The dispute centers on investments made in 2014 and on Greece’s system of so-called “deemed expenditure” rules, under which certain major purchases can trigger scrutiny over how they were financed. The rules can, under some circumstances, affect people who live and pay taxes abroad but continue to earn income in Greece.
The taxpayer, a resident of Australia, received Greek-source income from rental properties and interest, according to the case reviewed by Greece’s Dispute Resolution Directorate, an administrative body that examines challenges to tax assessments.
During an audit, Greek tax authorities identified purchases of securities and other investment products with a total value of roughly €2.87 million in 2014. The woman’s share was 50%, or €1.435 million.
Authorities said that amount had not been reported on her Greek tax return as expenditure related to the acquisition of securities. Because she was earning income in Greece, tax officials sought evidence showing where the money used for the investments had come from.
The taxpayer argued that the funds weren’t new or undeclared income. Instead, she said, the money had been sitting in her investment account for years and originated from capital legally transferred into Greece in 2004 and 2005.
That explanation failed to persuade the Dispute Resolution Directorate.
According to the ruling, the taxpayer didn’t provide tax returns from previous years demonstrating that the foreign-currency funds in question had been properly declared. She also didn’t rely on a mechanism available under Greek tax rules that allows taxpayers, subject to certain conditions, to use accumulated capital from previous years to justify current spending.
The case underscores a potential complication for members of Greece’s large diaspora and other overseas investors. Being classified as a tax resident of another country doesn’t necessarily insulate an individual from Greek tax rules when that person continues to receive income or hold investments in Greece. Large financial transactions can create additional reporting and documentation requirements, particularly when authorities seek evidence establishing the origin of the funds.
The taxpayer also challenged the assessment on procedural grounds, arguing that the case involved the 2014 tax year and that the statute of limitations had expired, preventing the authorities from imposing additional taxes.
The directorate rejected that argument as well. It found that the size of the tax liability allowed authorities to apply a 10-year statute of limitations available in certain tax-evasion cases. On that basis, the directorate concluded that the Greek tax administration had until the end of 2025 to issue the assessment.
The financial consequences were substantial.
The directorate upheld €582,160 in principal tax, an additional €291,080 related to inaccuracies in the tax filing and €56,745 under Greece’s special solidarity levy, a surcharge introduced during the country’s sovereign-debt crisis and imposed for years on certain categories of income.
The total assessment came to €929,985.86.
