7% tax rate incentive

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chrissyg
Posts: 289
Joined: Thu Jan 05, 2017 4:46 pm

7% tax rate incentive

Postby chrissyg » Fri Oct 09, 2020 3:09 pm

Is anyone doing this? Not quite retired yet but i have done the maths and when you count the loss of the tax allowances and swimming pool tax it works out very little difference. This is based on my private pension probablity which isnt huge plus the state pension. Is it perhaps only worth it if you have a big income or am i missing something here?

BST
Posts: 586
Joined: Wed Jul 10, 2013 3:29 pm

Re: 7% tax rate incentive

Postby BST » Fri Oct 09, 2020 3:43 pm

I think you are correct. If you are in a higher tax bracket then probably a plus but scraping by on your pension to having just enough to live comfortably then UK taxation must be better. I did see a figure/threshold somewhere for this just taking into account income.

Kilkis
Posts: 12190
Joined: Sat Apr 21, 2007 3:58 pm
Location: Near Chania

Re: 7% tax rate incentive

Postby Kilkis » Fri Oct 09, 2020 4:59 pm

There is an analysis on this thread at the bottom of the page. If you only have pension income the break even point is £19,230 per annum. If you have other sources such as interest, dividends, capital gaisn etc then the break even point will shift a bit due to different rates and allowances.

Warwick

PS If you can get your UK State Pension classed as remaining taxable in the UK under the DTA then the break even point will be lower because the UK allowance will count against that and it won't be taxable in Greece. The 7% will only apply to the other pensions. Some people do and some don't.

chrissyg
Posts: 289
Joined: Thu Jan 05, 2017 4:46 pm

Re: 7% tax rate incentive

Postby chrissyg » Fri Oct 09, 2020 5:07 pm

Yes if the allowance can still be had then that would make a huge difference and would the be worth it but i have to admit i dont really understand how to do that. I think i will need to speak to the accountant.

Kilkis
Posts: 12190
Joined: Sat Apr 21, 2007 3:58 pm
Location: Near Chania

Re: 7% tax rate incentive

Postby Kilkis » Fri Oct 09, 2020 5:24 pm

The Greek-UK DTA was written back in the 50s. I doubt if anybody involved in constructing it, on either side, is even alive today. The wording is somewhat arcane and I doubt if most Greek tax inspectors have ever read it. Greece has DTAs with many countries. In a large number of DTAs "public" pensions remain taxable in the country of origin and "private" pensions are liable for taxation in the country of residence. The email from my accountant had the following statement, my highlight in red:

    "The favourable tax regime is applied to pensioners in the private sector, as public pensioners are usually taxed in their home country. In any case, government sources say, double tax avoidance agreements will be observed.

So does the UK fit in the "usually" bracket or not? Does the tax inspector dealing with your return know what the DTA says? This sort of confusion is common in all tax regimes. I know people who have been told things by HMRC staff that are the exact opposite of what it says in the Greek-UK DTA but probably were in line with the bulk of the DTA's they dealt with. Even their own internal guidance document has errors in it.

Warwick


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