In our effort to keep all foreign tax residents—who live and work abroad but retain rights in Greece—informed, we have compiled a list of your most frequently asked questions about remittances to Greece, in accordance with the frameworks established by the Common Reporting Standard (CRS) banking systems, which have been in effect since 2017 in several countries.

In the following article, we will cover the following sections:

• The Tax System in Greece
• Cross-referencing bank account information systems
• Frequently Asked Questions by Residents Abroad
• Buying Property in Greece – What to Look For
• Useful tips for sending money to Greece
• Future checks
• Points of Interest for Residents Abroad

In short, the current tax system in Greece provides as follows:

Tax residents of Greece—regardless of whether they meet all the criteria to be considered foreigners—are required to report their worldwide income in Greece, since they have not transferred their tax residence by notifying the Greek tax authorities.

On the other hand, foreign tax residents who have notified the Greek tax authorities of their tax domicile are required to report only the actual income they receive from Greece, and not their worldwide income.

The above, together with the bank deposit information, should draw our attention to the following:

For tax residents of Greece, the income reported cumulatively over the years in Greece should be consistent with the amounts of deposits held at Greek and foreign banks.

For foreign taxpayers, given that they are not required to report their worldwide income in Greece, there is no reason to be concerned if their cases have been transferred to offices handling foreign taxpayers, as Greece has no authority to audit foreign taxpayers’ deposits.

Therefore, two new important issues are coming to our attention with greater intensity, given the tax audits and active transnational information exchange agreements:

• Tax Residency
• Control of Bank Deposits and Remittances

The majority of Greeks with deposits abroad are concerned and wondering to what extent they are at risk of being audited by the Greek tax authorities. This applies both to Greek tax residents living abroad who maintain bank accounts abroad and to foreigners wishing to purchase property in Greece with funds they will bring from abroad.

Here are some of our most frequently asked questions, presented in a question-and-answer format, that will help you understand the various aspects of these issues and plan your next steps in the best possible way.

1. I am a tax resident of Greece, I live in Greece, and I have a foreign bank account. What should I be aware of?

In this case, the cumulative total of declared income should cover the amounts of the bank deposits, so that there is no “Where to Find” issue.

2. I am a tax resident of Greece, but I live and work abroad and have a bank account abroad. Will the tax authorities investigate me?

Given that your tax residence has not changed, you are classified as a tax resident of Greece and are therefore required to report your worldwide income. The income you report in Greece should be sufficient to account for all your deposits. In any case, you should arrange to transfer your tax residence to avoid any problems in the future. We should also note that it is now possible to transfer the tax residence of one spouse under Circular 1201/2017.

3. I am a tax resident abroad and I have bank accounts in both Greece and abroad. Is there a chance I will be taxed?

Since you are a tax resident abroad, Greece has no right to monitor your deposits, whether they are held inside or outside the country. You will be taxed only on the actual income you are likely to receive in Greece, for which you must file your annual tax return.

4. I received a letter from foreign banks asking me to update my TIN and my tax residence. What should I do?

Many of our clients receive letters from foreign banks where they hold their bank accounts, requesting their TIN (Tax Identification Number) and their tax residence. In these cases, if you are tax residents of Greece, you must declare your VAT number in Greece and your tax residence; if the income declared in Greece covers these funds, there will be no discrepancy at the potential intersection.

But if that isn’t enough, you may be asked to explain yourself.

If you are considered a foreign tax resident of Greece, regardless of the above, the Greek tax authorities have no right to audit you.

5. I am a tax resident abroad and would like to buy property in Greece. What should I be aware of?

If you wish to purchase a property, you must provide proof of the cash flow; therefore, if remittances are made to cover the purchase price, they must be transferred from your foreign account to your account in Greece, and the remittance certificates must be kept on file so that the cash flow can be verified upon request.

The cash flow must be correct, so it is recommended that you contact your financial advisor before taking any action to ensure that your decisions are sound.

Now that this issue has been addressed, the Taxblock team can provide you with the necessary consulting support and guide you accurately to avoid any errors in the process.

6. I hold overseas bank accounts as a tax resident abroad and plan to return to Greece. Are there any benefits in the context of migration?

If foreigners wish to return to Greece and thereby become Greek tax residents, they have the right to relocate and bring their household goods—including one car per family—and their money with them within two years, without being asked where the funds came from. This capital is not taxed in Greece, as it is presumed to have been taxed abroad. To qualify for all these benefits, they must have resided abroad for at least three years.

Useful tips for sending and receiving money to and from Greece.

• Bank transfer only if tax residency has been determined.
• Remittances from your registered account abroad to your registered bank account in Greece.
• Transfer within two years of an unjustified relocation (see question 6)
• Preservation of all supporting evidence and unique evidence.
• Before buying a property, contact a financial advisor to avoid any potential oversights.
• When planning to purchase a property or set aside funds for a future purchase, report the remittances on the income tax form (E1) for the relevant year.

In our view, with regard to the exchange of bank deposit information, the Greek tax authorities receive from depositors account balances as of December 31, 2016, and subsequent years, from countries already included in the CRS (Common Reporting Standards).

The volume of data is large and, so far, difficult for the tax authorities to manage. Certainly, a new audit tool is being added, but it is not currently being used to its full potential. In the future, however, it will serve as an important database for the authorities of all countries, capable of overriding the tax and other planning efforts of partner countries.

In practice, the focus of scrutiny at this time will be on cases of suspected money laundering and on cases involving large debtors—particularly those with public debts and bank accounts abroad—rather than on individual cases of taxpayers who have not dealt with the authorities.

In conclusion, in the future, control and cross-checking methods will become more clearly defined and will apply to a wider range of stakeholders; therefore, foreigners must:

• ensure that their tax residence is updated,
• Avoid bank transfers if they do not meet the conditions set out above,
• get the advice they need from specialized tax advisors before making any investment or taking any other action.

Author

Maria Dianellou – Tax Advisor – Taxblock Team