In order to attract wealthy individuals, alternative taxation of income from foreign sources obtained by natural persons (and/or their relatives) who transfer their tax residence to Greece is introduced if the following conditions are cumulatively met (a) the person was not a Greek tax resident during the 7 out of 8 years preceding the transfer of his or her tax domicile to Greece and (b) that he or her or his relatives, or a legal person in which it holds the majority of the shares, invest in immovable property, movable assets or shares of legal persons established in Greece. The amount of the investment should not be less than 500,000 euros (EUR) and must be completed within three years. Condition (b) is not required in the case of a person who has obtained a residence permit due to investment activities in Greece (on the basis of Article 16 of Law 4251/2014). In particular, individuals who use the alternative tax method would have to pay a flat-rate tax of €100,000 per year, regardless of the amount of their foreign income. In the event that a parent uses equivalent provisions, he would have to pay a flat-rate tax of 20,000 euros per year. The use of these provisions may not exceed fifteen taxation years. Indirect taxation accounts for more than 40% of the state`s tax revenues. The protocol became necessary to appease the European Commission, which considered that the agreement could be contrary to the European treaty. Threatened by a possible challenge before the Court of Justice of the European Communities, Britain and Switzerland have agreed that account holders who have already paid the 35% withholding tax due under the EU Savings Tax Directive will be subject to a final withholding tax of 13% to honour the tax debt on interest payments. In addition to the adoption of a provision on the exchange of information in accordance with OECD standards, the Protocol provides, inter alia, for exemption from withholding tax for dividends paid to occupational pension funds and public bodies.
The tax rate that the source state is allowed to levy on interest payments has been reduced today from 10% to 7%. The revised DBA with Greece also adopted an arbitration clause. This will help to avoid double taxation once and for all. Bern, 28.12.2011 – Yesterday, the minutes of amendment to the 4 Double Taxation Convention (DBA) between Switzerland and Greece entered into force on 1 November 2010. It contains an OECD mutual assistance clause. The amending protocol will contribute to the further positive development of bilateral economic relations. For all other income and capital, Switzerland applies the « exemption from progression » method to Contracting States in order to avoid double taxation. Therefore, Switzerland will not grant a credit for foreign taxes. The only exception applies to the contract rate for interest at source, royalties and foreign dividends.
Under the general rule, the provisions of greece`s double taxation treaties with other countries/jurisdictions, which may include a narrower definition of a permanent establishment, take precedence over the provisions of the Greek Income Tax Law. . . .