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Bank transfers to Greece: Points of attention for foreign residents

Bank transfers to Greece: Points of attention for foreign residents

In our effort to keep informed all the foreign tax residents, who live and work abroad but retain rights in Greece, we have collected your most frequently asked questions about remittances to Greece, in combination with the frameworks set by Common Reporting Standard banking Systems (CRS) and applicable already from 2017 for several countries.

In the following article we will deal with the following sections:

  • The tax regime in Greece
  • Crossing bank account information systems
  • Frequently Asked Questions by Residents Abroad
  • Buying Property in Greece – What to Look For
  • Useful tips for your remittances to Greece
  • Future checks
  • Points of Interest for Residents Abroad

In short, the current tax regime in Greece stipulates:

Tax residents of Greece, regardless of whether they meet all the criteria to be considered foreigners, since they have not transferred their tax residence informing the Tax office of Greece, are required to declare their world income in Greece.

On the other hand, foreign tax residents who have notified their tax domicile to the Greek tax authorities, are required to declare only the actual income they receive from Greece and not the worldwide income.

The above together with bank deposit information should draw our attention to the following:

For tax residents of Greece, the earnings declared cumulatively over the years in Greece should be in line with the amounts of deposits held with Greek and foreign banks.

For foreign taxpayers, given their non-obligation to declare their world income in Greece, there is no reason to be concerned if they have been transferred to foreign taxpayers ‘offices, as Greece has no right to audit foreign taxpayers’ deposits.

Therefore, two new important issues are coming to our attention more intensively, given the tax audits and active transnational information exchange agreements:

  • The tax residence 
  • The control of bank deposits and remittances

The majority of Greeks with deposits abroad are concerned and wondering to what extent are in danger to be controlled by the Greek tax authorities. This applies to both tax residents of Greece living abroad and maintaining bank accounts abroad, as well as foreigners wishing to acquire property in Greece with funds they will bring from abroad.

Here are some of our most frequently asked questions in the form of questions and answers that will help you understand the different aspects of these issues, and plan your future moves in the best possible way.

  1. I am a tax resident of Greece, I live in Greece and I hold a foreign account. What should I watch out for?

In this case, the cumulative total declared income should cover the bank deposit amounts, so that there is no ‘Where to Find’ issue.

  1. I am a tax resident of Greece, but I live and work abroad and hold a bank account abroad. Will the tax authorities check me?

Given the unchanged tax residence, you fall under the category of tax residents of Greece with the corresponding obligation to declare world income. The declared income in Greece should be sufficient to justify all your deposits. In any case, you should take care of the transfer of your tax residence so that you do not encounter any problems in the future. Let us also mention that it is now possible to transfer the tax residence of one of the spouses with Circular 1201/2017.

  1. I am a tax resident abroad and I keep bank accounts in both Greece and abroad, is there a chance to be taxed?

Since you are a tax resident abroad, Greece has no right to check your deposits either inside or outside the country. You are going to be taxed  only for the actual income you are likely to receive in Greece, for which you must submit your annual tax declaration.

  1. I received a letter of update from foreign banks to update my TIN number and my tax residence. What should I do;

Many of our clients receive letters from foreign banks where they keep their bank accounts, requesting their TIN (Tax Identification Number) and their tax residence. In these cases, if you are tax residents of Greece you must declare your VAT tax number in Greece and your tax residence and if the income declared in Greece covers these funds, there will be no mismatch at the potential intersection.

But if that is not enough, you may be asked for explanations.

If you are considered as a foreign tax resident for Greece, regardless of the above, the Greek tax authorities have no right to control you.

  1. I am a tax resident abroad and wish to buy property in Greece. What should I watch out for?

If you wish to purchase a property, the cash flow must be proven, so in the event that remittances are made to cover the price, they must be carried out by your account abroad, in your account in Greece and stored in your file remittance certificates, so that any check can show the cash flow.

The cash flow needs to be correct, so it is recommended that you contact your financial advisor before taking any action to make sure your moves are correct.

Having dealt with this issue, the Taxblock team can provide you with the necessary consulting support and direct you accurately to avoid any errors in the process.

  1. I maintain overseas bank accounts as a tax resident abroad and plan to return to Greece. Are there any benefits in the context of migration?

In case foreigners wish to return to Greece and thus become greek tax residents, they have the right to relocate and transfer their households within two years, a car per family and their money without being asked where the funds came from. This capital is not taxed in Greece as it is supposed to have been taxed abroad. For all these benefits their stay abroad for at least three years, is a prerequisite.

 

Useful tips for remittances to and from Greece.

  • Bank Transfer only if the tax residence has been settled.
  • Remittances from your registered account abroad, to your registered bank account in Greece.
  • Transfer within two years of unjustified relocation (see question 6)
  • Preservation of all supporting evidence and unique evidence.
  • Before buying a property, contact a financial advisor to avoid possible omissions.
  • In planning to purchase a property or create a reserve for a future purchase, declare remittances to the income tax form (E1) of the year in question.

In our view, regarding the exchange of bank deposit information, the Greek tax authorities receive from depositors, accounts balances dated 31/12/2016 and subsequent years from countries already included in the CRS (Common Reporting Standards).

The volume of data is large and so far difficult to manage by the Tax Authorities. Certainly, a new audit tool is being added, but it is not currently being used to the fullest extent. In the future though, it will be an important database for the Authorities of all countries, able to override the tax and other planning of the partner countries.

In practice, the priority of scrutiny at this time will be in cases of suspected money laundering and in cases of large debtors especially with public debts, with bank accounts abroad and not in individual cases of taxpayers who have not dealt with the Authorities.

 

In conclusion, in the future the control and cross-checking methods will become clearer and apply to a larger mass of stakeholders, and therefore foreigners must:

  • ensure that their tax residence is updated,
  • avoid money bank transfers if they do not fulfill the conditions set out above,
  • get the advisory support they need from specialized tax advisors before any investment or other action.

Author

Maria Dianellou- Tax Advisor –Taxblock Team

 

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