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Remittances abroad during 2009 – 2011
According to par. 3 of Art. 48 of Law. 2238/1994 (old ITC), in case of an increment in a taxpayer’s property coming from an unknown or non-continuous or non-usual source, the taxpayer may be requested to demonstrate:
- The real source of income or
- That is exempt from tax under special provisions of Law.
If the taxpayer is not able to justify one of the above cases, the amount is taxed as employment income, in the period in which the increase in property was observed. It is noted that the increment in property may include changes in immovable properties (land, houses, boats, etc.) or securities (shares, bills, deposits, etc.).
Remittances justification – in general
The prior Circular 1033/2013 defined that sums of money deposited in banks by the end of 1999 (year period) may be accepted for remittances justification. However, a written confirmation by the credit institution and the timely submission of the income tax returns are required. It should be mentioned that the notion of cash may include financial products that were liquidated before making the remittance abroad.
More analytically, in accordance with Circular 1228/2014, if the properties were acquired by 31/12/1999 and disposed after 01/01/2000, but before sending the remittance, the sale prices are taken into account, evidenced by supporting documents, for the justification of the remittances.
However, if the properties were acquired after 01/01/2000, the competent tax authorities should examine the affordability of acquisition. Additionally, if the taxpayer had included the remittance amount in the tax return of the calendar year 1999, he falls within the provisions of par. 12 of the Circular 1033/2013.
Joint bank accounts
When a money transfer is executed by a joint bank account, in principle, the amount shall be equally allocated to both joint holders of the account. However, the audited taxpayer may invoke a different proportion of the money deposited in bank account, given that he can prove his claim providing the necessary documents.
Repatriation of funds
The repatriation of funds includes the following statutory cases:
- Art. 38 of L. 3259/2004: Money transfers to Greece from Greek taxpayers, during the period from 15/07/2004 to 04/06/2005. The tax rate is 3% imposed on the whole amount, without any other tax liability.
- Article 18 of Law. 3842/2010 (after the amendment by par. 19 of Art. 21 of L. 3943/2011): Money transfers to Greece from Greek taxpayers till 30/09/2011. The tax rate is 8% imposed on the whole amount, without any other tax liability.
When repatriated funds are taken into account for the justification of the wealth increase, the tax authorities shall check firstly the actual event of remittance and secondly if the tax due was paid. Moreover, it should be verified if the imported funds, previously deposited in a foreign bank account, where then invested in Greece as provided in the aforementioned laws.
With respect to Greek expatriates, regardless if they were registered to the competent tax office for non Greek tax residents, the relevant documents are transferred to the Tax Office where taxpayers filed a declaration as Greek tax residents. The competent tax office is obliged to provide information to the competent authorities, regarding the period for which the taxpayer is a Greek or a foreign tax resident.
Supplementary income tax returns
The supplementary income tax returns clearance, regarding declarations submitted before the issuance of the audit command, shall precede the audit and be taken into account for the determination of disposable income. Additionally, the taxpayer is entitled to provide documents, not included in the tax returns, during the audit period. All evidence should be examined and taken under consideration by the competent tax authorities.
It is worth noting that the instability observed in the Greek economy by the end of 2010, due to the debt crisis, pushed a large number of taxpayers to transfer their cash abroad. However, in many cases, the procedures adopted were not transparent and compliant to the Greek legal framework both in money transfers inside and outside Greece. Therefore, many tax issues have been encountered regarding the source of these incomes. To sum up, both taxpayers and banks engaged in these transactions shall be fully informed regarding the legal framework governing the treatment of money remittances.