However, when income tax is added to the high social security contributions and other indirect taxes, Greek taxes are among the highest in Europe. Major tax reforms have been introduced over the last few years and more are expected.
Paying income tax in Greece rather than in another country can be advantageous, as there are more allowances than there are in some other countries. Nevertheless, if you’re able to choose the country where you’re taxed, you should obtain advice from an international tax expert.
Employees’ income tax is deducted at source (i.e. pay-as-you-earn) by employers in Greece and employees aren’t responsible for paying their own income tax, although most must still file a tax return. Non-residents who receive income from a Greek source or own assets in Greece (e.g. property or a car) must file an annual return with the main non-residents’ tax office in Athens, which deals with Greeks and non-Greeks residing abroad with assets in Greece.
Tax File Number
All residents and non-resident foreigners with financial affairs in Greece must have a Tax File Number ( Arithmo Forologiko Mitro/AFM – known as the ‘ A-Fi-Mi’). An AFM is unique for each person and works as a form of identification for the Greek authorities.
Without an AFM you won’t be able to purchase property, buy a car or boat, import a foreign-registered car or obtain any kind of tax certificate from the authorities. Your AFM must be used in all dealings with the Greek tax authorities (e.g. when filing an annual tax return), when paying property taxes and in various other transactions.
You can apply for an AFM at the local tax office in the area where you’re buying a property or living at the time. You need to present your passport and the number is usually issued within a few days of application. Your lawyer or representative can obtain an AFM on your behalf; to do this he needs a legalised copy of your passport plus written authorisation from you.
Fiscal Representative
The term fiscal representative refers to any person or agent who provides tax and other financial services; this may be a professional, such as an accountant or tax adviser, or it may be a non-professional who merely deals with your financial affairs on your behalf.
It’s highly recommended for non-resident property owners to have a fiscal representative in Greece who presents annual tax returns and receives communications from the tax authorities. A fiscal representative can also look after your financial affairs, e.g. receive your bank statements, make sure standing orders are being paid and that you have sufficient funds in your bank account to pay them.
Your fiscal representative can also apply for a tax file number (AFM) on your behalf. Most foreign residents employ a fiscal representative (usually an accountant) to manage their financial and/or taxation affairs.
Before employing a representative, you should obtain recommendations from friends, colleagues and acquaintances. Once you have appointed a fiscal representative, you should give him power of attorney to manage your financial affairs and he should inform the tax authorities that he’s acting on your behalf. Note that many accountants, particularly those based on the islands, are very busy and it may be difficult to find one willing to take on new clients.
Professional fiscal representation including the handling of your financial affairs plus tax returns usually costs around €180 per year. The completion and filing of a single tax return costs between €15 and €30. There may be additional charges for handling tax administration – the cost depends on the complexity of your tax affairs.
For the relatively small cost involved, most people (both residents and non-residents) are usually better off employing a professional to handle their tax and other financial affairs than doing it themselves, particularly as the regulations change frequently. You can also often save more than the representative’s fee in avoided tax.