Article 5A of the Greek Income Tax Code (Law 4172/2013) provides for a special tax regime aimed at attracting High-Net-Worth Individuals who wish to transfer their tax residence to Greece. The regime is part of a broader framework of initiatives designed to encourage the relocation of certain individuals (including pensioners and employees) and the inflow of capital into the Greek economy.
Under Article 5A, individuals who transfer their tax residence to Greece may opt for an alternative method of taxation in respect of income arising abroad. In order to qualify, an individual must not have been a Greek tax resident for 7 out of the 8 years preceding the transfer of tax residence and must make a qualifying investment in Greece with a minimum value of €500,000. The investment may be carried out directly by the taxpayer, by a relative, or through a legal entity in which the taxpayer holds the majority of the shares. Eligible investments include, among others, investments in real estate, businesses, securities and participations in Greek legal entities. The investment must be completed within 3 years from filing the application.
A key feature of the regime is the way the foreign-sourced income is taxed. Instead of being subject to taxation under the general provisions of the Greek Income Tax Code, such income is covered by an annual lump-sum tax of €100,000, irrespective of the actual underlying amount. Payment of this tax exhausts any Greek income tax liability in respect of foreign-sourced income falling within the scope of the regime.
The regime may remain in force for a maximum period of 15 years. During this period, the taxpayer continues to be treated as a Greek tax resident for the purposes of Greek tax law as well as under the light of all Double Tax Treaties signed by Greece, while the special taxation rules apply specifically on foreign-sourced income, i.e. any Greek-sourced income is taxed according to the general provisions.
Article 5A also provides the possibility of extending the regime to certain family members of the main applicant. Spouses, ascendants and descendants may be included upon request, with an additional annual tax of €20,000 being payable for each such person. Minor unmarried children of the applicants who reside with them are deemed to have the same tax residence as the applicants, and no separate request for the extension, nor any relevant application, is required. Nevertheless, the extension of the application of favourable provisions to such children may be requested by means of an application filed upon reaching 18 years of age and their inclusion in the alternative taxation regime for foreign-sourced income shall apply for the remaining years of their parent’s participation in the regime.
Individuals wishing to be taxed under the Article 5A regime must file the application by 30 September of either the year of arrival in Greece or, under certain circumstances, the following tax year. In detail, individuals who have transferred their tax residence to Greece by 2 July of a given year may apply for inclusion in the Article 5A regime of the Greek Income Tax Code either for the year of arrival or for the immediately succeeding tax year.
The application must be accompanied by supporting documentation, including evidence of prior foreign tax residence, where such information is not available to the Tax Authority. Importantly, the application may be filed even if the supporting documents are not yet available, provided that the request is completed by 31 October of the relevant tax year. Applications and supporting documentation may be submitted electronically through the myAADE portal, by registered mail or courier, or in person before the competent authority. The tax administration examines the application and issues an approval or rejection decision, generally within 60 days and, in any case, no later than the last working day of November.
Upon approval of the request and subject to reciprocity, the Greek Tax Administration will inform the tax authorities of the jurisdiction in which the individual was last tax resident prior to filing the application, in accordance with the applicable rules on international administrative cooperation.
Individuals who have been admitted to the regime shall cease to be subject to it either if in any tax year they fail to pay in full the lumpsum or if, upon the expiry of the 3-year period, it is determined that they failed to complete the investment. Accordingly, individuals may, in any tax year during the applicable 15-year period, apply for withdrawal to the extent that they file such a request by 30 September of the year they request the withdrawal for.
Since its introduction, Article 5A has become one of the main mechanisms through which Greece seeks to attract individuals, entrepreneurs, and investors considering a change of tax residence. Together with other special tax regimes introduced in recent years, it reflects the broader policy objective of strengthening Greece’s position as an attractive destination for international individuals.
