The Law on the “brain gain” tax incentives in Greece

Based on the article 40 par. 1 of Law 4758/2020 (Government Gazette A242 / 04.12.2020), the article 5C was added to the Income Tax Code. This article establishes tax incentives for individuals who will transfer their tax residence in Greece. Specifically, there is an exemption from income tax and from the special solidarity contribution for 50% of the income for 7 years coming from paid work and business activity in the country for these individuals mentioned above.

Conditions
Specifically, it is stipulated that an individual, who will transfer his tax residence in Greece will be subject to a special tax regime for the paid work income earned in Greece if cumulatively:
a) was not a tax resident of Greece for the previous five (5) of the six (6) years prior to the transfer of his tax residence to Greece;
b) transfers his tax residence from an EU Member State or of the E.O.X. or by a state with which an administrative cooperation agreement in the field of taxation with Greece is in force,
c) provides services in Greece in the context of an employment relationship that will be associated either with a domestic legal entity or with a permanent establishment of a foreign company in Greece; and
d) declares that he will remain in Greece for at least two years.

If the taxpayer’s application is accepted, the individual will be exempt from income tax and the special solidarity contribution of article 43A for fifty percent (50%) of his employment income earned in Greece during the tax year.
The application for the transfer of the tax residence for inclusion in the provisions hereof will be submitted to the Tax Administration by the natural person within the year of assuming his service and not later than the 31st of July of that year.
Within sixty (60) days from the submission of the application, the Tax Administration will examine the application and will issue a decision, by which it approves or rejects it.
The natural person will state in his application the state in which he had his last tax residence until the submission of his application. The Tax Administration shall inform the tax authorities of that State of the transfer of the tax residence of the taxpayer in question, in accordance with the provisions on international administrative cooperation as they apply.
The provisions of this law will apply to the income of the tax year for which the natural person submits the application and will expire after the end of seven (7) total tax years, while it can not be extended beyond seven (7) tax years.
The natural person who will be included in the above provisions, if in a tax year does not meet the relevant conditions, will cease to be subject to the relevant provisions from the relevant tax year and henceforth is taxed for all his income from paid work acquired in Greece.
Also, the above will be applied exclusively for filling new jobs.
The above applies accordingly to the natural persons who transfer their tax residence in Greece, in order to carry out individual business activity in Greece. Fifty percent (50%) of their income from business activity that they acquire in Greece during the tax year is exempt from income tax and the special solidarity contribution for seven (7) consecutive tax years. The application for the transfer of the tax residence for inclusion in the provisions hereof will be submitted to the Tax Administration by the natural person within the tax year of commencement of its operations in Greece and not later than July 31 of that year.

A joint decision of the Minister of Finance and the Governor of the Independent Public Revenue Authority will determine the procedure for compliance with the provisions hereof, including the transfer of the tax residence, the department responsible for submitting, examining and approving the application, the supporting documents accompanying the application, the supporting documents for the proof of compliance with the conditions of the present, as well as any other necessary subject or detail for the application of the relevant provisions.


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