Greece – Double Tax Treaty and Agreements
Greece has entered into Double Tax Treaties (DTTs) with a broad range of countries across the globe. As a consultancy that specialises in serving expats and non-residents, we have a comprehensive knowledge of many of the DTTs. Double Tax Treaties are generally entered into to avoid the problem of double taxation on individuals and corporations, as well as to support and encourage cross-border trade and investment and to encourage foreign direct investment overall.
Countries with which Greece has Double Tax Treaties in place
The agreements aim to provide clear guidelines on which country has the right to tax what income. Greece currently has double tax treaties in place with the below countries:
Albania; Armenia; Austria; Azerbaijan; Belgium; Bosnia and Herzegovina; Bulgaria; Canada; China; Croatia; Cyprus; Czech Republic; Denmark; Egypt; Estonia; Finland; France; Georgia; Germany; Hungary; Iceland; India; Ireland; Israel; Italy; Japan; Korea, Republic of; Kuwait; Latvia; Lithuania; Luxembourg; Malta; Mexico; Moldova; Morocco; Netherlands; Norway; Poland; Portugal; Qatar; Romania; Russia; San Marino; Saudi Arabia; Serbia; Singapore; Slovakia; Slovenia; South Africa; Spain; Switzerland; Tunisia; Turkey; Ukraine; United Arab Emirates; United Kingdom; United States and Uzbekistan.
A closer look at the UK – Greece Double Tax Treaty
The DTT between Greece and the United Kingdom was developed to prevent the double taxation of income and capital gains where applicable. It applies to both businesses and individuals. You can get in touch with our team if you would like a copy of it to review. There is a framework allocating tax rights between the two countries and, most importantly for our clients, providing relief from double taxation when you or your business undertake cross-border activities.
The types of income that are covered by the treaty include:
- Employment
- Pensions
- Business profits
- Dividends
In terms of where the income is taxed, there is a general rule of thumb in the treaty which refers to the country of residence or the country where the income arises.
In addition to providing a tax credit mechanism, the DTT enables the exchange of information between the tax authorities – thus helping to prevent tax evasion.
For our clients, the DTT provides clarity as to the tax credits available on foreign dividends and the taxes to be paid on income and where they need to be paid.
A closer look at the Greece – United States Double Tax Treaty:
Similar to the treaty with the UK, the double tax treaty between Greece and the United States is also designed to provide relief from double taxation of individuals or businesses in the United States and Greece. Various forms of income are covered in the agreement, including but not limited to:
- Business profits
- Dividends
- Royalties
- Employment
The benefit to our clients is that there is certainty around what tax needs to be paid where, as well as the provision of tax credits where applicable. This is particularly important when assessing cross-border tax implications, including those relating to property transactions and inheritances, which may also involve separate tax rules and agreements.
Establishment and operation
The tax treaty between Greece and the United States dates back to 1950. The treaty has a savings clause in place that limits the application of the treaty to certain residents and citizens. The clause states that:
(1) Notwithstanding any provision of the present Convention each of the Contracting States, in determining the taxes, including all surtaxes and complementary taxes, of its citizens, subjects, residents or corporations, may include in the basis upon which such taxes are imposed all items of income taxable under its revenue laws as though this Convention had not come into effect.
There is a component of the treaty related to government employees. It generally provides that government employees receiving wages, salaries or a pension from a contracting state for services rendered to that state will be taxed in accordance with the applicable treaty provisions.
Article 3
Article three of the United States and Greece Double Tax Treaty addresses the taxation of industrial and commercial profits. It generally limits the ability of one country to tax the business profits of an enterprise of the other country unless the enterprise conducts business through a permanent establishment in the first country.
Interest income is addressed separately under Article 6, which provides certain exemptions and limitations depending on the recipient’s circumstances.
For example, in a hypothetical case where a Greek resident is not conducting or engaged in any business in the United States through a permanent establishment but is receiving qualifying interest from a specific source in the United States, the Greek resident may be exempt from US tax under Article 6, subject to its conditions. Similar provisions apply to qualifying United States residents receiving interest from Greece, although the treaty includes a 9% per annum interest-rate limitation.
