Taxes are rarely simple and tend to be a headache no matter where you live. Taxes can become even more complicated if you are an American expat living and working in a foreign country like Greece. Generally, U.S. citizens must always pay their U.S. taxes no matter where they live. If you live abroad, you might also have to worry about foreign taxes.
Being a United States citizen means you must pay your U.S. taxes, even if you do not physically live within the U.S. Even Expats living and working in Greece have U.S. tax obligations. Additionally, depending on your living situation in Greece, you might also have Greek tax obligations. Simply having assets or accounts in Greece might mean you have to report that financial information to the IRS. Being taxed in two countries can be expensive, and our team can help you find tax credits or exclusions to help you minimize your tax obligations in the U.S. We can also look into the tax treaty between the U.S. and Greece to help you avoid paying more than you need to.
Get assistance from our foreign tax accountants by calling US Tax Help at (541) 362-9127.
Do I Have to File U.S. Taxes if I Live in Greece?
If you are a citizen of the United States, you have to pay your U.S. no matter where in the world you live. Not only that, but you still have to file your U.S. taxes even if your income does not derive from U.S. sources. You are taxed on your worldwide income. This can be a major financial complication for those living and working in Greece. Even so, there is a solution to this issue, and our team can help you find it.
Simply going to Greece on vacation, even a lengthy vacation, is not enough to complicate your tax obligations. People who are U.S. expatriates, meaning they are U.S. citizens who have left the U.S. behind for a life abroad, are usually the ones incurring tax obligations with Greece and the United States. For example, a person who moved to Greece for work might have to worry about how they are going to pay their taxes.
This also means that the income you earn in Greece may be subject to U.S. taxes, even if your work and livelihood exist entirely outside of the United States. While this might seem unfair, there are ways to try and reduce your U.S. tax obligations that can save you money.
U.S. Expats and Greek Taxes
Dealing with your U.S. tax obligation while living abroad is already complicated enough, but what about taxes in Greece? How do you know whether you have to pay Greek taxes? The answer to this question, like many tax questions, is complex and may vary based on your specific situation. Generally, people might have to pay Greek taxes if they meet the legal criteria to be considered a Greek tax resident. It is important to note that being a tax resident is not the same thing as being a lawful citizen of Greece. It simply means you have resided in Greece long enough to be required to pay taxes.
Even if you do not live in Greece full-time – perhaps you split your time between Greece and the United States – you might still have to pay taxes on the income you earn in Greece. For example, suppose you own a home in Greece that you rent out when you are in the United States. In such a case, you would have to pay Greek property taxes and taxes on your rental income. Self-employed Americans working in Greece may also be required to pay Greek taxes.
You might be considered a Greek tax resident if you meet certain criteria. If you have lived in Greece for at least 183 days during any 12-month period, you may be a tax resident. Another possibility is to examine your “vital interests” in Greece. Exactly what constitutes a vital interest may vary, but it can generally be held to be properties, assets, and social ties that connect you to the country. For example, owning a home or other properties in Greece might make you a tax resident. Sending your kids to school in Greece might also be used to establish tax residency. If you are unsure whether you meet these criteria, talk to our team for help.
What Are Taxes Like in Greece?
If you live and work in Greece, there is a strong chance that you qualify as a Greek tax resident. As such, you need to know what Greek income tax rates are like so you can prepare your taxes accordingly. Income taxes in Greece are progressive, meaning that the more income you earn, the higher your tax rate might be.
For those making €10,000 or less, the income tax rate in Greece is only 9%. Your next €10,000 is taxed at a rate of 22%. The next €10,000 at a rate of 28%. The next €10,000 at a rate of 36%. Finally, any income above €40,000 is taxed at a rate of 44%.
If you own property, you must also consider real estate property taxes. If you own a business, you must also make sure your business pays any necessary taxes. As you can no doubt tell, taxes can very quickly become complicated when you have a diverse financial portfolio. The best way to make sure all your tax obligations are satisfied is to speak to a tax professional.
Reporting Assets and Accounts You Hold in Greece on Your U.S. Taxes
Depending on what kind of assets you have in Greece, you might have to report them to the IRS in the United States. A Report of Foreign Bank and Financial Accounts (FBAR) must be filed if your accounts or holdings are worth a certain sum of money. The IRS requires people to file FBAR reports if they have a financial interest or account in a foreign country that is worth more than $10,000 at any time during the tax reporting year.
