UK Non-Dom vs. Greek Non-Dom: Two Approaches to Taxing Foreign Income

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Table of Contents

1. Introduction to Non-Domiciled Status
2. The UK Non-Dom Regime
3. The Greek Non-Dom Program
4. Comparative Analysis
5. Economic Impact and Criticisms
6. Future Outlook
7. Conclusion
8. FAQs

1. Introduction to Non-Domiciled Status

In an increasingly globalized world, high-net-worth individuals (HNWIs) are constantly seeking ways to optimize their tax positions. One such mechanism that has gained significant attention in recent years is the concept of non-domiciled (non-dom) status. This article delves into a comparative analysis of two prominent non-dom regimes: the long-standing UK system and the relatively new Greek program.

Non-domiciled status typically allows individuals who are resident in a country, but not domiciled there, to pay tax on their foreign income only when it is brought into the country. This can result in substantial tax savings for those with significant overseas earnings or assets. Both the UK and Greece have implemented non-dom regimes, but with distinct approaches and outcomes.

2. The UK Non-Dom Regime

2.1 Historical Context

The UK’s non-dom regime has roots stretching back to the 19th century, originally designed to accommodate colonial citizens and traders. Over time, it evolved into a complex system that has attracted wealthy individuals from around the world, contributing to London’s status as a global financial hub.

2.2 Key Features

Under the UK system, non-doms can choose between two main options:

1. Remittance Basis: Pay UK tax only on UK income and gains, plus any foreign income or gains brought into the UK.
2. Arising Basis: Pay UK tax on worldwide income and gains as they arise.

The remittance basis comes with an annual charge for long-term residents:

• £30,000 for those resident for at least 7 out of the previous 9 tax years
• £60,000 for those resident for at least 12 out of the previous 14 tax years

2.3 Recent Changes

In recent years, the UK has implemented several reforms to its non-dom regime:

• From April 2017, individuals who have been UK resident for 15 out of the previous 20 tax years are deemed domiciled for all tax purposes.
• Inheritance tax now applies to UK residential property held through offshore structures.
• The remittance basis charge has been increased and tiered based on length of residence.

3. The Greek Non-Dom Program

3.1 Introduction and Objectives

Greece introduced its non-dom program in 2020 as part of a broader strategy to attract foreign investment and high-net-worth individuals. The program aims to boost the Greek economy, which has faced significant challenges in recent years, including the aftermath of the 2008 financial crisis and the COVID-19 pandemic.

3.2 Key Features

The Greek non-dom regime offers several attractive features:

• A flat tax of €100,000 per year on foreign-source income, regardless of the amount.
• Additional family members can be included for €20,000 each per year.
• The program is available for up to 15 years.
• No tax on foreign inheritance or donations.
• Exemption from reporting foreign assets held outside Greece.

3.3 Eligibility and Application

To qualify for the Greek non-dom status, individuals must:

• Not have been a Greek tax resident for 7 out of the last 8 years.
• Invest at least €500,000 in Greek real estate, businesses, or government bonds within three years.
• Submit an application to the Greek tax authorities.

For those considering this option, exploring real estate athens could be a viable way to meet the investment requirement while potentially benefiting from Greece’s growing property market.

4. Comparative Analysis

4.1 Tax Treatment

The UK and Greek non-dom regimes differ significantly in their approach to taxing foreign income:

• UK: Taxes foreign income only when remitted, with an annual charge for long-term residents.
• Greece: Applies a flat annual tax, regardless of the amount of foreign income or whether it’s remitted to Greece.

This difference can lead to vastly different outcomes depending on an individual’s specific financial situation. For those with very high foreign incomes, the Greek system may prove more advantageous, while those with moderate foreign earnings might benefit more from the UK’s remittance-based approach.

4.2 Duration and Flexibility

Another key difference lies in the duration and flexibility of the programs:

• UK: No fixed duration, but becomes less advantageous after 15 years of residence.
• Greece: Fixed 15-year duration, providing long-term certainty.

The UK system offers more flexibility, allowing individuals to switch between remittance and arising basis annually, while the Greek system provides a straightforward, long-term arrangement.

4.3 Investment Requirements

The Greek program’s investment requirement sets it apart from the UK system:

• UK: No specific investment requirement.
• Greece: Minimum €500,000 investment in Greek assets required.

