Greece's Tax Authorities Target Individuals Falsely Declaring Foreign Residency to Evade Taxes

digital nomads

Greece’s tax administration, the Independent Public Revenues Authority (AADE), is set to audit taxpayers who, despite declaring their permanent residence outside Greece, live and work in the country.

Many of them have opted for a country with low tax rates to simultaneously avoid the presumed income that applies in Greece and scrutiny of their bank deposits.

Auditors from the Independent Authority for Public Revenue (AADE) are actively seeking individuals who primarily reside in Greece but falsely declare themselves as tax residents abroad to evade taxes and audits. Their focus is particularly on those in the service sector who can work from anywhere with just a laptop.

In a circular addressed to auditors, AADE has clearly outlined the essential conditions to qualify as a genuine tax resident abroad: The taxpayer must reside outside Greece for a minimum of 183 days per year, substantiate it with relevant supporting documents, and appoint a trusted person – a tax representative – for their tax representation.

According to the legislation, those who relocate their tax residence abroad are exempt from the presumed cost of living (“tekmiria”) for their assets in Greece. In simpler terms, they are not subject to tekmiria for houses, cars, and recreational boats. Additionally, the tekmiria for the acquisition of assets (real estate, vehicles, etc.) does not apply, provided they do not generate real income in Greece. If income is obtained in Greece, such as from rent or interest on deposits, they fall under the regime of presumed incomes.

Conversely, a considerable number of Greeks who left during the financial crisis and bailouts and had established tax residency abroad are returning under favorable terms. They are leveraging provisions that grant a 50% discount on the taxation of their incomes for those (Greeks or foreigners) relocating in tax terms to Greece. This discount is contingent upon their employment in new jobs or initiation of self-employed professional activities. [Source: kathimerini.com]

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