The digital nomad visa, introduced under Article 11 of Law 4825/2021, offers a viable immigration option for foreigners wishing to reside and work remotely from Greece. However, the new legislation does not include any tax provisions, so its implementation raises questions in terms of tax risks.
In accordance with the new provisions of the Greek Immigration Code, citizens of third countries (i.e. outside the EU / EEA) who are self-employed, self-employed or employees working remotely using information and communication technologies with employers or clients outside Greece (digital nomads), can apply for a visa for Greece valid for up to 12 months. Applicants may be accompanied by members of their family.
It is important to note that the digital nomad visa does not give entitlement to paid employment or independent business activities in Greece. In practice, this means that holders of a digital nomad visa can only provide services to employers and / or clients established outside Greece.
The digital nomad visa is issued by the Greek consular authority of the place of origin or the place of main residence of the applicant, under an accelerated procedure. Specifically, the relevant consular authority is required to respond within 10 days of the relevant request and, provided full documentation has been submitted, complete the visa issuance process in one sitting.
The applicant is required to prove that they will provide remote work for clients or employers outside Greece. In addition, the applicant is required to provide proof that he has sufficient resources as stable income to cover his living expenses during his stay in Greece. The amount of sufficient resources is set at € 3,500 per month. If the aforementioned sufficient resources come from salaried employment, provision of services or entrepreneurial work, the above minimum amount refers to the net income after payment of the required taxes in the country where the employment where the services are provided. The above minimum amount is increased by 20% for the spouse or partner and by 15% for each child.
If the holder of the digital nomad visa considers that he will remain in Greece after the expiration of its period of validity, he can apply for a respective two-year residence permit, provided that the prerequisites for the issuance of the digital nomad visa continue. to apply. The respective residence permit is issued by the competent authority of the Greek Ministry of Migration and can be renewed for a period of two years, for each renewal. Family members of the main applicant can also issue a respective residence permit.
In either case, the respective residence permits do not entitle the holder to paid employment or to self-employed commercial activity in Greece.
Taxation of the digital nomad in Greece
In accordance with the Income Tax Code (Law 4172/2013) (ITC), taxpayers who have their tax residence in Greece are subject to tax in Greece on their taxable income arising both in Greece and abroad. (that is, their aggregate income), earned in a tax year.
A natural person is considered to be a tax resident of Greece if he maintains his permanent or main residence in Greece or his habitual residence or the center of his vital interests, i.e. his personal and financial ties.
In addition, a natural person who resides in Greece for a period exceeding 183 days, cumulated over a period of 12 months, is considered to be a tax resident of Greece, retroactively from the first day of his presence in Greece. This provision does not apply to natural persons who reside in Greece exclusively for tourist, medical, therapeutic or similar private purposes and whose stay does not exceed 365 days, including short stays abroad.
In accordance with the legal provisions in force, taking into account the fact that the initial digital nomad visa can be issued for a period of validity of one year, with the possibility of extension of stay, the holder of the digital nomad visa is taxable in Greece for income occurring abroad, if their residence in Greece exceeds the limits set by the ITC.
The Greek tax authorities have not currently provided any clarification on whether the respective legal provisions need to be changed to exempt holders of the digital nomad visa from being considered tax residents of Greece.
Risk of permanent establishment
According to the ITC, as a permanent establishment is considered to be the specific establishment through which the entity carries out all or part of its business activities.
In addition, in the event that a person acts on behalf of the entity and is authorized to enter into agreements on its behalf, then that entity is considered to have its permanent establishment in Greece with respect to the business activities that such person carries out on his behalf, with the exception of activities which are defined as exemptions by the ITC.
Depending on the circumstances, there is a considerable risk for a digital nomad to ‘trigger’ a permanent establishment in Greece for the company for which he is employed or represented.
Associate, EY Greece
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