greek tax professional can help ensure you’re taking advantage of all available deductions and allowances.

6. Filing Requirements for Expats

As an expat in Greece, you’ll need to familiarize yourself with the local tax filing requirements. Here are some key points to keep in mind:

Tax Return Deadline

The deadline for submitting tax returns in Greece is typically June 30 of the year following the tax year. However, extensions are sometimes granted, so it’s advisable to check the current deadline with the Greek tax authorities or a local tax professional.

Documentation Required

When filing your Greek tax return, you’ll need to provide various documents, including:

• Proof of income (e.g., salary statements, pension receipts)
• Bank statements
• Receipts for deductible expenses
• Property ownership documents (if applicable)
• Tax identification number (AFM)

Online Filing System

Greece has implemented an online tax filing system called TAXISnet. Expats are required to register for this system to submit their tax returns electronically. While the system is available in English, some sections may still be in Greek, so seeking assistance from a local tax professional or a Greek-speaking friend can be helpful.

7. Tax Treaties and Double Taxation

Greece has signed double taxation treaties with numerous countries to prevent individuals from being taxed twice on the same income. These agreements are particularly relevant for expats who may have income sources in their home country or other jurisdictions.

If you’re an expat from a country that has a tax treaty with Greece, you may be eligible for certain tax benefits or exemptions. Some key points to consider regarding tax treaties include:

• Relief from double taxation on various types of income
• Reduced withholding tax rates on dividends, interest, and royalties
• Exemptions for certain types of income (e.g., pensions or government service income)
• Methods for claiming treaty benefits (e.g., tax credit or exemption)

It’s crucial to review the specific tax treaty between Greece and your home country to understand how it may affect your tax situation. Consulting with a tax professional who specializes in international taxation can provide valuable insights and help you navigate the complexities of cross-border taxation.

8. Social Security Contributions

In addition to income tax, expats working in Greece are generally required to contribute to the Greek social security system. The main social security organization in Greece is called EFKA (Unified Social Security Fund). Social security contributions are mandatory for both employees and employers and cover various benefits, including healthcare, pension, and unemployment insurance.

Employee Contributions

As an employee, your social security contributions are typically deducted directly from your salary. The current rates for employee contributions are:

• Pension insurance: 6.67% of gross salary
• Health insurance: 2.55% of gross salary
• Supplementary insurance: 3.25% of gross salary

Employer Contributions

Employers are also required to make social security contributions on behalf of their employees. The current rates for employer contributions are:

• Pension insurance: 13.33% of gross salary
• Health insurance: 4.55% of gross salary
• Supplementary insurance: 3.25% of gross salary

It’s important to note that these rates may be subject to change, and there may be additional contributions for specific industries or professions. Self-employed individuals and freelancers have different contribution rates and requirements.

9. Tax Planning Strategies for Expats

As an expat in Greece, effective tax planning can help you optimize your financial situation and ensure compliance with local tax laws. Here are some strategies to consider:

Timing of Residency

If possible, plan your arrival in Greece strategically to minimize your tax liability. For example, arriving late in the tax year may reduce your taxable income for that year.

Structuring Income

Consider how your income is structured. For instance, if you have the option to receive part of your compensation as non-taxable allowances (e.g., housing or education allowances), this could reduce your overall tax burden.

Utilizing Tax Treaties

If applicable, make use of the provisions in tax treaties between Greece and your home country to avoid double taxation and potentially benefit from more favorable tax treatment on certain types of income.

Maximizing Deductions

Keep detailed records of all potentially deductible expenses and ensure you claim all available deductions and allowances when filing your Greek tax return.

Pension Contributions

Consider making contributions to Greek or international pension plans that may offer tax advantages.

Seeking Professional Advice

Consult with a tax professional who specializes in expat taxation in Greece. They can provide personalized advice based on your specific situation and help you navigate the complexities of the Greek tax system.

10. Recent Changes in Greek Tax Law

The Greek tax system has undergone several changes in recent years as part of the government’s efforts to reform the economy and attract foreign investment. Some notable changes include:

Reduction in Corporate Tax Rates

Greece has gradually reduced its corporate tax rate from 29% in 2018 to 22% in 2023, making the country more competitive for businesses.

Introduction of Non-Dom Regime

In 2020, Greece introduced a non-dom tax regime to attract high-net-worth individuals. This program offers a flat tax rate of €100,000 per year on foreign-source income for qualifying individuals who invest at least €500,000 in Greek assets.

Digital Nomad Visa

Greece has introduced a digital nomad visa, allowing remote workers to live in Greece for up to 12 months while working for employers or clients outside of Greece. This visa comes with certain tax implications that expats should be aware of.

Simplification of Tax Procedures

The Greek government has been working on simplifying tax procedures and improving the efficiency of the tax administration system, including enhancing the capabilities of the TAXISnet online platform.

