Tax residency in Greece for digital nomads is something we need to discuss. Many nomads like to wander around the uncountable majestic Greek islands and their beaches. Or maybe you want to emerge yourself in the ancient history and culture of Greece? Of course, there are also the vibrant cities like the capital Athens or Thessaloniki. There is something for everyone to like in Greece!
Furthermore, for those who have their budget in mind it is good to know that the cost of living in Greece isn’t that high. You can check the details for different cities on Numbeo. The actual cost will largely depend on your lifestyle and where you want to spend your time. Bigger cities, just like tourist hotspots, are of course more expensive than hidden gems.
The actual question we will look into is if it is also interesting to setup tax residency in Greece for digital nomads? Might this save you some taxes and give you more (financial) freedom? Let’s have a closer look.
Living in Greece
The first assessment you should always make is to check if you are able to live in Greece. If you are a citizen of one of the countries of the Schengen Area, this will be easy. You have the right to live in any of the countries that are part of the Schengen Area. Greece is one of them.
If you are a citizen of any other country, you will need to obtain a visa to stay in the country longterm. For this purpose, Greece created a a visa specific for digital nomads. You can read more about in my article I dedicated to digital nomad visas. The most important condition is probably that you need a minimum income of €3.500 per month to qualify.
General Greek tax rules
Once you are living in Greece as a digital nomad, the Greek tax rules might apply to you. Let’s have a look what that means.
Establishing tax residency in Greece
Greece applies a double test to asses if you are a Greek tax resident and have to pay taxes.
The first one depends on the amount of days you spend in the country. If you spend more than 183 days in a 12-month period in the country, you will qualify as a tax resident. This is the so-called days test.
Furthermore, Greece will consider you as a tax resident if you have your permanent home in Greece or if the centre of your vital interest lies in the country. There are different elements that could lead to a person having its centre of vital interests in Greece. There is ownership of assets in Greece, the place where your family resides and where your children go to school, etc. Evaluating whether or not you are a tax resident based on this basis isn’t a black and white assessment like the days-test.
Greek tax rates
If you are a Greek tax resident, Greek tax rates will apply to your income. Greece will tax your worldwide income: the income earned in Greece but also any income earned abroad.
Greece applies progressive tax rates on income from employment or business which start at 9% and go up to 44% as from an income of €40.000.
For rental income they also apply progressive rates. These range from 15% to 45% as from €35.000. If you receive rental income from abroad, this income is exempt from taxes in Greece if the country where the real estate is situated has a double tax treaty with Greece.
Investment income, on the other hand, is taxed at fixed rates. On dividends a rate of 5% applies. For interest the rate is 15% and for royalties 20%.
Aditionally, you need to account for a solidarity contribution. This contribution is levied on income as from €12.000 at a rate of 2,20%. It goes up to 10% on income above €220.000.
Social contributions in Greece are divided in different categories. The higher the category, the higher the premium and the more benefits that come with it. Minimum contributions start from €210 per month and go up to €566 per month.
Tax residency in Greece for digital nomads: tax exemption
By offering tax breaks to digital nomads Greece tries to get nomads to spend longer periods of time in the country. In this way Greece can tap into a new pool of people who bring money into the economy. In my article about digital nomad visas in Europe you could already read about the Greek digital nomad visa.
Tax residency in Greece for digital nomads is something to consider as Greece will grant you a 50% tax break for professional income. This means that you can divide the tax rates mentioned before by two. This means the actual maximum rate amounts to 22,5%.
Nevertheless, you don’t just get this tax break like that. There are conditions that apply.
Not applicable to Europeans
The first important remark is that Greece only grants the tax exemption to people who applied for the digital nomad visa. Only people from outside the Schengen Area can apply for this visa. Consequently, citizens from the Schengen Area won’t qualify for the tax break. So, for nomads with citizenship of a Schengen country, tax residency in Greece for digital nomads won’t be an option. Tax rates are too high to consider it a good place to setup tax residency.
Commitment for two years
Secondly, you need to commit to a minimum stay of two years. This does not mean you actually need to spend the full two years within the borders of Greece. However, it does mean that you will have to pay taxes for at least two years in Greece. So, basically, you commit to being a tax resident of Greece for at least two years.
If you would want to spend the remainder of your days in Greece you should know you can only benefit from the tax benefit for a limited timeframe. Under the requirement that you fulfill all conditions, the maximum period for enjoying the tax break is seven years. After those seven years, the normal tax rates will apply to your income. Accordingly, from the eight year, you will see your tax rate double.
Tax residency in Greece for digital nomads: conclusion
If you are eligable for the digital nomad visa, you can also benefit from the tax break that Greece offers to digital nomads. The tax break enables you to cut your tax liability in half. However, given the progressive tax rates of Greece, this is still not the best deal around. Nonetheless, there might be a reason why want to become a (tax) resident of Greece after all. In that case, it is of course better to benefit from the tax break than to be subject of the normal tax rules.
If you are a citizen of a Schengen country, you will not qualify for the tax break. High progressive taxes will be the price to become (tax) resident in Greece.