SPECIAL INCENTIVES TO ATTRACT TAX RESIDENTS TO GREECE

In the midst of intense global tax competition, many states seek to attract tax base – that is, income, investments and human capital – through special tax regimes.
Greece, through Articles 5A, 5B and 5C of the Income Tax Code (Law 4172/2013), has established a comprehensive framework of incentives for individuals who choose to transfer their tax residence to the country.

The objective is not only the immediate increase of tax revenues, but also the strengthening of consumption, investment and employment – in essence, overall economic activity.

I. The legal framework at a glance

The special regimes for new tax residents are structured around three pillars:

• Article 5A ITC – alternative taxation of foreign-source income (the so-called non-dom regime).
• Article 5B ITC – special regime for pensioners from abroad.
• Article 5C ITC – incentives for employees and entrepreneurs who transfer their tax residence to Greece (the “brain gain” regime).

These regimes cannot be combined with each other: each individual may be subject only to one of them, depending on their profile and needs.

1. Article 5A ITC – The “non-dom” regime for investors

It targets high net worth individuals who:

• transfer their tax residence to Greece; and
• make a substantial investment in Greece (indicatively at least EUR 500,000 within a specific period of time, either directly or through a legal entity).

A further condition is that they must not have been tax residents of Greece in 7 out of the 8 years preceding the transfer.

Main tax benefits

• An annual lump-sum tax of EUR 100,000 on the total foreign-source income, irrespective of its amount.
• Possibility to include relatives (spouse, children, etc.) with an additional fixed amount of tax per family member.
• The regime may apply for up to 15 years.

For income arising in Greece, the general provisions apply. Article 5A is essentially a tool of international tax planning for persons with significant foreign-source income.

2. Article 5B ITC – Pensioners from abroad with a flat tax rate of 7%

Article 5B applies to individuals who:

• receive a pension from abroad;
• transfer their tax residence to Greece;
• were not tax residents of Greece in 5 out of the 6 years preceding the transfer; and
• transfer their residence from a state that has an administrative cooperation agreement with Greece (e.g. a double taxation convention or another form of information-exchange framework).

Main tax benefits

• Imposition of a flat tax rate of 7% on the total foreign-source income (not only on the pension, but in general on income from outside Greece).
• The regime may apply for up to 15 tax years.
• Application of double taxation conventions and possibility to credit foreign tax paid, where provided.

In practice, a pensioner with stable income from abroad knows in advance their tax burden in Greece, which facilitates their financial planning.

3. Article 5C ITC – Incentives for employees & entrepreneurs (brain gain)

Article 5C (corresponding to “Article 5C” in English translations) was adopted to encourage the return or establishment of employees and entrepreneurs in Greece.

It applies to individuals who:

• transfer their tax residence to Greece;
• exercise dependent employment and/or individual business activity in Greece;
• were not tax residents of Greece for 5 out of the 6 years preceding the transfer; and
• meet additional criteria (country of origin, non-affiliation with “non-cooperative” tax jurisdictions, assumption of a new position of employment or commencement of new activity in Greece).

Main tax benefits

• Exemption from income tax and solidarity contribution for 50% of the income derived from employment or business activity exercised in Greece.
• The duration of the regime is up to 7 consecutive tax years.

Beyond a tax incentive, Article 5C also functions as an instrument of brain gain policy, encouraging the return of Greeks living abroad as well as the establishment of highly skilled foreign professionals.
Lerounis Accounting – Tax Office +1

II. Business perspective: which regime suits each interested party?

The three categories address different target groups:

5A – Global investors / HNWI
Individuals with high international income and willingness to invest capital in Greece. It offers tax certainty through a fixed amount of tax on foreign-source income.

5B – Retirees / lifestyle movers
Pensioners who choose Greece for its quality of life, climate and cost of living, with a simplified low rate of 7% on foreign-source income.

5C – Professionals / entrepreneurs
Skilled employees, executives, freelancers or entrepreneurs who relocate to work or carry out business activity in Greece. The 50% tax exemption effectively reduces the “tax opportunity cost” of relocation.

Correct classification of the interested person (profile, source of income, investment plans) is crucial in order to select the appropriate regime.

III. Procedure – Common principles

Certain common principles apply across all regimes:

• The application for inclusion is submitted to the Tax Administration within a specific deadline (usually by 31 March of the relevant tax year).
• Proof of previous tax residence abroad and of the fulfilment of the relevant time conditions (e.g. 5/6 or 7/8 years) is required.
• For Article 5A, documentation/commitment regarding the required investment is necessary.
• Inclusion in the regime applies from the tax year of transfer of tax residence and onwards, for as long as the conditions are met and no exit is requested or revocation is issued by the Administration.

In practical terms, anyone considering the transfer of their tax residence to Greece should coordinate with a tax / legal advisor both in Greece and in the state of origin, in order to assess:

• the impact in terms of double taxation;
• the treatment of assets (e.g. shares, real estate, participations);
• any family and succession/estate-planning issues.

IV. Conclusion: Greece as a strategic tax destination

With Articles 5A, 5B and 5C of the Income Tax Code, Greece has developed a modern and differentiated system of tax incentives for individuals who wish to link their life and activity with the country.

• For investors, it offers predictability and stability.
• For pensioners, it combines quality of life with a simple and low tax regime.
• For employees and entrepreneurs, it substantially reduces the tax burden during the crucial first years of establishment.

This framework, when properly utilised and with professional guidance, can be a powerful tool both for the individual and for the Greek economy, acting as a bridge between the global mobility of capital and people and the country’s need for sustainable growth.