Expat Taxes in Greece: A Guide for Americans Moving Overseas
- Living as an American Expat in Greece
- Greece at a Glance
- What Are Expat Taxes like for Americans Living in Greece?
- Who Has to File Taxes in Greece?
- Who Qualifies as a Tax Resident in Greece?
- What Types of Taxation Does Greece Have?
- Essential Tax Forms for US Expats in Greece
- When Are Taxes Due in Greece?
- Does the US Have a Tax Treaty with Greece?
- Does the US Have a Totalization Agreement with Greece?
- Navigating Tax Compliance for US Expats in Greece
Living as an American Expat in Greece
Living as an American expat in Greece can be an exciting and rewarding experience. Greece is a country with a rich history and culture, beautiful landscapes, and delicious cuisine. As an expat, you’ll have the opportunity to explore all that Greece has to offer, from ancient ruins to beautiful beaches and everything in between.
However, living in a foreign country can also come with challenges. Expats in Greece may need to navigate a different language and cultural norms, as well as a different tax and legal system. It’s important to do your research and seek out resources that can help you make the most of your time in Greece.
But what are expat taxes like for US citizens living in Greece? Let’s find out!
Greece at a Glance
- Primary Tax Form for Residents: E1 form for employees, E2 form for self-employed individuals.
- Tax Year: January 1st to December 31st.
- Tax Deadline: The deadline for submitting tax returns is usually at the end of June.
- Currency: Euro (EUR)
- Population: Approximately 10.7 million people.
- Number of US Expats: There are around 30,000 US expats living in Greece.
- Capital City: Athens
- Primary Language: Greek
- Tax Treaty: Yes
- Totalization Agreement: Yes
What Are Expat Taxes like for Americans Living in Greece?
First, you must file a US tax return as an American living in Greece. From Atlanta to Athens, all Americans have to report their income to the IRS. This is because every US citizen must file a tax return every year regardless of where they live.
On top of that, you will probably also have to file a Greek tax return. This can get complicated, so let’s take a closer look at the Greek tax system.
Who Has to File Taxes in Greece?
If you are an individual who is a resident of Greece, you will have to pay taxes on your worldwide income, which includes wages, rental income, and investment income. Additionally, if you own property in Greece, you will also have to pay taxes on it.
Non-residents are subject to Greek taxation if they earn income from Greek sources, such as rental income or employment in Greece. The tax rate for non-residents is generally higher than for residents.
Self-employed individuals and businesses operating in Greece must also file taxes. If you are a self-employed individual, you will need to file a tax return on your personal income, while businesses must file tax returns on their profits.
Who Qualifies as a Tax Resident in Greece?
Generally speaking, you will be considered a resident of Greece for tax purposes if you are in the country for at least 183 days in any 12-month period. Alternatively, you may be considered a resident if you have a habitual abode or “vital interests” in Greece. The definition of vital interests is somewhat open to interpretation, but common factors include:
- Owning significant assets in Greece
- Registering for Greek social security
- Sending your children to a Greek school
If you do not meet the 183-day rule or have a habitual abode or vital interests in Greece, you will be considered a non-resident for tax purposes.
What Types of Taxation Does Greece Have?
Greece taxes income at progressive rates ranging from 9% to 44%. (All amounts are given in EUR.) below, you can see the current Greek income tax rates.
|Income (EUR)||Tax Rate|
|1 – 10,000||9%|
|10,001 – 20,000||22%|
|20,001 – 30,000||28%|
|30,001 – 40,000||36%|
|40,001 and over||44%|
Social Security Tax
Greece’s social security system is funded by employee wages, just like the US. The current rate for this tax is 40.56% of an employee’s salary, with the employer contributing 24.81% and the employee contributing the remaining 15.75%.
Greece imposes a value-added tax (VAT) on certain goods and services. The standard rate for this tax is 24%. Goods and services deemed “basic necessities” are taxed at reduced rates of 13% or even 6%.
