Are you currently in the process of applying for Greek dual citizenship? Many of our clients ask if being a Greek dual citizen will require them to pay taxes in Greece.
Due to the sometimes complex situation (often with income coming from more than one country), you might wonder exactly how taxation works in Greece as a dual citizen and how you can avoid paying taxes on the same income.
This guide answers those Greek tax liability questions and walks you through how to calculate your Greek income tax (if needed).
Will I owe Greek taxes as a dual citizen?
Most importantly, if you do not legally reside in Greece for more than 183 days of the year and are not deriving your income in Greece for that period of time then you do NOT need to file taxes in Greece.
What income you owe Greek taxes on largely depends on your residential status.
You are considered a tax resident if you lived in Greece for 183 or more days last year. Similarly, you could be considered a tax resident if you have vital interests in Greece (like owning assets in Greece).
What do tax residents owe?
If either (or both) of these describe you, then you will pay Greek taxes on all of your income, no matter the source.
What do non-residents owe?
Non-residents only need to pay Greek taxes on the money they earn from people and businesses in the country. So, if you own a rental property in Greece that generates income, you’ll have to pay Greek taxes on it. Similarly, if you have a Greek employer, that income will be taxed by Greece.
Understanding Greek Tax Treaties
Tax treaties are probably the most important thing to understand to avoid double taxation. These documents are agreements between countries to apply taxes paid in one country as a credit towards taxes owed in another.
So if I pay $100 in taxes to country A, I subtract $100 from the amount of taxes owed in country B.
Greece has entered into 57 tax treaties, so if you are reading this, you are likely protected by one of these.
For instance, the US and Greece have a tax treaty. With these rules, you can claim the money you paid in Greek taxes as credit toward your US taxes. That way, it counts toward your tax burden in America.
Regardless, you still need to report your income to both countries.
The US and Greece also have a totalization agreement. This means you don’t have to pay into Social Security in both systems on the same income. However, if you do pay into both systems, you’ll be eligible for benefits from both.
You can read the Greek-US tax treaty here.
It’s worth pausing to consider just how important it is to understand Greece’s tax treaty with the other country you are a dual citizen of. This is the single best way to avoid double taxation, so getting a good grasp on the rule and using it is essential to reduce your tax burden.
Factoring in the FEIE
Dual citizens of the US and Greece have yet another protection from double taxation. It’s called the Foreign Earned Income Exclusion (FEIE). This allows you to avoid paying US income tax at all on foreign earnings up to $126,500. That’s true even if you live in a country without a tax treaty with the US.
To benefit from the FEIE, you must have a bona fide residence in a given country for the year in question.
Why would people use the FEIE and not the tax credit system? FEIE can be easier and, in some cases, could be a greater tax reduction.
You’ll use the IRS Form 2555 to claim the FEIE.
How does Greek income tax work?
Greek income taxes are progressive. That means once you begin earning over a certain amount, the money you make over that amount is taxed at a higher rate. So while everyone pays 9% taxes on their first €10,000, if you make €15,000, you’ll owe 22% on the next €5,000.
The tax brackets in Greece are as follows:
- First €10,000: 9%
- €10,001 to €20,000: 22%
- €20,001 to €30,000: 28%
- €30,001 to €40,000: 36%
- Over €40,000: 44%
What are other common Greek taxes?
Of course, while income tax is a large portion of what most people owe, there are many other common taxes:
- Social Security: In Greece, if you earn a wage, you’ll owe 15.75% to Social Security, which is often withheld from your check.
- Capital Gains: Individuals pay 15% on capital gains (when you sell an asset for more than you purchased it). Corporations pay 22% on these because they’re treated like any other business income.
- Value-Added Tax (VAT): While only businesses pay VAT directly, if you do run a business, this is a major part of your tax burden. You owe this on the sale of goods and services, imports, and exports (even to and from other EU countries). Goods deemed necessary have a lower rate.
How do I file my Greek taxes as a dual citizen?
Greek dual citizens can file their taxes in a few ways:
- Online using TAXISnet
- At the local tax office (E2 forms need to be filed at the tax office nearest the property)
- Through a tax professional
Exactly what you file depends on the types of income you received. By and large, most people file E1 (for personal income), E2 (for leasing property), and/or E3 (for business income) tax forms.
What’s the deadline for Greek taxes?
Greek taxes are due on June 30th.
Are you ready for June 30th?
Our clients almost all say the same thing: taxes are the most challenging part of dual citizenship. But if you do it once—taking the time to understand the rules and reaching out for professional help when necessary—you’ll get the hang of it.
Sorting your documentation through the year greatly reduces the headache when June rolls around.
Interested in learning more about Greek dual citizenship (including how to get Greek citizenship), feel free to contact us.
Disclaimer: This article is intended for general informational purposes only and does not constitute legal or tax advice. Tax laws are constantly evolving, so it is important to consult a qualified lawyer or tax professional to determine the best strategy for your specific situation.
This page was last updated by Marco Permunian
