Greece’s highest administrative court, the Council of State, has ruled that the imputed income presumption for asset acquisition applies to foreign residents, even if their only declared income is imputed rather than actual.
This decision is expected to have far-reaching implications for international investors in the Greek real estate market.
The case involved a foreign national who was assessed Greek income tax based on the imputed acquisition of property in Greece. Initially, lower administrative courts ruled in favor of the taxpayer, arguing that the application of imputed taxation required the existence of actual taxable income within Greece. However, the Council of State overturned this decision, ruling that even imputed income, such as the value of free-use housing, is sufficient to trigger taxation.
With ruling No. 1769/2024, the court clarified that actual income is not required for the imputed taxation rule to apply, expanding the scope of Greek tax law. This change could significantly affect foreign property buyers, including those investing in Greece through the Golden Visa program, as it enables tax authorities to impose income tax even when the declared income is entirely imputed.
This ruling increases the tax exposure of non-residents purchasing property in Greece. Foreign investors, even those acquiring real estate for vacation or investment purposes, may now face unexpected tax bills, regardless of whether they earn income in Greece.
Additionally, this decision reduces the ability of foreign taxpayers to contest tax assessments. Until now, non-residents could argue that the lack of actual income meant the imputed taxation rule should not apply to them. However, the court has now made it clear that any form of income—even if only imputed—can activate taxation.
For foreign property owners and investors, this ruling raises critical concerns about tax liabilities in Greece. However, some legal and financial strategies may help mitigate risks. One option is to invoke a Double Taxation Avoidance Agreement (DTAA) if the investor’s home country has a tax treaty with Greece. By proving tax residency elsewhere, investors may be able to challenge Greek taxation, provided they obtain and submit a valid certificate of tax residence from their country.
Another defense is to prove that the funds used for purchasing property originated from foreign earnings already taxed abroad or from personal savings. Bank transfer records showing that the money was sent from abroad—and was not earned in Greece—could serve as key evidence to dispute taxation.
Foreign buyers may also consider declaring sufficient income to offset the imputed tax burden. This could involve reporting foreign income to Greek tax authorities or recognizing imputed income within Greece, such as from the free use of a property.
For those permanently residing outside Greece but owning property there, ensuring that Greek tax residency is properly registered is crucial. Non-residents should formally declare their tax residency abroad to avoid being classified as Greek tax residents, which could result in additional tax obligations.
If a foreign investor faces a tax assessment based on imputed income, they have the right to file an administrative appeal with the Independent Authority for Public Revenue (AADE) in Greece. If unsuccessful, they can escalate the case to an Administrative Court, where they can argue that they had no actual taxable income in Greece.