The Greek inheritance tax is assessed based on the value of the property being bequeathed and the relation of the heir. For immediate relations, the rate ranges from 0%–10%, while other heirs may be subject to a tax of up to 40%.
Capital Gains Tax
Greece taxes capital gains at various rates depending on the nature of the payment.
- For businesses, capital gains are generally treated as ordinary corporate income and taxed at the same rate (22%).
- For individuals, capital gains are generally taxed at 15%.
Greece taxes property through a tax program known as ENFIA. This consists of a principal tax levied on each property and a secondary tax levied on the total value of the property rights owned by an individual. The factors determining the value of a given property are complex.
Property is also taxed at the local level. The rate for this tax ranges from 0.025%–0.035% of the property’s value.
Real Estate Transfer Tax
Real estate is exempted from the Greek VAT. However, the sale of real estate is taxed under a separate program at 3.09% of the property’s value.
Greece taxes corporate profits at a flat rate of 22%. One exception to this is financial institutions, which are generally taxed at a higher rate of 29%. Resident corporations are taxed on their worldwide income, while non-resident corporations are taxed on only Greek-source income. Corporate profits are never taxed at the local level.
Essential Tax Forms for US Expats in Greece
US expats living in Greece are required to file US tax returns with the IRS every year, and they may also need to file a Greek tax return. The essential tax forms that US expats in Greece need to be aware of include:
- Form 1040 is the standard US tax return form that all US citizens and residents must file annually, regardless of their location.
- Form 2555: This form is used to claim the Foreign Earned Income Exclusion (FEIE), which allows US expats to exclude a certain amount of their foreign-earned income from US taxation.
- Form 1116: This form is used to claim the Foreign Tax Credit (FTC), which allows US expats to reduce their US tax liability by the amount of foreign taxes paid.
- E1 or E2 form: These are the primary tax forms for Greek residents, depending on whether you are an employee or self-employed.
It’s essential to understand the specific requirements and deadlines for filing these forms to avoid any penalties or legal issues.
When Are Taxes Due in Greece?
The Greek tax year is the same as the calendar year, starting on January 1 and ending on December 31. Tax returns are due around June 30 of the following year, though the exact date varies depending on the last digit of the taxpayer’s tax ID number. Married couples may file a joint return, but each spouse is taxed separately on their share of the income.
Does the US Have a Tax Treaty with Greece?
Yes, the US and Greece have signed a tax treaty together. The treaty helps to avoid situations where a taxpayer pays taxes on the same income to both the US and Greek tax authorities.
Under the treaty, US citizens living in Greece can claim foreign tax credits for taxes paid to Greece, reducing their US tax liability. Additionally, the treaty outlines specific rules for determining residency and taxable income for individuals and businesses operating in both countries.
It’s important to note that the treaty does not exempt US citizens living in Greece from filing US tax returns. All US citizens, regardless of their location, are required to file a tax return with the IRS every year.
Does the US Have a Totalization Agreement with Greece?
Yes, the United States and Greece have a totalization agreement to help prevent double taxation of Social Security benefits for individuals who have worked in both countries. The agreement ensures that workers are not required to pay Social Security taxes to both countries for the same work.
Under the totalization agreement, workers who have paid into the Social Security systems of both countries may be eligible to receive benefits from both countries. The agreement also outlines rules for determining eligibility and the amount of benefits payable.
Navigating Tax Compliance for US Expats in Greece
Are you an American living in Greece? Do you need help understanding your expat taxes? Look no further! Our comprehensive guide provides all the information you need to navigate this complex process. But if you still have questions, our team of experienced tax experts is here to help. We can even handle the preparation and filing of your expat tax return on your behalf, ensuring that you get the most out of your tax situation.
If you’re ready to be matched with a Greenback accountant, click the get started button below. For general questions on expat taxes or working with Greenback, contact our Customer Champions.