Relocation from Israel to Greece

In recent years, Greece has become an increasingly popular destination for Israelis considering relocation, whether for employment, investment, studies, retirement, or improved quality of life. Advantages such as a significantly lower cost of living compared to Israel, a relaxed Mediterranean lifestyle, warm weather throughout the year, and easy access to nature and urban life attract many Israelis.

However, relocating to Greece requires thorough planning and a comprehensive understanding of the legal, financial, and tax implications associated with the move. This article outlines the key considerations to address before making the move.

The 5-Step process for relocating from Israel to Greece

1. Assess employment opportunities and living costs.
2. Consider terminating Israeli tax residency, taking into account matters such as exit tax.
3. Obtain an appropriate visa or residency.
4. Review your tax obligations under both Israeli and Argentine law, including potential double taxation and available reliefs.
5. Plan fund transfers and banking.

The following sections explain the main tax, legal, and financial considerations for Israelis relocating to Greece.

Key Considerations When Relocating from Israel to Greece

The relocation process consists of several essential steps.

First, a thorough review of employment opportunities, cost of living (which varies between cities like Athens, Thessaloniki, and island regions), the local tax system, educational options for children, available healthcare services, and other important factors. Second, consider whether you wish to terminate your Israeli tax residency and the numerous implications that come with it. It is important to plan how you will manage your finances and assets, as well as arrange for private health insurance. In Greece, while public healthcare is available, foreigners may not get full coverage right away, and many residents choose private insurance for quicker and more specialized services.

In addition, you must arrange your legal status in Greece This includes obtaining the right visa or residency permit, such as a work visa, Golden Visa (through real estate investment), digital nomad visa, student visa, or residence permit.

In this regard, one of the main challenges in relocating to Greece is obtaining the appropriate residence visa. Each visa type has different requirements – age, education, income, minimum investment, employment contract, health insurance, and more. It is essential to select the visa that best suits your circumstances and to arrange it in advance.

Greece has a residency visa program called the “Golden Visa” for non-EU citizens who invest in real estate. In 2024, the program underwent changes that tightened the conditions for purchasing real estate and obtaining a golden visa for foreign residents. According to the program, the investment threshold required for obtaining the visa varies according to different regions in Greece.

For more information on the subject, read the article “Changes In the Greek Golden Visa Program“.

Tax Aspects of Relocation to Greece

When moving to a foreign country, the question of post-move tax obligations in Israel arises. The answer usually depends on whether you have terminated your Israeli tax residency.

Termination of Tax Residency

One of the main issues in the relocation process is determining your residency for tax purposes. In Israel, Israeli residents are taxed on their worldwide income, while non-residents are taxed only on income sourced in Israel.

If you intend to settle in Greece for the long term, it may be preferable to sever your residency from Israel (for both income tax and National Insurance). Note that Israelis who sever their residency are required to pay an “exit tax” on certain assets.

According to Section 1 of the Israeli Income Tax Ordinance, residency is determined based on a the center of life test, and a rebuttable presumption based on the number of days you stayed in Israel, as follows:

• The center of life test – This is a substantive test, in which all personal, family, economic, and social ties are examined. These include permanent place of residence, place of economic activity, location of economic interests, and more.
• Days test – An individual is considered an Israeli resident if they spent 183 days or more in Israel during a single tax year. A person may also be considered a resident if they spent 30 days or more in Israel during the current tax year. This applies when their total stay in Israel is 425 days or more over the current and two preceding years. This presumption can be rebutted if the individual proves that, despite their stay in Israel, their center of life is not in Israel.

Anyone who meets the days test, i.e., is considered an Israeli resident under this test, must file Form 1348 – “Declaration of Residency”. This form is attached an annex to the individual’s tax report. Its purpose is to declare the termination of Israeli tax residency and to describe the circumstances demonstrating that the individual’s center of life is no longer in Israel.

It is important to note that terminating tax residency is usually not a one-time event but an ongoing process. The Israeli Tax Authority (ITA) may review your residency status even years after leaving. Therefore, it is recommended to keep detailed documentation of all actions indicating the transfer of your center of life to [Country Name], and to avoid creating new ties to Israel.

These days, a dramatic bill to amend the Income Tax Ordinance regarding the definition of Israeli residency for tax purposes has been submitted to the Knesset.

According to the proposal, there will be absolute presumptions that determine the number of days defining an individual as an Israeli resident. These presumptions cannot be rebutted. The “center of life” test will serve only as a secondary tool in cases not covered by these presumptions.

As a result, there may be situations where an individual who has terminated their residency in Israel will still be considered an Israeli resident for tax purposes. This can happen when the number of days spent in Israel in subsequent years is high enough to meet the residency threshold.

To view the draft bill, click here.

Exit Tax

Israelis leaving Israel may be required to pay an “exit tax” on certain assets. This tax is intended to capture the unrealized capital gains of  assets held by Israeli residents.

According to Section 100A of the Income Tax Ordinance, an individual who ceases to be an Israeli resident is deemed to have sold their assets on the day before terminating the tax residency (“Exit Day”). The tax is calculated on the notional gain between the original purchase price and the value on the exit day. Note that some assets, such as real estate, may be exempt from this tax.

There are various methods for calculating and paying exit tax liability, each with different implications for the taxpayer. The timing and structure of these payments can significantly impact the overall tax burden. It is highly recommended to consult with an international tax expert before departing Israel to develop a tax strategy that best aligns with your specific circumstances and financial goals.

