Non-Residence: Start And End Dates For Period Of Temporary Non-Residence
The temporary Non-Residence rules distinguish between residence and sole-residence, allowing a taxpayer to rely on treaty residence despite being dual UK resident. The HMRC manual RDRM12640 The SRT provides:
“An individual’s period of temporary non-residence starts from either:
- the date immediately following the last residence period in which they were solely resident in the UK (referred to as period A)
- if split year treatment applies to the individual, the date following that on which the last residence period for which they had sole UK residence ends.
The period of temporary non-residence ends on the day before the date of the start of the next residence period for which an individual has sole UK residence.”
Treaty non-residence is defined in RDRM12630
“An individual will be Treaty non-resident at any time if, at that time, they fall to be regarded as resident in a country outside the UK for the purposes of double taxation agreements, having effect at that time.
An individual will be Treaty resident in the UK if, at the time, they fall to be regarded as resident in the UK for the purposes of double taxation arrangements having effect at that time”.
Residence and Sole residence is defined in RDRM12620
“In relation to whether an individual is temporarily non-resident, a residence period is either:
- a full tax year
- the overseas part of a split year
- the UK part of a split year.
Sole residence for a year includes residence when there is no treaty non-residence.
“An individual will have sole UK residence for a residence period consisting of an entire year, if they are resident in the UK for that year, and there is no time in that year when they are Treaty non-resident.”
Sole residence includes, residence for part of a split year when there was no treaty non-residence during that part of a split year.
“An individual will have sole UK residence for a residence period consisting of part of a split year, if the residence period is the UK part of that year, and there is no time in that part of the year when they are Treaty non-resident.”
To consider whether treaty non-residence would apply, consider the Greek-UK DTA
Article IX of the Greek-UK DTA, Double Taxation Relief (Taxes on Income) (Greece) Order 1954 (SI 1954/142),
(1) An individual who is a resident of the United Kingdom shall be exempt from Greek tax on profits or remuneration in respect of personal (including professional) services performed within Greece in any year of assessment if
(a) he is present within Greece for a period or periods not exceeding in the aggregate 183 days during that year, and
(b) the services are performed for or on behalf of a resident of the United Kingdom, and
(c) the profits or remuneration are subject to United Kingdom tax.
(2) An individual who is a resident of Greece shall be exempt from United Kingdom tax on profits or remuneration in respect of personal (including professional) services performed within the United Kingdom in any year of assessment, if
(a) he is present within the United Kingdom for a period or periods not exceeding in the aggregate 183 days during that year, and
(b) the services are performed for or on behalf of a resident of Greece, and
(c) the profits or remuneration are subject to Greek tax.
The DTA relies on the domestic tax rules to determine whether a taxpayer is “resident” in one of the DTA states to begin with
Underlying residence rule in Greece
Greek Taxes on personal income
The general rule considered for the determination of an individual’s tax residence status is one’s physical presence in Greece in any 12-month period.
You’re considered to be a Greek resident and liable to Greek tax if any of the following apply:
- Your permanent home, i.e. family or principal residence, is in Greece.
- You spend over 183 days in Greece during any calendar year.
- You’re employed or carry out paid professional activities in Greece, except when secondary to business activities conducted in another country.
- Your centre of vital economic interest, e.g. investments or business, is in Greece.
It appears that a taxpayer could be resident in Greece for part of a year even if they spent less than 183 days there in a Greek tax period which appears to correspond with the calendar year.
One must complete an income tax return in Greece if their annual income is over €3,000.
Even if you have no taxable income at all, you must file a tax return if you meet any of the following conditions:
- You own a private car, a motorcycle with an engine capacity of more than 500cc, a pleasure boat or an aircraft.
- You own a property (see below).
- You’re a partner in a Greek partnership, limited liability company or joint venture.
- You earn income from the letting of property or land.
- You’re buying or constructing a building.
- You own a swimming pool of over 25m2 (you must declare an income of at least €11,600 for an outdoor pool and at least €17,400 for an indoor pool).
No taxable years other than the calendar year are permitted
The filing of tax returns of natural persons is effected only electronically (via the Internet).
Husbands and wives (legally married couples) up to the calendar year 2017 (inclusively) were liable to file a joint tax return, but the income of each spouse was taxed separately. However, the taxable income of one spouse from a business that is financially dependent on the other spouse is added to the taxable income of the other spouse. Taxable income of dependent children is added, with certain exceptions, to the parent who declares the higher total income. If the parents declare equal amounts of total income, the income of dependent children is added to the father’s taxable income. If there is no father, the income is added to the mother’s.Nevertheless, by virtue of L.4583/2018 as of 1 January 2018 and onward, spouses may opt to file separate tax returns, following an irrevocable statement that should be submitted to the tax authorities by the end of February of the year following the year end. In the event of separate filings, the provisions related to taxable income of dependent children apply accordingly for the parent who reports the higher income.
For the purposes of the income tax return filing (single or joint), it is mandatory that the taxpayer(s) has obtained a Greek tax registration number.
Non-Greek tax residents are required to file an annual income tax return only with the Greek tax office applicable for foreign residents.
In this respect, they appoint against the Greek tax authorities, on a basis of a proxy document, a Greek tax resident as their representative. Legal entities are not allowed to be appointed as representatives.
The deadline for the submission of the Greek income tax returns for a tax year is set to 30 June of the following year.
Apart from the actual number of days the taxpayer and/or family spends in Greece, the other crucial factor that can be used for the determination of an individual’s tax residence is the centre of one’s ‘vital interests’.
Although the term ‘vital interests’ has not been officially interpreted within the meaning of the Greek ITC, prior provisions (in force until 31 December 2013) as well as the related jurisprudence indicate several different elements that might be taken into account by the Greek Authorities in order to establish the grounds for the determination of the above term:
- Ownership of assets in Greece.
- Social security registration, either mandatory or voluntary.
- Children’s schools.
- Country where family resides.
- Country where family usually spends holidays.
Notwithstanding the above, an individual’s tax residence status is also determined on the basis of the provisions of a bilateral Double Tax Treaty (DTT) concluded between the contracting states (i.e. country of origin/home and Greece) where applicable.
In principle, subject to relevant tax treaty provisions, income tax is payable by all individuals earning income in Greece, regardless of citizenship or place of permanent residence. Permanent residents are taxed on their worldwide income in Greece.
Benefits in kind are, in principle, subject to payroll withholding taxes (WHTs). However, as of 1 January 2015 and considering the difficulty in evaluating the taxable basis of such benefits at the time of their granting, no employment withholding is effected thereon. Instead, their value (since such benefits are taxable) is added to the employment income of the beneficiaries and taxed upon the assessment of their personal annual income tax return.
Greek Personal income tax rates
As of 1 January 2013, income tax depends on the source of the income (e.g. employment, rental) and is calculated accordingly.
The tax scale applying to employment income, pensions, and business profits is illustrated below. The top tax rate is 44% above Euro 40,000
from PWC: https://taxsummaries.pwc.com/greece/individual/taxes-on-personal-income
Residence in Greece or another non-UK place may be established and recognised by registration, obtaining a personal tax number and filing tax returns on the basis of being physically resent and spending all or part of a tax period there while having a main residence and centre of vital interests there.
Any period of return to the UK would be considered as a returner, a part-year, rather than as a leaver.