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Sat, Aug 19, 2017
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Death Duties in Greece

How Greece Death Duties and Estate Taxes Affect British, Irish and Other Ex-patriates

Introduced in 2007

 

Greece introduced a new Inheritance Tax law, known as Tax Law 3427 effective January, 2006. Some further adjustments were added in March 2007 (see page bottom). The law brings Greece in line with European Commission parameters on estate taxes and death duties. It affects British, Irish and other ex-patriates as well as Greeks who live in the country or who have assets in the country. This page of Brits in Crete is a guide to these changes.

 

Greece Tax Law 3427/2006

Greece Tax Law 3427/2006 in fact unifies under one code the previously separate taxes of real estate transfer taxes, inheritance tax, donation tax and paternal grants (donations to children). The most significant change is the increase in the tax-free bracket for inheritance tax or for donations made between parents and children. This was increased from €20,000 to €80,000 in 2006.

In addition, the payment period required for tax liability on assessed inheritance tax has effectively been lengthened from a 24 monthly instalment repayment period to a generous 24 instalments bi-monthly. This means that the Tax offices has lengthened the time to pay the assessed amount to 48 months i.e. still 24 installments but the tax demand needs only be settled once every two months.

Greece Tax Law 2961/2001

Taxes are in principle calculated depending on the “tax classes” as set out in an earlier tax law, Article 29 of the Law 2961/2001. That law provided for three tax classes, based on how heirs or 'legatees' are being classified according to their relationship to the deceased and therefore the three differing tax brackets.

For example "Class A" covers relatives of a deceased, be they a surviving spouse, the children or parents:
* if the estate is valued under €80,000 there is 0% zero tax.
* € 80,001 to 100,000, the rate is 5%
* €100,001 - 220,000 the rate is 10%, and
* above €220,001, the assessed rate is 20%.

It is best to contact a competent accountant and if necessary a lawyer in your local tax area or where the deceased had resided during their recent years and had been assessed in order to discuss the whole matter as to how the local tax office handles such a case.

Good To Know! 

For the Foreigner, Your Link with the Tax Man IS your Accountant

Crete tax officials for the most part, rely on the advice given by qualified accountants with whom they work on a day-to-day basis for their clients. That is why it is important to talk to fellow residents and neighbours in Crete. Ask them who they would recommend to advise you on tax and accounting matters.

There is no written rule, but it is 'understood' by any local community there are those accountants who "bend" the rules - avoid them, and those who will give everyone peace of mind when it comes to submission of the tax returns. In cases of bereavement, most of the time, officials are pretty helpful. Do not take it personally if they are not.

The all encompassing Tax Law 3427/2006 in Greece applies to everyone who is resident in Greece (and therefore if in Crete) or own major property assets (house, boat car, caravan etc) in the country. If that is the case, that means also having to have a tax number ( ΑΦΜ (AFM) in Greek, pronounced aff'e'me).

Greece is an EU member state, therefore double taxation agreements are in place with other members e.g. Eire and the UK. The good news is that Greece, with few exceptions, only tax on assets and income within Greece, not worldwide, unlike the UK.

That briefly outlines Inheritance Tax in Greece. But let us recap for you as a foreigner, if you have to pay tax in Greece.

Do You Qualify to Pay Greek Tax ?

Who Pays Anyway?

It all boils down to one clear definition: "domicile". Basically, the Greek tax regime decides if your "domicile" is Greece, based on any of the following criteria:
* If you spend over 183 days in Greece during the period Jan 1 - Dec 31 in any given year.
* If your permanent home (main residence and or family residence) is in Greece.
* If you earn income from employment in Greece. Mind you, you are allowed to earn €3,000 a year without filing for tax purposes (see below). You are also exempt if your work in Greece is regarded as secondary to your income generating activities undertaken in another country.
* If your main investments or business interests are in Greece.

The €3,000 income Rule

If your annual income is €3,000 or less in a year the rule is overridden and you have to complete a tax return, if:
* You own any private car, a caravan, a RCV etc
* You own a motor bike over 500cc
* You own a luxury yacht or any boat for that matter, registered in Greece
* Your private jet, or a glider in the same circumstances
* You own ANY property, (be it house, shed, stables, out house - if it provides shelter (and therefore has electricity, it is definitely taxable)
* You own any land
* You generate income from letting your property (or leasing your land)
* You hold shares in any Greek firm (from listed to private un-limited)
* You buy, construct or renovate a building.

The one bit of good news is that there still is not an annual property tax unless your building is bigger than 150 square metres. Another provision is regarding a swimming pool of over 25m2. It attracts the equivalent of a wealth tax. An outdoor pool must be declared representing an annual notional income of €11,600 and if it is indoors then it is €17,400.

You are no longer to play the stock market in Greece as an individual, without declaring it. Previously it was allowed but if executed too frequently it was judged to be income generating and therefore liable to tax.  (NB: Rule was amended between 2010 and 2014).

It is important to understand the motivating factors behind the very different apporach to taxation in Greece compared to UK. Like the fact, you have to prove your taxable income in Greece last year is more than the value of the vehicle you wish to buy in the present year. Or you have to prove you brought the money legally into the country to make the purchase.

The fact that Greeks made it almost a national pastime to dodge paying their taxes is the reason the country introduced such drastic tax avoidance measures to improve revenue collection and prevent rampant fraud.

All Important "Pink Slips"

For the same reason when you buy a property in Greece as a foreigner those all important bank pink slips still serve to prove your money was brought in from abroad legally either by telegraphic transfer / bank declaration or you personally declared it on arrival at the port of entry at the customs office at each location. This prevents the tax man from treating the payment as undeclared income.

Note: The local Crete tax office is pivotal to a smooth exchange of contracts for buying and selling of property.

Crossing EU Internal Borders - €10,000 Cash Limit

Are you aware that it continues to be illegal to carry more than €10,000 cash across EU internal borders without declaring it. The same applies when arriving from a non - EU country. Some member states have increased limits.

Important: We are not tax experts nor accountants. Rules change frequently. For formal advice on Inheritance Tax, contact accountants in your area and prefecture where you stay when you are in Crete. They are not expensive by UK standards and worth every euro.

You can always check out our Brits in Crete Forum for the latest on any topical subject. On the subject of Inheritance Tax, you may like to read a very useful informative discussion of February 2007 here.

**Greek Tax Inheritance Tax Amendments Effective March 2007

From March 1, 2007 under the general category of "Inheritance Tax" a further 20% to 33% increase in the scales used for "Legacy", "Donation" and "Parental donation" duties are being imposed for such transfers. A further category is introduced for the disabled.

More Useful Articles for Ex-Pats in Greece for Both UK and Greece Taxation - From Brits in Crete

- Advice on UK Tax Issues and how to Leave UK and leave your obligations behind!

- Impact of UK's 2008 Finance Act Changes on Brit Ex-Pats Working/Living Abroad

- Ex-Pats Living in Greece and/or with Property - Guide to Their Obligations to the Greek Tax Man.

- Greek Inheritance Tax 2006-2007 onwards Useful General Reference. (This Page)

- Almost Total Abolition of Greek Inheritance Tax from 2008 onwards.

- Amendments to Greece Tax Code from January 1, 2009 onwards.

- Major Changes in Inheritance Tax from January 19, 2010 onwards.