Money Transfer

For discussion, news, comments, questions and information about Crete & Greece.
Muttly
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Money Transfer

Postby Muttly » Thu Aug 23, 2007 9:09 am

I recieve a government pension which I cannot get in Euros. It must be taxed in the UK and Greece has a recipricol tax agreement wihich means that if I pay tax in the UK I am not taxed in Greece.

It is currently paid into a standard UK Bank account. I cannot be the only potential Crete resident who is paid in this way.

What is the best way of drawing your pension in Crete under these circumstances limiting the costs of money transfer and currency differntial i.e. £ to €.

Thanks Muttly.

Kilkis
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Postby Kilkis » Thu Aug 23, 2007 11:51 am

We simply let ours mount up for about a year and then transfer it in one lump sum. There is a charge for the transfer but it is pretty insignificant if you are only making one transfer per year. So far we have used bank-to-bank transfer but instructed the UK bank to make the transfer in sterling and let the Greek bank do the exchange since you get better exchange rates in Greek banks. Using a specialist transfer company is another option and might get you a slightly better deal on the exchange rate. I've not tried this method so cannot recommend any particular companies but I think others probably can.

I know some people simply use a UK debit card and draw the money directly out of their UK account at a Greek ATM. This seems to be quite cost effective if you use a Nationwide Flex account but is expensive with other banks. I have a slight concern with this method. Depending on your circumstances, the Greek taxman might at some point ask you to justify how you live in Greece. If he does he will want to see pink slips issued by a Greek bank to prove that you have transferred money here. I am not sure how you would provide proof if you had simply been drawing it directly. I am pretty sure he will not accept UK bank statements.

Warwick

filippos
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Postby filippos » Thu Aug 23, 2007 12:45 pm

Depending on your pension provider you may be able to have your pension, net of UK tax paid directly into a bank in Crete. (Our accountant advised us that we would pay more tax in Greece if the pension was paid gross and subject to Greek tax rates.) Our UK State pension is paid direct to Crete - although not by electronic transfer but by draft - into a Sterling account. We can then choose the time to switch to Euros and hope we get the timing right.

We had/still have a Euro account with Bank of Cyprus and setting up the sterling account took all of five minutes.

Filippos.

Kilkis
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Postby Kilkis » Thu Aug 23, 2007 5:09 pm

filippos wrote:...Our accountant advised us that we would pay more tax in Greece if the pension was paid gross and subject to Greek tax rates....


It does depend on your age and the amount of the pension. The tax-free allowance in Greece is bigger than in the UK for people under 65. That means that people less than 65 with pensions bigger than the UK allowance but not too big would pay less in Greece. Unfortunately, in Greece tax then kicks in at 15 % and rises to 40 % much more quickly than in the UK so bigger pensions pay more.

At present with an exchange rate of 1.45 the break-even point for someone under 65 on a pension, i.e. not working, is around €19,300. If the exchange rate goes up the break-even point comes down and vice-versa.

For someone over 65 the tax free allowance in the UK increases to almost the same as the 0 % band in Greece so Greek tax is then more than in the UK at virtually any income above that allowance, i.e. €11,000.

We can conclude, therefore, that Filippos is either immensely rich, very old or possibly both?

Warwick

margarita
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Postby margarita » Thu Aug 23, 2007 5:29 pm

Kilkis wrote:We can conclude, therefore, that Filippos is either immensely rich, very old or possibly both?

Warwick


Just for the record, Filippos is a kept man - living off his wife's pension!!

He is, however, very old.

margarita

Eleni13
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Postby Eleni13 » Thu Aug 23, 2007 5:39 pm

margarita wrote:
Kilkis wrote:We can conclude, therefore, that Filippos is either immensely rich, very old or possibly both?

Warwick


Just for the record, Filippos is a kept man - living off his wife's pension!!

He is, however, very old.

margarita


Pity there isn't a yeros emoticon.....

filippos
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Postby filippos » Thu Aug 23, 2007 7:12 pm

Warwick, you don't often come to strange conclusions. Immensely rich? €19,300? That equates very roughly to £13k - about half UK average earnings.

Our accountant's advice is past it's sell by date so I should probably have qualified it. Allowances were lower here when it was given and I haven't re-checked the calculations.

As Margarita has already pointed out, rather unkindly I thought, my current income is zero.

However, you and she are right in one particular. I am immensely old.

Filippos.

allan
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Postby allan » Thu Aug 23, 2007 7:31 pm

I also recieve a Government pension and due the the rules must be taxed in the UK and I am below the age for an OAPension.

The system I use is open a Bank A/C here in Crete...When the exchange rate is good, write a cheque out to myself and deposit it with my Greek bank.

I get the exchange rate at the time, ok maybe not too brilliant, but it costs me nothing in charges with either bank, here or in the UK.

I then wait maybe 10 to 15 days and my money is automatically transferred from the Uk to Crete.

Have used the ATM machines when in need but my UK Bank charges me an arm and a leg.

So much for Barclays.. :D :D :D

Muttly
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Postby Muttly » Thu Aug 23, 2007 8:55 pm

Britain must be coming out of the 19th Century.

