Tax Resident or 365 Day Tourist in Perpetuity

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Stavros21
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Joined: Wed Mar 08, 2017 11:47 am

Tax Resident or 365 Day Tourist in Perpetuity

Postby Stavros21 » Sun Jun 11, 2017 12:51 pm

Hi All,

I've just returned from another fact-finding trip to Greece.

On this occasion, I visited the Dodecanese Islands and the Peloponnese.

I have a question on tax.

I know that many UK ex-pats are paying tax in the UK whilst living full-time in Greece. An accountant in Rhodes told me that if I have no income in Greece, and am paying tax in my home country, then I don't have to pay tax in Greece. I asked the accountant if this situation might change. His reply ? A classic 'Mediterranean Shrug', where the shoulders and eyebrows rise, and the face says 'dunno mate'. I'm not sure I want to do my tax planning on this basis :) By the way, this gentleman came highly recommended, but I'm not convinced by his response.

I am aware that Greece has a provision which apparently allows people to stay for more than 183 days for 'tourism', 'health' and 'other' (whatever that means) reasons. However, I can't believe the Greek tax authorities will continue to turn a blind-eye to cumulative years of perpetual tourism.

I'd love to live in Greece but am concerned that this loophole, if indeed it is one, will be closed. Greece's finances are in a terrible mess and surely they will bring an end to this practice. After all, the country needs every euro it can raise.

Transferring my tax residency to Greece would double my tax obligations. Ouch!

However, one thing was quite clear. Starting a small business is not a good idea. The accountant gave me a one word reply. Don't!

I'd love to hear your thoughts.

Best wishes,

James

filippos
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Re: Tax Resident or 365 Day Tourist in Perpetuity

Postby filippos » Sun Jun 11, 2017 4:01 pm

Stavros21 wrote:Transferring my tax residency to Greece would double my tax obligations. Ouch!
Why? Does your current tax residency not have a dual taxation agreement with Greece that allows, broadly speaking, that paying tax in one jurisdiction means you don't pay tax in the other?

Stavros21
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Joined: Wed Mar 08, 2017 11:47 am

Re: Tax Resident or 365 Day Tourist in Perpetuity

Postby Stavros21 » Sun Jun 11, 2017 4:31 pm

Filippos,

Thank you.

Greece has higher tax rates than the UK. So, as a Greek tax resident, you would pay the difference between the tax already paid in the UK and the tax due in Greece.

The purpose of a DTA is to avoid an individual being taxed twice on the same income.

James

Kilkis
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Re: Tax Resident or 365 Day Tourist in Perpetuity

Postby Kilkis » Sun Jun 11, 2017 5:18 pm

I am tax resident in Greece and I am not taxed twice. I declare my UK income in Greece and pay tax on it in Greece. For each income stream I get a DTA form signed by the Greek tax authority which I submit to HMRC. HMRC then treats that income stream as Not Taxable in the UK. The Greek authorities will not sign the HMRC form. There is a special dual language form. I got a copy from a German web site, modified it slightly to satisfy HMRC and used that. I am not saying it is easy. They might make you do a full tax audit but it is possible.

I am not sure why you think any accountant should be able to tell you what the Greek tax rules will be next year? Making predictions is very difficult, especially about the future. Uncertainty about what will come out of Brexit only makes it harder

Warwick

Stavros21
Posts: 5
Joined: Wed Mar 08, 2017 11:47 am

Re: Tax Resident or 365 Day Tourist in Perpetuity

Postby Stavros21 » Mon Jun 12, 2017 3:22 am

Warwick,

Thank you for your reply.

I was previously a tax resident in Spain and France and paid all of my taxes in these countries. I understand the operation of DTAs.

My question concerns the operation/continuation of the unusual situation in Greece whereby non-Greeks living in the country full-time have been able to pay tax in their home country.

This is not possible in other EU states.

From what I understand, there seems to be an anomaly (grey area) in the Greek tax code which lets people be classified as perpetual tourists.

I don't expect an accountant to forecast future tax rates but I do expect them to offer serious comment on the application/background to the situation
of tax residency versus permanent tourism.

You will understand that I don't want to receive a rude fiscal shock in the future.

Best wishes,

James

Al
Posts: 299
Joined: Mon Aug 02, 2010 7:26 pm
Location: Kalives

Re: Tax Resident or 365 Day Tourist in Perpetuity

Postby Al » Mon Jun 12, 2017 9:39 am

My accountant's advice is the same as yours. (May be the same accountant, or another of the prominent accountants in Chania?) I have lived here on pensions paid and taxed in the UK. Given that an accountant here, unlike in the UK, assiduously cultivates good working relations with the Tax Office, I'd say his advice was sound. It's served me well for ten years or more! If the rules change your accountant will know, in advance, and will adjust his advice accordingly.

Stavros21
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Joined: Wed Mar 08, 2017 11:47 am

Re: Tax Resident or 365 Day Tourist in Perpetuity

Postby Stavros21 » Mon Jun 12, 2017 11:17 am

Hi AI,

Many thanks for your interesting input.