As tax laws can change frequently, it’s crucial for expats to stay informed about the latest developments and how they may impact their tax situation in Greece.

11. Comparison with Other European Countries

To put the Greek tax system into perspective, it’s helpful to compare it with other European countries. While tax rates and structures vary widely across Europe, here’s a brief comparison with a few other popular expat destinations:

Spain

Spain has a progressive tax system similar to Greece, with rates ranging from 19% to 45%. However, Spain’s top rate applies to income over €60,000, compared to Greece’s top rate which kicks in at €40,000.

Portugal

Portugal’s tax rates range from 14.5% to 48%, with the top rate applying to income over €75,009. Portugal also offers a Non-Habitual Resident (NHR) regime, which can provide significant tax benefits for qualifying expats.

Italy

Italy’s tax rates range from 23% to 43%, with the top rate applying to income over €75,000. Italy also offers a special tax regime for new residents, providing a flat tax rate on foreign-source income.

Germany

Germany has a more complex progressive tax system, with rates ranging from 14% to 45%. The top rate applies to income over €277,826 for single individuals.

While Greece’s top tax rate of 44% is relatively high compared to some other European countries, it’s important to consider the overall tax burden, including social security contributions and the cost of living, when making comparisons.

12. Challenges and Considerations for Expats

While living in Greece can be a rewarding experience, expats should be aware of some challenges and considerations related to taxation:

Language Barrier

Despite efforts to provide English translations, many tax-related documents and communications are still primarily in Greek. This can make it challenging for non-Greek speaking expats to navigate the tax system without assistance.

Complexity of the Tax System

The Greek tax system can be complex and subject to frequent changes. Staying informed and compliant can be time-consuming and may require professional help.

Cash Economy

Greece has historically had a significant cash economy, which can complicate record-keeping and tax compliance for expats used to more formalized economic systems.

Property Taxes

In addition to income tax, property owners in Greece are subject to annual property taxes (ENFIA), which can be substantial depending on the property’s value and location.

Bank Account Reporting

Expats should be aware of any obligations to report foreign bank accounts, both to Greek authorities and potentially to their home country’s tax authorities.

Exit Tax Considerations

If you plan to leave Greece after a period of residency, be aware of potential exit tax implications, especially if you’ve accumulated significant assets during your stay.

Despite these challenges, many expats find that the benefits of living in Greece outweigh the complexities of the tax system. With proper planning and professional advice, navigating Greek taxation can be manageable.

13. Conclusion

Understanding Greek income tax brackets and the broader tax system is crucial for expats planning to live and work in Greece. While the progressive tax structure and various deductions and allowances can seem complex at first, familiarizing yourself with these elements will help you make informed financial decisions and ensure compliance with local tax laws.

Key takeaways for expats include:

• Understand your tax residency status and its implications
• Familiarize yourself with the current tax brackets and rates
• Take advantage of available deductions and allowances
• Be aware of social security contribution requirements
• Consider the impact of tax treaties on your overall tax situation
• Stay informed about recent changes in Greek tax law
• Seek professional advice for personalized tax planning

By staying informed and proactive in your tax planning, you can navigate the Greek tax system more effectively and focus on enjoying all that this beautiful country has to offer. Remember that tax laws can change, so it’s important to regularly review your tax situation and seek updated information or professional advice as needed.

14. FAQs

Q1: Do I need to pay taxes in Greece if I’m working remotely for a foreign company?

A1: If you’re considered a tax resident of Greece (e.g., spending more than 183 days in the country), you’ll generally need to pay taxes on your worldwide income, including income from foreign sources. However, the specific tax treatment may depend on factors such as your visa status and any applicable tax treaties.

Q2: Can I file my Greek tax return in English?

A2: While the TAXISnet system offers some English language support, many tax documents and forms are still primarily in Greek. It’s advisable to seek assistance from a Greek-speaking friend or a professional tax advisor to ensure accurate filing.

Q3: Are there any special tax regimes for retirees moving to Greece?

A3: Greece has introduced a special tax regime for foreign retirees who transfer their tax residence to Greece. Under this regime, qualifying individuals can opt for a flat tax rate of 7% on their foreign-source pension income for a period of 15 years.

Q4: How do I obtain a Greek tax identification number (AFM)?

A4: To obtain an AFM, you’ll need to visit your local tax office (DOY) with your passport, proof of address in Greece, and any relevant visa or residency documents. It’s recommended to bring a Greek-speaking person with you to assist with the process.

Q5: Can I claim tax deductions for expenses related to my relocation to Greece?

A5: Generally, relocation expenses are not tax-deductible in Greece. However, certain work-related expenses may be deductible once you’ve established residency and are working in Greece. It’s best to consult with a tax professional for specific advice based on your situation.

Article reviewed by Georgi Ivanov, Corporate Lease Negotiator | Industrial Real Estate Strategist, on March 1, 2025