Income class (taxable income) | applicable tax rate

EUR 0 to EUR 10,000 | 9%

EUR 10.001 to EUR 20,000 | 22 %

EUR 20.001 to EUR 30,000 | 28%

EUR 30.001 to EUR 40.000 | 36 %

over EUR 40,000 | 44 %

Greece has developed special tax options for foreign pensioners. In Greece, pensioners pay only 7% income tax on their German pensions. Other income is also tax-advantageous. However, certain conditions are attached to this option taxation. These tax conditions are only available on request. They shall also apply for a maximum period of 15 years. Furthermore, an agreement on tax cooperation must be concluded with the country of origin. And of course, this regulation only applies if there are actually pensions from abroad. Finally, the unlimited tax liability in Greece foreseen in the period of application is one of the conditions for pensioners to be able to pay these low taxes in Greece. German pensioners, on the other hand, are lagging behind. In the double taxation agreement with Greece, Germany has secured the right to tax state and public pensions.

1. Paying Taxes as a Retiree in Greece – Introduction

Many southern European countries have introduced special tax privileges for foreigners since the turn of the millennium. Among them are also some that are targeted at seniors. After all, the Mediterranean region is considered a sun-rich alternative for a second life after working life. The many culinary attractions alone draw pensioners in droves to the south – not to mention the landscape, climatic and cultural.

Greece has also entered this competition for a few years. There, too, there are regulations that promise foreign pensioners tax benefits. For this reason, we now look at this offer together with you and see if it is worthwhile. In particular, retirement income is the focus of our considerations, without going into detail about special models, such as the Rürup pension. However, we will also shed light on income from other sources if necessary.

How much tax do pensioners pay regularly in Greece?

Before we go into the details of the preferential taxation of foreign pensioners in Greece, let us show for comparative purposes how much tax one would otherwise have to pay. We are also interested in how much tax you have to pay as a pensioner in Germany.

2.1. Taxes on pensions in Germany

In Germany, pensions are subject to regular taxation under the Income Tax Act. However, pensions and pensions fall within the scope of other income.

Nevertheless, very special regulations apply to retirement benefits in Germany. § 22 EStG codifies them. If you look up there, you immediately notice a large table. There is talk of a tax share depending on the retirement age. This increases from year to year. The reason for this is that pensions used to be tax-free. Because the pension contribution payments are made from taxed income. For pensions, however, different rules applied, because these were taxable. This was true at least until a court ruling recognised a real tax inequality, even though pensioners, unlike pensioners, never had to make their own pension contributions. So the legislature had to improve the income tax law in this regard. But anyone who hoped as a pensioner that he would no longer have to pay taxes in the future was mistaken. Instead, the successive taxation of pensions was introduced. To the same extent, however, the tax burden of pension payments under the special expenses was reduced.

Thus, no blanket answer to the question of the amount of German taxes on pensions is possible. Ideally, the taxable share is only 50%. But for people who retire from 2040, no reductions in the taxable share are planned. Consequently, from 2040 onwards, the range of tax payable at the top tax rate on German pensions is between 21 % and 42 % (2023, with a tax share of 83 %, depending on the retirement year, this range is between 21 % and 34,86 %).

As we will see in a moment, the regulations on how pensioners have to pay taxes in Greece are much simpler.

2.2. How pensioners in Greece pay taxes on their pensions

2.2.1 Staggering of income tax rates

Anyone who is regularly taxed as a pensioner in Greece pays income taxes. A progressive tax rate is applied, which increases in steps from EUR 10,000 to EUR 40,000:

Incidentally, these tax rates also apply to income from the following sources: wages and business activities (commercial, self-employment). For people who have an income of more than EUR 40,000 to tax, there are thus up to this limit taxes with an average tax rate of 23.75%, which corresponds to EUR 9,500. In addition, there are 44% of taxes on the part of income that exceeds EUR 40,000.

However, all statutory social security contributions are deductible from gross income. In order to determine the taxable income, these taxes must first be deducted.

2.2.2. Applicable tax reductions

In addition, tax reductions must be taken into account. These depend on whether taxpayers are single or married and whether they have dependent children, in the latter case also on their number. Since we focus here on pensioners, we only deal with the allowances for unmarried and married people.

Single and married taxpayers without dependent children with an income of up to EUR 12,000 can reduce their income tax by EUR 777. For income above EUR 12,000, the tax rebate for each EUR 1,000 above this limit is reduced by EUR 20 each.

In order to obtain this tax deduction, however, certain conditions must be met. For example, they are linked to costs of living, which have been proven to be paid by electronic means. These include costs for food, housing, clothing, services, car maintenance and much more. Only if these expenses are paid either in Greece or in another EU/EEA country, they are taken into account by the financial authorities. The cumulative costs must be at least 30% of the income, up to a maximum amount of EUR 20,000. If the actual demonstrable costs were lower, the difference is subject to a tax of 22 %.

For taxpayers with a degree of disability of at least 67 %, a flat-rate tax deduction of EUR 200 applies.

Tax incentives for pensioners in Greece: only 7% tax

But now we look at the tax innovations that Greece wants to attract pensioners from abroad. For this purpose, the Parliament in Athens in 2019 and 2020 adopted Laws 4646/2019 and 4714/2020. In addition to the adjustments for foreign seniors that are interesting for this article, it also contains some other regulations that are intended to attract wealthy investors as well as employees and self-employed from abroad. In addition, Greece has created further tax incentives to bring digital nomads into the country.