This difference reflects the different objectives of the two programs, with Greece actively seeking to attract foreign capital alongside tax revenues.

5. Economic Impact and Criticisms

5.1 UK Experience

The UK’s non-dom regime has been both praised and criticized over the years:

• Positive Impact: Attracted significant foreign investment and talent, contributing to London’s status as a global financial center.
• Criticisms: Perceived as unfair by some, allowing wealthy individuals to pay less tax than ordinary residents. Has faced political pressure and media scrutiny.

Recent reforms have aimed to address some of these criticisms while maintaining the UK’s attractiveness to international talent and investment.

5.2 Greek Expectations

As a newer program, the Greek non-dom regime’s impact is still unfolding:

• Anticipated Benefits: Increase in foreign investment, particularly in real estate and businesses. Potential boost to local economies through high-end consumption.
• Potential Concerns: Risk of inflating property prices in desirable areas. Possible public perception issues regarding tax fairness.

Early indications suggest growing interest in the program, particularly from wealthy individuals from the Middle East, Russia, and China.

6. Future Outlook

6.1 Global Trends in Taxation

The future of non-dom regimes will likely be influenced by several global trends:

• Increasing international cooperation on tax matters, including information exchange agreements.
• Growing public and political pressure for tax fairness and transparency.
• Competition among countries to attract mobile high-net-worth individuals and their capital.

These trends may lead to further refinements or restrictions in non-dom regimes globally.

6.2 UK Prospects

The UK’s non-dom regime faces ongoing scrutiny and potential further reforms:

• Possible tightening of rules or increased charges, particularly if there’s a change in government.
• Balancing act between maintaining attractiveness to international talent and addressing fairness concerns.
• Potential impact of broader geopolitical factors, including Brexit and changing global financial landscapes.

6.3 Greek Potential

Greece’s program, being newer, has significant growth potential:

• Opportunity to establish itself as a Mediterranean hub for high-net-worth individuals.
• Potential for positive spillover effects on the broader Greek economy, particularly in real estate and luxury sectors.
• Possible adjustments or expansions to the program based on initial results and feedback.

7. Conclusion

The UK and Greek non-dom regimes represent two distinct approaches to attracting and taxing wealthy foreign residents. While the UK’s system is more established and flexible, Greece’s newer program offers simplicity and long-term certainty. Both have the potential to significantly impact their respective economies and continue to evolve in response to global trends and domestic pressures.

For high-net-worth individuals considering their global tax positions, these programs offer intriguing options. However, the choice between them – or indeed, whether to opt for non-dom status at all – depends on a complex interplay of factors including income levels, asset structures, long-term residency plans, and investment preferences.

As the global landscape of wealth and taxation continues to shift, we can expect ongoing developments in this area. Both the UK and Greek models will likely face challenges and opportunities in the years ahead, as they navigate the delicate balance between attracting foreign wealth and maintaining domestic tax equity.

8. FAQs

Q1: Can I hold both UK and Greek non-dom status simultaneously?

A1: No, you cannot hold non-dom status in both countries at the same time. Each country’s non-dom regime requires tax residency in that country, which is typically mutually exclusive.

Q2: How does the Greek non-dom program affect inheritance tax?

A2: Under the Greek non-dom program, you are exempt from Greek inheritance tax on foreign assets. However, inheritance of Greek assets would still be subject to Greek inheritance tax.

Q3: Are there any restrictions on how long I can maintain UK non-dom status?

A3: While there’s no absolute time limit, the UK system becomes less advantageous after 15 years of residence. At this point, you’re deemed domiciled for all tax purposes and can no longer benefit from the remittance basis.

Q4: Can I include my family in the Greek non-dom program?

A4: Yes, you can include family members in the Greek non-dom program. Each additional family member requires an extra annual payment of €20,000 on top of the main applicant’s €100,000.

Q5: How do these non-dom regimes interact with tax treaties?

A5: Both the UK and Greek non-dom regimes operate within the framework of their respective tax treaties. However, the specific interactions can be complex and may vary depending on the particular treaty and the nature of your income. It’s advisable to seek professional tax advice for your specific situation.

Article reviewed by Dimitris Papadakis, Luxury Property Specialist | Curating Exclusive Real Estate Opportunities, on March 30, 2025