Article 9 – Dividends
This section of the DTT essentially states that dividends and interest paid by a Greek corporation are exempt from US tax unless the recipient is a citizen, resident or corporation of the US. The application of this provision depends on the relevant treaty and domestic tax rules.
Article 14 – Foreign Tax Credit
An extract is provided below:
(1) Notwithstanding any provision of the present Convention each of the Contracting States, in determining the taxes, including all surtaxes and complementary taxes, of its citizens, subjects, residents or corporations, may include in the basis upon which such taxes are imposed all items of income taxable under its revenue laws as though this Convention had not come into effect.
(2) Subject to section 131 of the United States Internal Revenue Code, Greek tax shall be allowed as a credit against United States tax.
(3) Greece will allow against Greek tax a credit for the amount of United States tax imposed upon income from sources within the United States but in an amount not exceeding the amount of the Greek tax imposed upon such income.
This is a foreign tax credit provision which is common in most double tax treaties. It provides that where a person pays taxes in one country, they may be able to claim a credit against tax payable in the other country, subject to the applicable limitations and requirements.
Article 18 – Exchange of information between the tax departments
An extract from the treaty is provided below:
The competent authorities of the Contracting States shall exchange such information (being information which such authorities have at their disposal) as is necessary for carrying out the provisions of the present Convention or for the prevention of fraud or the administration of statutory provisions against legal avoidance in relation to the taxes which are the subject of the present Convention.
Any information so exchanged shall be treated as secret and shall not be disclosed to any person other than those concerned with the assessment and collection of the taxes which are the subject of the present Convention. No information shall be exchanged which would disclose a technical secret, or process relating to trade, industry, business, or a profession.
The above section essentially means the two countries will cooperate with each other. It ensures that the tax departments communicate with each other and exchange information, subject to the relevant confidentiality protections and limitations.
Banks in Greece that report US Account Holders
To find out which banks and financial institutions in Greece are registered for FATCA reporting, you can follow the attached link and view the FFI list.
Other benefits of Greece’s Double Tax Treaties
One of the additional benefits of double tax treaties Greece has in place is the establishment of mutual agreement procedures for dispute resolution. This can help our clients address double taxation issues through the relevant competent authorities, although the process and resolution times vary.
Our experience in advising non-resident and expat clients on Double Tax Treaties with Greece
We have a comprehensive knowledge of some double tax treaties Greece has in place, as well as experience coordinating with independent accounting and legal professionals who can interpret and apply the double tax treaties Greece has in place with different countries. Our independent partner accountants advise our expat clients on:
- The tax implications for expats and non-residents who are receiving dividends from overseas.
- Tax implications if you have investment properties overseas and reside in Greece, or vice versa.
- Tax implications of owning shares overseas.
- Tax implications of making capital gains.
Contact our team to talk about how our independent partner accountants can assist with your property, income tax or other needs. We understand the unique challenges facing non-residents, dual citizens and expats and are able to assist.
Client testimonials
We needed urgent advice on the Greece and USA Double Tax Treaty. The Tsaks Consulting team was able to assist. We were dealing with high-value sums, and therefore accuracy of advice was critical. The team from Tsaks Consulting took the time to explain everything to us and referenced the exact section of the treaty which applied. Tsaks Consulting and their accounting partners, whom we dealt with, were highly experienced, prompt in their service and very professional.
Patrick V | Private Individual (HNW) | New York and Santorini
The Tsaks Consulting team and their accounting partners are our go-to team when we require advice and assistance related to double tax treaties in Greece. Particularly the US / Greece double tax treaty as well as the Greece / Canada double tax treaty. In general, they have a comprehensive knowledge of Greece’s double tax treaties, and I would recommend them for assistance if you require tax advice. They also communicate at a professional level with your in-house accountants and legal teams. This is important for our internal operations and ensuring everything in our organisation runs smoothly.
George P | Multinational Corporation | Europe and America
Important Clarification
Tsaks Consulting Greece is a business consultancy, not a law firm or accounting practice. We provide consultancy, administrative assistance and coordination services and work with independent qualified accountants, lawyers and other professionals who provide specialist tax, accounting and legal advice.
The information provided is general in nature and does not constitute personalised tax, accounting or legal advice. Tax treaty provisions, eligibility requirements and applicable legislation may change and should be reviewed by appropriately qualified independent professionals.