3.1. Only 7% tax for pensioners in Greece

The core of the tax incentives in Greece is that foreign pensioners and pensioners only have to pay 7% in taxes. This applies to pensions, rental income, interest, dividends and investment income from foreign sources. In addition, foreign withholding taxes may be charged. However, if there is also income from Greek sources, they are separately subject to regular taxation in Greece.

It must be noted that this flat-rate taxation does not provide for basic allowances or other tax deductions. Therefore, this special tax regime tends to be much more attractive for people with high incomes.

3.2 Conditions on tax incentives

In order to take advantage of these really very low flat-rate taxes, foreign pensioners and pensioners in Greece must meet a number of conditions. First of all, an application must be submitted to the tax office in Athens, which is responsible for foreign tax residents. In order to take advantage of the tax benefits in the current calendar year, you have to submit the application by 31.03. at the latest. Furthermore, in five of the previous six years, no unlimited tax liability must have existed in Greece. In addition, one must provide proof of foreign pension or pension benefits. It shall also include information on the amount of income. Then there are also requirements regarding the respective country of origin of the applicants. This is because there must be a bilateral agreement with Greece on tax cooperation.

These are the requirements that retirees and pensioners must meet when submitting their applications. A number of others are added to this and concern the period of application of preferential taxation. For example, pensioners and pensioners benefit from the low taxes in Greece for a maximum of 15 years. But this also applies only as long as one has a residence, habitual residence or center of life in Greece for at least 183 days a year, the center of life being both private and financial or economic. If this period of attendance is exceeded, the right to this taxation expires.

Of secondary importance are some more points. Thus, there is no offsetting with other taxes or tax assets in Greece. In addition, the annual payment period for paying the tax should be observed. Because if the deadline, which ends on the last business day in June, expires, the preferential taxation is permanently eliminated. Should this happen, one is automatically subject to regular taxation in Greece (see above). Therefore, it is hardly surprising that the tax payment is always due in one amount.

4. advantageous taxes only for German pensioners in Greece

Although the new tax benefits apply to all foreign retirement income, if you apply for them in Greece under the special regulations, at least German nationals must pay attention to an important special feature. Because here, in fact, only pensioners are able to use this option. Thus, German pensioners remain outside. This is not so much related to Greek legislation as to the double taxation agreement between Germany and Greece. Article XII, paragraph 3, states that old-age pensions paid by the State or public authorities to eligible recipients are subject to taxation in the same country. In other words, a Greek pensioner living in Germany pays taxes on his pension in Greece. And conversely, a German pensioner who is tax resident in Greece will still tax his pension in Germany.

5. special taxes in Greece for pensioners and pensioners – Conclusion

5.1 Tax advantage for foreign pensioners and pensioners in Greece

Let us now come to a final consideration. It can be said in general that the flat-rate tax rate of 7% is very attractive for foreign pensioners and pensioners in Greece. The conditions which they must fulfil in order to benefit from this preferential taxation are also relatively easy to fulfil. Furthermore, there is an advantage in terms of the maximum duration of application of 15 years compared to similar tax regimes in other southern European countries, such as Italy or Portugal. Comparable regulations expire a little earlier than in Greece.

However, this taxation is only worthwhile if the income exceeds a certain minimum level. Otherwise, taxation would be more advantageous under the regular regulations. In any case, this point is also relevant with regard to alternative taxation in Germany. If you see a greater advantage in the use of the basic allowance granted in Germany, it is better to maintain a residence in Germany and travel to Greece only for holiday purposes.

5.2 Advantages in central tax administration jurisdiction

What can also be considered a very practical advantage is that the tax support takes place through a central, specially set up administrative unit. This will better protect local authorities, which may have less experience of these specific regulations outside the larger population centres in Greece, from making erroneous assessments.

5.3. Moving to Greece as a pensioner – option also for GmbH shareholders

Anyone who receives pensions from other than public funds in Germany can also benefit from the low taxes in Greece, for example as a GmbH shareholder. What you should of course pay attention to is whether there is a participation in a German corporation at the time of the move. Because then the hurdle is the exit taxation incurred when moving out of Germany. However, there are ways to avoid them. We are happy to advise you individually.

Nevertheless, the move can be interesting for former GmbH shareholder managing directors. Especially if you have agreed with the company a high pension. However, you have to make sure that the conditions are foreign usual. Alternatively, you can also sell the GmbH shares before moving to Greece and arrange an annuity in return. In both cases, a German pensioner in Greece can expect favorable taxes.

5.4. No option for German pensioners

As tempting as the idea of a very advantageous retirement under the sun of Greece may seem to one or the other, it only makes sense for pensioners in Germany, but not for German pensioners. Unlike German pensioners who move their sole retirement home to Greece, pensioners who do the same have to tax their retirement benefits in Germany according to the general rules (see above). So instead of paying only 7% of taxes in Greece, they accrue up to 42% of taxes in Germany.

5.5 Why Greece Created These Low Taxes for Retirees and Pensioners

Finally, a brief consideration of why Greece introduced this special taxation for foreign pensioners and pensioners. Because the fact that the Greek Treasury renounces a significant part of the taxes compared to the regular income taxation may be surprising at first.

To understand this, it is necessary to recall the increased purchasing power of senior citizens, which is especially noticeable in Central Europe and Scandinavia. Since senior citizens usually spend their money where they live, they make a significant contribution to the economy. Therefore, in this context, one also speaks of a silver economy. In addition, senior citizens often have very special requirements, such as their medical care and care. This thus opens up niches in the labour market that can be filled with new workers. So Greece is trying to stimulate its own economy by locating senior citizens. In this indirect way, the Greek Treasury still receives its taxes despite the tax relief granted.