The accountant I spoke to was in Rhodes Town.

Having experienced the taxman in France and Spain, and having received advice about Portugal and Italy (all significantly higher tax jurisdictions than the UK), I am proceeding with great caution.

Your experience over 10 years is comforting news. I hope this 'treatment' continues, as nobody wants to see their tax bill go through the roof.

Many thanks,

James

filippos
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Re: Tax Resident or 365 Day Tourist in Perpetuity

Postby filippos » Mon Jun 12, 2017 2:42 pm

Stavros21 wrote:Your experience over 10 years is comforting news. I hope this 'treatment' continues,......

If you want reassurance regarding what's happened historically I, and many others, have been here for 15 years or more with the same experience as Al. As for the future I don't know what might happen five minutes from now so I wouldn't attempt to guess what might happen in future years. I've always believed in following my instinct and making decisions based on facts available at the time. Fortunately, I've made more right decisions than wrong ones ....................... but that's history.

Kilkis
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Location: Near Chania

Re: Tax Resident or 365 Day Tourist in Perpetuity

Postby Kilkis » Mon Jun 12, 2017 6:28 pm

Several years ago, I can't remember exactly how many, the Greek tax code decided tax residency on where a person's income arose. If it arose outside Greece then the person could remain non-tax resident in Greece. I would imagine many long term residents, like Filippos, were originally registered as non-tax resident under that code. A few years ago the code changed so that an 183 day rule was introduced to decide residency. My understanding was that the new rule was challenged because it put the tax code in conflict with the civil code. The paragraph saying that the 183 day didn't apply, "if the person was here for health, touristic or other personal reasons" was then introduced to get round the conflict. That understanding may be completely wrong. Either way, some accountants have kept people registered as non-tax resident on that basis, some accounts have simply said that their clients stayed in Greece for less than 183 days and some accountants have changed their clients' status to tax resident. That is the situation today. Pick an accountant and role the dice. Tomorrow? Your guess is as good as mine.

Warwick

john4d
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Location: Near Vamos

Re: Tax Resident or 365 Day Tourist in Perpetuity

Postby john4d » Mon Jun 12, 2017 10:13 pm

As usual Warwick a good summary. However the question I would ask (and I'm not expecting an answer) is :- If the Greek Tax authorities do decide to apply the 183 day rule with vigour, so those expats who are currently not tax resident in Greece but are here for more than 183 days, suddenly find themselves tax resident and therefore have to pay Greek tax -will they back date the tax owing to previous tax years, and if so how many years? As I mentioned in another thread, because of back dating I found myself liable for tax (property tax) for the year 2008, nine years ago.
There's no such thing as a bad taste joke

Stavros21
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Joined: Wed Mar 08, 2017 11:47 am

Re: Tax Resident or 365 Day Tourist in Perpetuity

Postby Stavros21 » Tue Jun 13, 2017 7:05 am

Dear All,

Thank you for your helpful contributions

Filippos,I agree with your comment on 'instinct', hence my question to the good members of this forum about the tax residence anomaly in the Greek tax code.

Warwick, thank you for your interpretation of the background to the current definition of tax residency. That's exactly the type of information I was looking for.

John 4d, your comment echoes my fears. None of us want a 'registered' letter from the taxman demanding back tax. It happened to me in France :(

In light of everything, I think the best option is to lease and see how BREXIT, Greek austerity, Italian elections etc develop.

Many thanks for all of your thoughts.

James

Kilkis
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Location: Near Chania

Re: Tax Resident or 365 Day Tourist in Perpetuity

Postby Kilkis » Tue Jun 13, 2017 10:14 am

I think the question of back dating is not clear cut. If your accountant is working completely within the current law but the law changes then I don't think there should be a question of back dating. If, however, your accountant is somehow circumventing the current law and that becomes apparent because of a change in the law, or for any other reason, then I would expect the tax to be back dated. I don't think the tax authority has ex-pats as a high priority. They have bigger fish to fry. Obviously that could change.

My comments are based purely on information supplied by my accountant in circular emails to all his ex-pat clients. I have never tried to investigate further since I have been tax resident in Greece from the day I arrived 20 years ago. Tax is used to provide services and infrastructure. I make use of Greek services and infrastructure so I think it is reasonable to pay my taxes in Greece. Just a personal opinion not a criticism of those who don't pay tax here.

Warwick

SatCure
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Re: Tax Resident or 365 Day Tourist in Perpetuity

Postby SatCure » Fri Jun 16, 2017 1:25 pm

Kilkis wrote:I make use of Greek services and infrastructure so I think it is reasonable to pay my taxes in Greece.

Indeed but bear in mind that all permanent, retired, UK expats are probably bringing in more than 12,000 Euros* "living expenses" each year - ALL of which gets spent in Greece. So it's not as if we are robbing the Greek economy.

* You can, of course, get by on a lot less if you never eat out, don't own a car, etc. However, I'm referring to people with a relatively normal lifestyle, not hermits. 8)


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