Greeks working abroad must avoid tax fines in the country

When the economic crisis began in Greece a little over a decade ago, labor market conditions were difficult both for businesses trying to survive and of course for workers trying to keep their jobs despite wage cuts and a contracting economy. It was a particularly difficult period for Greece’s young adults who wanted to start their professional lives, enter the workforce or take the next step in their career from low-paying menial jobs.

After trying in vain to find or retain gainful employment in Greece, many looked abroad for opportunities and thousands of Greeks became permanent residents of countries elsewhere in Europe and further afield.

It is at this point that concerns arise regarding their tax obligations. Most of them submit a tax return to Greece every year stating that their income for the period is zero. This is a mistake that can prove costly.

For those taxpayers who live permanently abroad and have established their tax residence there, it is deemed necessary to transfer their dealings with the Greek tax authorities to the Economic Services Directorate for Residents of Foreign Countries (known in Greece as DOY Katoikon Exoterikou), as complicated and time-consuming as this process may be.

Most of them submit a tax return to Greece every year stating that their income for the period is zero. This is a mistake that can prove costly 

By doing so they will no longer have any obligation to submit a tax return in Greece for incomes arising abroad. If, however, they have failed to transfer their Greek tax affairs to the above directorate, the rules state that they should be taxed for incomes earned abroad in this country as well. This is because in Greece the authorities take into account taxpayers’ worldwide income for tax purposes.

Take for example a Greek who works in Germany as an employee and has an annual income of 30,000 euros there. They must declare this income to the Greek authorities, as well as the tax they paid in Germany for the corresponding income. If the tax they paid in Germany (for example 3,000 euros) is less than the tax they would have paid for the same income in Greece (say 3,500 euros), the difference must be paid to the Greek authorities – in this case 500 euros.

But no such payment would have to be made if they had moved their tax affairs from their local Greek tax directorate (DOY) to DOY Katoikon Exoterikou. Therefore, it is crucial and necessary to transfer these taxpayers’ tax liabilities to the DOY Katoikon Exoterikou in Greece so that they are not confronted some years down the line with a nasty surprise involving large amounts of supplementary taxes, fines and surcharges that they will be asked to pay to the Greek authorities for incomes earned abroad.

Elli Kominea is an economist and tax accountant.