Persons residing (domiciled) in Greece are liable to income tax on their world-wide income, whether remitted to Greece or not. Where tax has already been paid outside Greece on non-Greek source income, the tax may be deducted up to the amount of tax payable in Greece on the same income.
Non-residents are taxed only on Greek source income.
The determination of whether an individual is a resident or not depends on the individual’s intention to adopt Greece as his place of permanent residence. Such intent must be apparent from objective evidence such as the acquisition of a house with the intention of adopting Greece as the country of domicile.
Taxable income is classified into six categories (real estate, investment, employment, agricultural, business, and professional). Although income from each source is separately computed, individuals are subject to tax on the aggregate of income from all categories. Married persons are subject to tax separately on their own income but are required to file a joint tax return. Greek tax resident individuals and EU residents earning 90% of their income in Greece are subject to income tax at progressive rates, which commence at 0% and increase to a maximum rate of 40% on taxable income in excess of EUR 75,000.
For foreign tax resident individuals, with the exception of EU residents earning 90% of their income in Greece, the progressive income tax rates commence at 5% and not 0% and they have a lower amount of tax deductions. A 1.5% discount or EUR 118 (whichever is lower) is granted if the annual income tax return is filed electronically (through the Internet).
Imputed versus actual income
Legal provisions designed to prevent tax evasion specify that individuals are taxed on their declared income or imputed income, whichever is highest. Income is imputed on the basis of living expenditure or acquisition of certain assets. The main factors considered in imputing income from living expenses or acquisitions are the engine size of owned motor vehicles, repayment of loans or credits, the purchase of real estate, the construction of buildings, the cost of operating pleasure boats, aircrafts and helicopters, rent paid and deemed rental income for primary residence exceeding 200 sq.m. and for a secondary residence exceeding 150 sq.m. in size, the construction maintenance and use of a swimming pool and similar expenditures.
Income thus imputed will constitute taxable income if it is more than 20% of the declared family income (that of the taxpayer, his spouse and his dependants), unless there is evidence that the difference between the imputed income and the declared income is covered by borrowing, or savings that have been taxed or exempted from tax in the past, from gifts which have been subjected to or exempted from gift tax, from income taxed abroad (or exempted) and imported to Greece, and the like.