Making an equiry about my pension from my pension branch this afternoon I discovered that not only are they prepared to pay the pension into any bank account worldwide but in my case as Greece is an EEC partner, in Euros and direct to a Greek Bank Account without the need of any UK bank intervention.

This is a complete reversal from two years ago where it could only be in sterling etc. In addition the rate I get is not the tourist rate but the foreign interbank rate i.e. currency trade rate. So today it would be £1 to €1.471. There is no % shaved of for transfer fees.

Because it is a government pension it will of course remain taxed in the UK and with the Inland Revenue (who else) I ran into a problem. When I made enquiry a couple of years ago I was told that the revenue would issue me with a certificate stating that I was paying tax in the UK and therefore would remove the double tax jeopardy.

Now they are not so sure, one individual I contacted said they would, another haughtily dismissed the idea "because I was not resident in the UK"....err.....yes. Another said write a letter asking for a letter announcing to the Greek Tax Authorities that the IR were taxing me in UK. Bit of a sucking of teeth when I asked if it would be in English or Greek, pity I did not try Esperanto, that would have brought on the pains.

I don't know how many other ex-pats with government sourced pensions are on this forum but I would suggest that it might be an idea to see if your pension branch has entered the 21st Century and can pay direct to a Greek Bank Account. Not raising hopes but it might be worth an enquiry.

Kilkis
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Postby Kilkis » Thu Aug 23, 2007 11:07 pm

I think an important difference is that the UK Inland Revenue knows about income that arises in the UK but the Greek taxman does not. If any part of your UK income is liable to Greek tax and you don’t want it to be taxed in the UK, then the UK Inland Revenue issue you with a form to get signed by the Greek taxman that you are paying tax on that particular income in Greece. This is a UK Inland Revenue form under the dual taxation agreement and is in English. As far as I can tell, if part of your UK income is liable for tax in the UK and you don’t want it to be taxed in Greece then you simply don’t declare it on your Greek tax form. For example, our accountant told us that UK State Pension is a “government pension” and so remains taxed in the UK. He simply did not include it on our Greek tax return. The UK taxman told us that the State Pension is not a “government pension” and should be liable for tax in Greece. This difference of opinion doesn’t really matter. Since we are not declaring it on our Greek tax return we cannot get the UK dual taxation form completed and so it remains liable for tax in the UK.

Warwick

lshall05
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Postby lshall05 » Fri Aug 24, 2007 12:18 am

I got told a couple of days ago from my main pension provider (previous employer's pension scheme) that when I was ready to take my pension they could pay it in to any account I wanted them to and because it would be taxed at source (ie UK) I could contact the IR to get the dual tax form thing (didn't go into detail cos it's another 33 years before I technically retire)...
Living in Crete!!

Muttly
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Location: Pseudo-America

Postby Muttly » Fri Aug 24, 2007 2:33 am

Kilkis wrote:I think an important difference is that the UK Inland Revenue knows about income that arises in the UK but the Greek taxman does not. If any part of your UK income is liable to Greek tax and you don’t want it to be taxed in the UK, then the UK Inland Revenue issue you with a form to get signed by the Greek taxman that you are paying tax on that particular income in Greece. This is a UK Inland Revenue form under the dual taxation agreement and is in English. As far as I can tell, if part of your UK income is liable for tax in the UK and you don’t want it to be taxed in Greece then you simply don’t declare it on your Greek tax form. For example, our accountant told us that UK State Pension is a “government pension” and so remains taxed in the UK. He simply did not include it on our Greek tax return. The UK taxman told us that the State Pension is not a “government pension” and should be liable for tax in Greece. This difference of opinion doesn’t really matter. Since we are not declaring it on our Greek tax return we cannot get the UK dual taxation form completed and so it remains liable for tax in the UK.

Warwick


I'm being very dull here, again. Bear withe me please. If you become a resident, even if you do not work in Greece, I take it that you must obtain a Greek Tax Number and Submit a Greek Tax Return every year.

Do I have this correctly.

filippos
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Postby filippos » Fri Aug 24, 2007 9:04 am

If you want to do useful things like buy a house or a car etc. then, "Yes." An annual return is required even if it's 'Nil'. Do the same as everyone else, foreigners and Greeks, and get an accountant to do it. The forms are complex, in Greek and there are penalties for non or late submission. Due dates vary according to the tax number. It's not expensive for a 'Nil' return.

Filippos.

Nita
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Postby Nita » Fri Aug 24, 2007 9:10 am

Not just to buy a house a tax number is needed if you rent a property. It's also needed to set up telephone, electricity, water accounts etc. As Filippos says 'get an accountant'.

Phaedra
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Postby Phaedra » Fri Aug 24, 2007 1:18 pm

filippos wrote:Warwick, you don't often come to strange conclusions. Immensely rich? €19,300? That equates very roughly to £13k - about half UK average earnings.

Our accountant's advice is past it's sell by date so I should probably have qualified it. Allowances were lower here when it was given and I haven't re-checked the calculations.

As Margarita has already pointed out, rather unkindly I thought, my current income is zero.

However, you and she are right in one particular. I am immensely old.

Filippos.


How can you be immensely old? Incredibly old, perhaps but immensely - that indicates mass. I can vouch that you are neither, Filippos. A bit decrepit perhaps, but hey - aren't we all over 50??? ;-) :twisted:


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