19th March 2011 at 6:07 pm #30529TFCParticipantMember since: 8th January 2011
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Does anyone have any comments re this?
"There is a clause in the new tax evasion bill currently passing through the Greek parliament which suggests that the authorities might be looking to tighten up on those who “elect” to be taxed abroad. It changes the definition of tax residence from the current notion of where your “centre of vital economic interests” lies to a simple tally up of days resident in Greece. If you spend more than 183 days in Greece per calendar year, you are deemed tax resident, and obliged to pay tax to Greece on your worldwide income, subject to the provisions of any Double Tax Treaty (e.g., government pensions paid from the UK). It’s the third item here http://www.kpmg.com/GR/en/IssuesAndInsights/ArticlesPublications/Tax-News/Documents/Tax-20110303.pdf" :-/19th March 2011 at 8:34 pm #30985KephalianParticipantMember since: 17th September 2006
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A quick assessment of this appears to relate to Greek tax paying citizens and resident tax payers of non-EU countries – Albania etc, where a double tax agreement does not exist. There also appears to be a heavy focus on corporate concerns taxed in Greece but with global reach. This in particular is of great concern to Athens in respect to tax evasion.20th March 2011 at 5:07 am #31285
The quote that you cut and pasted from the Living in Crete forum came from me, so you may as well have my comments as well.
Many UK expats would “fail” the residency tests set by the UK taxman. Conversely, they would “pass” Greek tax residency tests. The system relies on a degree of honesty and self – declaration but, for whatever reason, some expats fail to tell the UK taxman that they have “gone”, and similarly fail to tell the Greek taxman that they have “arrived”. Greek accountants seem to be happily complicit in this. As a consequence, taxes due to Greece are instead paid to the UK. (I suspect similar circumstances apply to expats from other countries too).
The new (proposed) law clarifies absolutely any tax residency issues. You live here for 6 months or more – you are a Greek tax resident, period. (This more or less mirrors the UK taxman’s view on residency).
Will it have any practical impact? Probably not, unless it also has some sanctions against accountants being complicit in making inaccurate returns. (Imagine, though, if the Greek taxman did get serious. Most people have a tax number. That tax number is linked to, among other things, electricity bills, ‘phone bills, mobile ‘phone bills and, possibly, fuel oil bills. All of these bills show a consumption of something in Greece at a point in time or over a period of time. Not too difficult to use them to establish a pattern of Greek residence. “More than 6 months, sir? That’ll do nicely.”)
As a Greek tax resident from the time I moved here in 2005, I have a slight degree of self – interest in the issue. Over the last couple of years, since the size of the black hole in Greece’s finances has become apparent, the taxes I pay (both direct and indirect) have risen considerably. It would be nice to see, in the jargon, “a widening of the tax base” – more people joining the Greek taxpayers’ club.
Maybe it’s time to start collecting those supermarket receipts in order to qualify for a Greek tax allowance.
Paul20th March 2011 at 1:04 pm #31506AnonymousMember since: 1st January 1970
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The important words are "subject to the provisions of any Double Tax Treaty". Britain and Greece have a double tax treaty and therefor Greece cannot insist that UK generated pensions (i.e paid from the UK) be taxed in Greece.
The UK government is as hard up as the Greek one and will use every trick in the book to ensure that UK pensions paid to Brits living elsewhere in Europe are taxed in the UK. It is only in the last few years that the UK government agreed to pay their pensions direct to Greek bank accounts.
The old rule that income is taxed in the country where it is generated is still applied by the British taxman irrespective of where you live.
Fred20th March 2011 at 2:42 pm #31663
I think that you are mistaken about the workings of the DTT. It’s here http://www.hmrc.gov.uk/manuals/dtmanual/dt8250+.htm and the key articles in respect of pensions are 8 & 10. In a nutshell, if you are a UK citizen now tax resident in Greece, you should pay Greek tax on UK pensions and annuities arising from non – governmental service but pay UK tax on pensions arising from UK governmental service.
I believe that there has been (still is?) some confusion about where tax should be paid on the UK state pension. There’s a financial advice company here http://www.gerardassociates.co.uk/how-pension-taxed-overseas-double-taxation which suggests that it should be treated in the same way as a non – governmental pension (i.e., taxed in Greece if you are a Greek tax resident).
I still think that the Greek taxman is missing out on a reasonable slice of tax revenues from expats, and the proposed residency law amendment suggests that he might be thinking along similar lines.
Paul20th March 2011 at 3:12 pm #31786
Discovered after my above posting, and straight from the horse’s mouth http://www.hmrc.gov.uk/pensioners/pension-company.htm#4
Paul20th March 2011 at 8:15 pm #31881
TFC – if your location flag also indicates your citizenship, the Canada/Greece DTT is here http://www.fin.gc.ca/treaties-conventions/greece_1-eng.asp
Paul21st March 2011 at 7:46 am #31960AnonymousMember since: 1st January 1970
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424B4B50574745544157240 wrote: In a nutshell, if you are a UK citizen now tax resident in Greece, you should pay Greek tax on UK pensions and annuities arising from non – governmental service but pay UK tax on pensions arising from UK governmental service.
In 2008 I put this exact argument to the UK taxman via a UK accountant as it would have been beneficial to me to be taxed this way because I thought I could have two personal allowances. One in Greece and one in the UK.
I ended up with a bill from the accountants for their work and a ruling that I had to pay UK tax on all my pensions.
I wish you luck if you want to fight the same battle.
Fred21st March 2011 at 9:18 am #32020
Is it possible that your own battle came about because of dual residency? My hypothetical case, above, was based on the most simplistic scenario of an expat relocating completely to Greece. The most usual circumstances for questions of dual residency arising is where you continue to maintain a home in the UK (as well as one in Greece) and/or routinely spend 91 days or more back in the UK. Under those circumstances, HMRC will certainly wish to claim you as a UK tax resident, and probably fight for it.
Many DTTs have "tie break" clauses to determine the outcome in these cases, but the Greek/UK one does not. I’m not certain, but I think that where no tie breaker exists, the OECD model version is used – here http://www.oecd.org/document/45/0,3746,en_2649_33753_36221101_1_1_1_1,00.html
It wouldn’t be difficult to see the UK taxman "winning" you as a taxpayer under 2a (vital interests = source of pension) or 2c (nationality).
I still think that where you are a clear cut Greek tax resident, the tax rules outlined earlier should apply.
Paul21st March 2011 at 10:05 am #32065altohbMember since: 10th July 2007
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We had no problem using the DT treaty to enable us to declare my husband’s company pension here in Crete. We had signed the relevant paperwork when we left the UK to declare that we would no longer be tax resident there, and the Greek tax authorities treat us as resident here. The pension provider sends us a statement of payments for the relevant calendar year (paid gross into a UK bank, following application of the DT treaty), and this is submitted with our Greek tax return.
We are both British born, so no citizenship issue.
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