Greece to Target Foreign Pensioners With 7% Flat Tax to Bolster Economic Recovery

 

The Greek Ministry of Finance has tabled a law that will implement a flat income tax rate of 7% for foreign retirees who transfer their tax residence to Greece, according to the Guardian. Parliament is set to deliberate the law within the week.

“The logic is very simple: we want pensioners to relocate here, we have a beautiful country, a very good climate, so why not?” said Athina Kalyva, head of tax policy at the Greek finance ministry. “We hope that pensioners benefiting from this attractive rate will spend most of their time in Greece, that would mean investing a bit – renting or buying a home.”

Alex Patelis, Chief Economic Adviser to Athens’ Premier Kyriakos Mitsotakis, disclosed that the flat tax rate will apply to all foreign income, regardless of what form it takes.

“The 7% flat rate will apply to whatever income a person might have,” said Patelis, “be that rents or dividends as well as pensions.”

The scheme will only apply, however, to pensioners from countries with which Greece enjoys a double taxation treaty, while officials said that citizens of “dodgy countries” need not apply.

Patelis went on to discuss the backlash, or lack thereof, from ordinary Greeks. He argued that since pensioners do not engage in employment they will not compete against Greeks for jobs. He also explained that pensioners are consumers who will bring cash into the Greek market.

“Pensioners, by definition, don’t work, so there’s no competition with the domestic labor force. On the contrary, they will be here spending money,” Patelis stated.

Greece aims to capitalize on its exceptional handling of the Coronavirus pandemic to lure pensioners from other potential destinations in the EU, as other countries such as Spain and Portugal have previously designed schemes focusing on pensioners.

The well-timed proposal of the law may well aid Greece in the attraction of pensioners, as Patelis highlighted that “once the pandemic subsides, we believe capital and labor will move to places that did relatively better.”

Greece also recently introduced a EUR 100,000 a year lump-sum tax program for those who invest EUR 500,000, which – so far – has successfully attracted about two dozen applicants.

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Ahmad Abbas AuthorSubscriber
Director of Content Services , Investment Migration Insider

Ahmad Abbas is Director of Content Services at Investment Migration Insider and a six-year veteran of the investment migration industry.

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