If you own assets in Greece or are expected to inherit assets in this country, it’s important to understand the legal and tax implications involved in the inheritance process, as even non-residents may be required to pay taxes according to local law.
In Greece, there are complex rules for the taxation of inheritances and gifts, with significant implications for heirs of assets, as inheritance tax in Greece can reach up to 40% of the inheritance value. Early understanding of local law and early planning of wills, residency, and gifts during lifetime can significantly reduce exposure to tax payments when transferring assets between generations.
Beyond that, inheritance tax planning can prevent legal disputes, delays in the inheritance process, and unexpected demands from various authorities.
What’s the Difference Between Inheritance Tax and Estate Tax?
- Estate Tax – Imposed on the deceased’s assets before they are transferred to the heirs.
- Inheritance Tax – Applies to all assets received by the heir.
Inheritance Tax in Greece – What You Need to Know?
In Greece, inheritance tax is calculated individually for each heir based on both the value of inherited assets and the heir’s relationship to the deceased.
The Greek inheritance tax applies to assets located in Greece, regardless of whether the deceased was a Greek national or a foreigner. It also extends to movable assets situated outside of Greece if they are owned by a Greek resident, a foreigner whose primary residence is in Greece, or a Greek citizen – except in cases where a Greek citizen owns foreign property in a country where they have resided for at least ten consecutive years.
The tax is calculated on a progressive scale, with rates determined by the relationship between the heir and the deceased.
Inheritance tax rates in Greece
- Spouses, children, grandchildren and parents – tax exempt up to €150,000. After that, the tax rate ranges from 1%-10% depending on the amount of the inheritance.
- Siblings, grandparents, great-grandchildren – tax exempt up to €30,000. After that, the rate ranges from 5%-20% of the amount of the inheritance.
- Others – tax exempt up to €6,000. After that, the rate ranges from 20%-40%.
Exemptions and Relief
- Primary Residence Inheritance – A spouse who inherits the primary residence from the deceased, and does not own any other real estate property, can request an inheritance tax exemption up to €250,000. A child who inherits the primary residence of the deceased and does not own any other real estate property is entitled to an inheritance tax exemption up to €200,000.
- Joint Bank Accounts – The surviving co-holder of a joint bank account enjoys a complete inheritance tax exemption on the deceased’s share of the account. This exemption also applies to joint accounts held abroad, provided there is a valid tax treaty between Greece and the country where the account is maintained.
Gift Tax
Gift tax is an important part of planning for the transfer of assets between generations. Often, when property owners are exposed to the amount of inheritance tax, the option of transferring assets as gifts during the testator’s lifetime arises, thinking that this is preferable to inheriting in the future. However, it should be taken into account that gifts may be taxable at the same or even higher rates as the inheritance tax rates.
In Greece, the gift tax rates are similar to inheritance tax rates. Also, like inheritance tax, gift tax is calculated according to the relationship between the giver and the recipient.
Therefore, early planning for inheritance tax and gift tax is essential when transferring assets between generations. Proper planning allows you to maximize existing exemptions, significantly reduce tax liability and ensure that assets are transferred to the next generation in an orderly and efficient manner.
Gift tax in Greece is similar to inheritance tax, based on the degree of relationship between the recipient of the gift and the donor. Gift tax will be assessed on the person giving the gift, unless they are deceased, in which case it will be assessed to the person receiving the gift. The tax rates are the same as inheritance tax rates unless it is a cash gift. Cash gifts are subject to different tax rates depending on the category of the recipient, ranging from 10% to 40%.
In addition, there are specific exemptions and deductions, for example, gifts of up to 800,000 euros are tax-free to people in the category of spouses, children, grandchildren and parents, with any excess taxed at a flat rate of 10%.
Inheritance Taxation in Israel Compared to Greece
In Israel, unlike Greece, there is no estate tax or inheritance tax. However, in certain cases, tax may be imposed on the full value of the inheritance received, such as capital gains tax when selling the asset.
The tax treaty between Israel and Greece includes provisions that can prevent double taxation. Still, it’s important to plan the reporting and filing accurately to avoid double payment.
To read the Israel-Greece Tax Treaty in English on the Ministry of Finance website, click here.
Making a Will in Greece – The Key to Tax Savings and Dispute Prevention
Inheritance doesn’t always transfer smoothly to heirs. Sometimes complex procedural steps are needed to obtain a probate order or permission to realize the assets.
Creating an organized will is not just a matter of personal desire; it is an integral part of estate taxation. A detailed will can ensure that assets are transferred smoothly and efficiently to the heirs. The will should include the wishes of the deceased but must also be adapted to the requirements of the law so that its validity is not compromised.
Greece has a system of ‘forced heirship,’ meaning there are specific rules regarding how a deceased person’s estate must be distributed. In Greece, a person is not allowed to exclude their parents, children, or spouse from their will without a time limitation, except in extreme circumstances.
