More often taxpayers receive letters from the Greek tax administration inviting them to submit amending tax returns to include income from abroad.
The invitation states the following:
"We inform you that with the completion of relevant crosschecks of tax data received in the context of automatic exchange from countries of the European Union (N.4170/2013), it follows that you have not declared or incorrectly declared, pensions, origin ..
(The country of origin is indicated) relating to the fiscal year 2015.
For your convenience, an extract of the data transmitted to the Greek Tax Administration by the Tax Authority of ... is provided at the end of this message.
(The country of origin is indicated) for fiscal year 2015. Based on these data and considering any relevant evidence of payment of this remuneration (Certificate of a foreign paying agent, etc.), as well as other income of the same tax year, please submit the required amending
Income Tax Declaration for the year 2015 to fulfill your tax obligations.”
The most frequent question that arises to taxpayers refers to why to tax income already taxed abroad in Greece as well.
The answer is that a taxpayer resident for tax purposes in Greece is liable to tax on his taxable income arising in the national territory and abroad, namely his worldwide income earned in a given tax year.
The new question that arises for taxpayers is whether tax paid abroad is lost, so income is taxed in both States.
The answer comes with Article 9 of the Law N. 4170/2013 In the case of a taxpayer who is resident for tax purposes in Greece and earns income abroad, the income tax payable by that taxpayer in respect of that income is reduced by the amount of tax paid abroad on that income.
The reduction in the planned income tax may not exceed the amount of tax on that income in Greece.
In accordance with the above, the foreign tax is deducted from the Greek tax, if the taxpayer presents to the Greek tax authority the documents mentioned in circular POL 1026/22.1.2014.
It should be noted that for those States with which Greece has signed a Convention on the Avoidance of Double Taxation, this Convention takes precedence over the Income Tax Code and the relevant articles apply.
Depending on the Convention on the Avoidance of Double Taxation, we distinguish 3 cases:
(A) Income must be taxed in both States: first to the foreign state and then to the Greek according to article 9 of Law 4172/2013.
(B) The income should be taxed only in the Greek State, in which case a refund of the tax withheld in the foreign State should be sought.
(C) Income should be taxed only in the foreign State, in which case this income will be reflected in the tax return for presumptions, after the relevant application for avoidance of double taxation has been submitted by the taxpayer.
For all matters above of global income - residents abroad our office provides specialized tax services, resolving related issues.
On behalf CK Accounting & Tax Services
Author, Christine Kapela