Double Taxation Treaty between Israel and Greece

Israel and Greece have a double taxation treaty. This treaty is intended, among other things, to prevent a situation where a person pays double tax on the same income. The treaty regulates issues such as determining residency in cases of dual residency, withholding tax rates on passive income (dividends, interest, royalties), and taxation of employment income.

Under the treaty, employment income earned by an Israeli resident working in Greece is generally taxed in Greece, provided the work is physically done there. However, in some cases, if the employee is in Greece for less than 183 days in a 12-month period and meets other criteria, Israel may keep taxing rights. The specific situation needs to be looked at individually.

The treaty also addresses dual residency. If someone qualifies as a tax resident of both countries under their local laws, the treaty offers tie-breaker rules to determine residency. These criteria include:

1. He shall be deemed to be a resident of the state with which his personal and economic relations are closer (“centre of vital interests”);
2. If the state in which he has his centre vital interests cannot be determined, he shall be deemed to be a resident of the state in which he has a permanent home available to him; if he has a permanent home available to him in both states’ or if he has a permanent home available to him in either state, he shall be deemed to be resident of the state in which he has an habitual abode;
3. If he has a habitual abode in both states or in neither of them, he shall be deemed to be a resident of the state of which he is a national;
4. If he is a national of both states or neither of them, the competent authorities of the contracting states shall settle the question by mutual agreement.

To read the Double Taxation Treaty between Israel and Greece in English – click here.

How will Terminating Tax Residency Affect Income Taxation?

If the move to Greece is temporary, you remain an Israeli tax resident and cannot terminate your residency status. This means you are liable for Israeli tax on your worldwide income and must report all income, including income earned in Greece, to the ITA.

If tax residency is not terminated, you may still be able to claim a tax credit in Israel for taxes paid in Greece.

If the move to Greece is permanent and you have terminated your Israeli tax residency, you will only be liable for Israeli tax on income sourced in Israel, while all other income will be subject to tax in Greece

For more information on the termination of residency, click here.

National Insurance

An Israeli resident living abroad is required to pay National Insurance (Bituach Leumi) contributions. However, once tax residency is terminated, there is no obligation to pay National Insurance, and the individual is no longer entitled to health or social security benefits in Israel.

Between Israel and Greece, there is no social security agreement. Therefore, you must take care of private health insurance in the destination country. This may lead to double national insurance, so if you intend to immigrate to Greece, you must also terminate your residency in Israel regarding national insurance.

Tax System in Greece

If a person has their permanent residence (centre of vital interests) in Greece or spends more than 183 days there in a calendar year, they are deemed tax residents. While non-residents are only taxed on income earned within Greece, tax residents are taxed on their entire income.

Greece has progressive personal income tax, with the following tax brackets (2024 rates):

• 9% up to €10,000
• €10,001–€20,000: 22%
• €20,000–€30,000: 28%
• €30,000–€40,000: 36%
• Over €40,000: 44%

Capital gains tax applies to profits made from the sale of property related assets (real estate and securities). Capital gains tax is generally taxed at 15%. There are a variety of exemptions and reductions that apply to the sale of these assets, particularly if they are the owner’s primary residence.

Foreign income received by Greek tax residents is basically taxable in Greece but is allowed exemption or credit if the relevant double taxation treaty with the foreign jurisdiction, such as that with Israel, so provides power for such exemption or tax credit.

Income from foreign sources which is received by, or attributed to, Greek tax residents is generally taxable in Greece, although it may be taxed or eligible exemption or a credit for the taxes that were paid abroad, depending on what double taxation treaty applies.

The corporate tax rate in Greece is 22%, while in some cases, a surtax as well as social contributions are payable.

Greece applies inheritance and estate taxes, rates of which depend upon the relationship between the deceased and the heir and the value of the estate. Close family members are favoured with more exemptions and lower rates.

Transferring Funds from Israel to Greece

You should review the different options for transferring funds abroad , such as bank transfers and international credit cards. Each option has its own advantages and disadvantages regarding fees, transfer times, exchange rates, amount limits, and regulations. Pay close attention to reporting requirements for authorities and banks, in accordance with anti‑money‑laundering laws and international regulations (FATCA, CRS). It is also advisable to open a bank account in Greece in advance.

According to Section 170(a) of the Ordinance, when a payment from Israel to a foreign resident constitutes taxable income, withholding tax applies. Therefore, transfers of funds that do not constitute taxable income may not be subject to tax but could still require prior approval from the ITA.

For more information, see the article “Transferring Funds from Israel Abroad.”

 Opening a Bank Account in Greece

Opening a bank account in Greece is possible for foreigners, but the process may be more complex than in Israel, and bank policies vary between different institutions. Generally, the requirements for opening a bank account in Greece typically include submitting documents such as a valid passport, proof of address, and a Greek tax identification number (AFM). Additionally, banks may request further documentation, including proof of income or business registration, depending on the specific circumstances.

Returning to Israel

When returning to Israel, it is important to carefully assess the potential implications. If you have terminated your tax residency, you may qualify for benefits as a regular  or veteran returning resident, depending on the duration of your stay abroad. These benefits can include tax exemptions on income and capital earned outside Israel.

You should also take into account the waiting period of up to six months for the renewal of National Insurance (Bituach Leumi) health coverage, as well as possible benefits available through the Ministry of Aliyah and Integration.

In short, relocation to Greece offers many opportunities, but it is a complex process that requires professional planning, personal guidance, and a thorough understanding of all legal and tax aspects. It is recommended to consult with international tax experts to ensure early and comprehensive planning for a smooth and successful transition to your new life in Greece

The firm of Nimrod Yaron & Co. has extensive experience advising on international relocation and Israeli tax residency termination. For an initial consultation, click here.

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