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Greece Courts New Foreigner Pensioners With 7% Tax Rate

Αssociated Press

Finance Minister Christos Staikouras. (AP Photo/Petros Giannakouris, FILE)

ATHENS – It won't apply to those already living in Greece, but the New Democracy government, hoping to help offset a downturn in the economy caused by COVID-19 and a long lockdown, will offer a 7 percent flat rate to foreign pensioners who make the country their tax domicile.

Finance Minister Christos Staikouras, noting the economy is expected to shrink 8 percent in 2020 after it was projected to grow 2-3 percent before COVID-19 hit, told SKAI radio the bill is ready for public consultation.

In a feature on the idea, Helena Smith for the British newspaper The Guardian noted the irony of many countries trying to recruit young people and the best and brightest with their work years ahead of them, Greece instead chasing retirees.

“The logic is very simple: we want pensioners to relocate here,” Athina Kalyva, head of tax policy at the Greek finance ministry, who has helped design the scheme told the paper.. “We have a beautiful country, a very good climate, so why not?”

The initiative, laid out in a draft law to be tabled in Parliament this week proposes the flat tax for foreign retirees who transfer their tax residence to Greece, the offer good for a decade.

“We hope that pensioners benefiting from this attractive rate will spend most of their time in Greece,” says Kalyva, adding that, ultimately, the aim is to expand the country’s tax base. “That would mean investing a bit – renting or buying a home.”

“The 7% flat rate will apply to whatever income a person might have, be that rents or dividends as well as pensions,” Alex Patelis, Chief Economic Adviser to the pro-business New Democracy government of Prime Minister Kyriakos Mitsotakis said.

“As a reformist government, we have to basically try to tick all the boxes in order to boost the economy and change growth models in Greece,” he added.

“We want to build on the brand name Greece, and capitalize on what has been achieved,” ahe said. “Once the pandemic subsides, we believe capital and labour will move to places that did relatively better.”

The plan is also an undisguised reach to the 5-million strong Greek Diaspora that had been shunned for generations by Greek governments before New Democracy put in place giving some of them a vote in national elections.

Applicants will be vetted though to exclude those from countries with sketchy records and only those who live in countries with a double taxation treaty with Greece are eligible for consideration, and they must live in Greece at least six months a year.

Notorious for high and changing tax rates, Greece wants to also change that image as Mitsotakis had been pursuing foreign businesses to reverse the anti-business stance of the ruling Radical Left SYRIZA he dumped out in July 7, 2019 snap elections.

New Democracy was beginning to accelerate a slow recovery from a near decade-long crisis when COVID-19 struck, the government pouring 17.5 billion euros ($20 billion) into subsidies for workers temporarily laid off during the lockdown and employers.

“Pensioners by definition don’t work,” said Patelis. “So there’s no competition with the domestic labor force. On the contrary, they will be here spending money. Brits go to Spain, American people move to Florida, so why not Greece?”

Ironically, Greece is now looking to woo the old after the crisis drove away the young, scores of thousands fleeing to other countries looking for work, along with entrepreneurs, taking their talents with them, many vowing to never return to live.

It's could work, Platon Tinios, Economics Professor at the University of Piraeus and an expert in Greek pension reform told the paper.

“It’s a good idea if pensioners have easy access to a decent health system and good links to airports, so they can go and see their grandchildren,” he said, adding: “and golf courses, too.”