When drafting a will, it is often possible to choose the law that will apply to it. When dealing with assets in Greece, this choice can have a substantial impact on inheritance planning and its future realization. Without advance planning, the law that will apply to the deceased’s assets will be the law of the deceased’s last and principal place of residence.
If you own assets in Greece, our recommendation is to make a will to ensure that the transfer of assets is done as smoothly as possible. A will can prevent misunderstandings or lengthy legal processes and ensure that the process proceeds in an orderly manner even after the death of the deceased.
Received an Inheritance in Greece? 7 Steps for Proper Realization of Inheritance from Greece
1. Clarification of Factual and Legal Background
First, check the type of asset that is to be inherited, its location, the identity and status of the heirs, the value of the asset, and more.
2. Checking the Timing and Location of Inheritance Realization
Consider whether it’s advisable to realize the asset now and if so, where is it better to realize it – in Greece or in Israel?
3. Regulatory and Banking Aspects
It is recommended to check the costs of money transfers, whether there is a need to open an account in Greece or another country for the purpose of transferring funds, what approvals are required, etc.
4. Planning the Asset Transfer
Consider whether to transfer the asset itself or its proceeds, and what the implications are in terms of tax, exemptions, deductions, etc.
5. Avoiding Double Taxation
In light of the existence of a double taxation prevention treaty, it is recommended to check whether there is a mechanism for crediting tax paid in Greece against tax liability in Israel. Make sure that the reporting is done correctly and accurately to avoid double payment.
6. Checking the Future Effects on the Asset
It is recommended to examine the future effects on the asset, for example, a future sale of the asset will often be subject to capital gains tax in Israel as well.
7. Transferring the Asset to Israel
Performing all necessary actions, submitting documents, handling matters with banks in Greece and Israel, and executing the asset transfer.
How Can We Help?
The goal is to transfer the inheritance to heirs in Israel in the most tax-efficient way, while addressing legal issues in Israel and Greece and issues related to banking and regulation. For example, whether it’s better to realize a certain asset in Greece or transfer it to Israel; how to transfer inheritance funds to a bank account in Israel; how to use various exemptions between heirs; whether to give gifts during lifetime; whether to establish a trust, and more. Strategic planning, according to law and tax treaties, is essential to minimize tax liabilities.
Nimrod Yaron & Co. has extensive experience in personally and professionally accompanying Israelis with assets or inheritances in many countries around the world, including Greece, from the first stage of planning, through dealing with authorities in Greece and Israel, to transferring inheritance funds to the heir’s bank account.
We work with all relevant professional entities in Greece and Israel and offer legal solutions both in terms of taxation and banking, tailored to the circumstances of the case.
If you have inherited an asset or wish to bequeath assets in Greece in the future, our team of lawyers specializing in international taxation and inheritance law will be happy to advise you on this matter – contact us for an initial consultation.
Questions and Answers
Do I need to pay tax in Israel on an asset inherited from Greece?
No. There is no inheritance tax in Israel. However, capital gains tax may apply after the sale of the property. It is important to check the recommended date for selling the inherited property.
Why is it important to plan the transfer of assets between generations in advance?
The transfer of assets between generations from abroad is not just a family matter but also a tax and economic issue. Early planning, considering legal issues in Israel and abroad, can save a lot of money and prevent legal complications.
How can the inheritance be realized optimally and save tax?
To realize the inheritance optimally and save unnecessary tax payments, all tax options should be examined, including utilizing exemptions, planning gifts, establishing companies, trust funds, and more.
How can the inheritance tax liability in Greece be reduced?
Through early tax planning, which includes drafting a will, utilizing exemptions, giving gifts during your lifetime, and more, you can significantly reduce your tax liability.
Is it better to give an asset as a gift during lifetime or to bequeath it?
The choice between giving a gift and bequeathing depends on the circumstances of the case. Sometimes a gift will be taxed similarly to an inheritance. Therefore, the legal and tax aspects should be examined before making a decision.
What are the implications in case there is no will?
In the absence of a will, the inheritance will be divided among the legal heirs according to the local inheritance law of Greece.
What documents are required for the process of realizing an inheritance in Greece?
To realize an inheritance in Greece, documents such as a death certificate, a will (if one exists), copies of the heirs’ ID cards, property ownership documents, bank account confirmations, and more are required.
How long does the process of realizing an inheritance in Greece take?
It should be considered that the process of realizing an inheritance in Greece can take between several months and a year or more, depending on the complexity of the testator’s estate, the number of heirs, the existence of a will, and other factors.
If I receive an inheritance of movable property from a Greek person, do I owe inheritance tax?
In Greece, inheritance tax is levied on movable property that was owned by a Greek citizen or resident of Greece. Inheritance tax will apply to all movable property, whether located in Greece or abroad, when the deceased was a Greek citizen or resident of Greece. The tax rate will be determined according to your relationship to the deceased and the value of the assets you inherited.
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