Talk to our team if you are unsure whether your holdings in Greece must be reported as part of an FBAR report. Generally, accounts held in financial institutions outside the United States must be reported if they meet the above criteria. However, certain accounts may be exempt from these reporting requirements. For example, individual retirement accounts (IRAs) that you own do not have to be reported in an FBAR report even if they exceed $10,000.
You should also note that FBAR reports are not submitted alongside your normal taxes. Instead, FBAR reports must be submitted through FinCEN’s BSA E-Filing System. You may file an FBAR using physical, paper forms, but you must contact FinCEN to make such a request.
How to Reduce Your Tax Obligations in The United States While Living in Greece
Dealing with taxes in two countries might be more complicated and expensive than you know how to deal with. Fortunately, some credits and exemptions might help you alleviate some of your financial burdens. Which exemptions or credits apply to your case may depend on your circumstances, and you should speak to our team about which is best for you, as you might not be able to claim them all.
Foreign Tax Credit
You might be able to claim a foreign tax credit to help reduce your U.S. tax obligations. You might be able to take advantage of this credit if you have already paid your Greek taxes. The foreign tax credit works by allowing taxpayers to claim the money they have paid into foreign taxes as a credit on their U.S. taxes. Alternatively, you may take it as an itemized deduction. For example, if you pay $5,000 in Greek income taxes, you can take a $5,000 credit or deduction on your U.S. income taxes.
You must use Form 1116 to claim the foreign tax credit if you are an individual. Businesses seeking to claim this credit must use Form 1118. If you decide to claim the foreign tax credit, you may not claim the foreign-earned income exclusion as described below.
Foreign-Earned Income Exclusion
If you earn most or all of your income from foreign sources, you might be eligible for the foreign-earned income exclusion. Whether your income is eligible for exclusion depends on where you earn it. If you work and earn a living in Greece, you might be able to take advantage of this exclusion. You may still be eligible if your employer is in the United States, but you work in Greece. The main focus is on where you earn the income, not where your employer is located. However, people who work for the United States government are ineligible for this exclusion. As of 2024, you may exclude up to $126,500 of foreign-earned income from your U.S. taxes.
What to Do if You Are a U.S. Expat and Do Not Know How to File Greek Taxes
Anyone who has paid taxes before knows that they are incredibly complex. Even taxes that are considered relatively simple are often very hard to wrap your head around. If you have tax obligations in the United States and Greece, the best thing you can do for yourself is to call a tax professional for help.
Work with a tax accountant or CPA who is familiar with U.S. and Greek tax laws and requirements. Greece and the United States have a tax treaty that describes things like tax residency requirements, how tax credits and exemptions work, and how a person must pay their tax obligations in both countries. Checking your specific financial situation against these requirements and rules can help you determine how to pay your taxes.
Even if you are somewhat sure of what you have to do, call a tax professional anyway. They can help you make sure of what you have to do to avoid making mistakes. As detailed below, tax mistakes in the United States or Greece might lead to very unpleasant and expensive consequences.
What Happens if I File My U.S. or Greek Taxes Incorrectly?
Taxes are complicated, and mistakes are known to happen, but you should avoid mistakes as best as you can. If you file your U.S. or Greek taxes incorrectly or you fail to file Greek taxes when you should, you might face some steep penalties.
Filing your taxes late or failing to file them at all often results in certain administrative penalties and fees. You might be charged a steep fee depending on how late you are with filing and how much money you owe. Even if you file on time, you may run into trouble if you underpay your taxes. An audit might reveal how much you should have paid, and you might owe back taxes.
If the government suspects that you intentionally failed to file taxes, you risk more serious consequences. Criminal charges may be imposed against those suspected of evading their tax obligations. In the United States, if you cannot pay the money you owe, you might be incarcerated. Again, this largely depends on your specific circumstances and how much unpaid tax debt is involved.
If you believe you might have made mistakes on your U.S. or Greek taxes, talk to our tax accountants about it right away. Often, if the problem is the result of an honest mistake, the government is unlikely to impose criminal penalties. As long as you can pay the government the money it is owed, you should be fine. However, if you have filed incorrectly for several years, the back taxes might add up, and the government might be more suspicious and conduct a more thorough investigation or audit.
Call Our Tax Accountants to Get Assistance with Your Tax Obligations
Get assistance from our foreign tax accountants by calling US Tax Help at (541) 362-9127.