Almost a year into a pandemic that has brought travel to a near halt, many have resigned themselves to lying on the couch scrolling through photos of past holidays in the sun until carefree travel is once again possible. In the meantime, popular vacation destination Greece has an interesting workaround: move there.
The government of the sunny Mediterranean country has plans to offer an income tax cut of 50% to professionals who move to Greece in 2021. The EU member state hopes to capitalise on the rise in remote working brought about by the pandemic. The project ties together the appeal that has made Greece a tourism hotspot to the country’s ambitions to diversify its economy into the digital sphere.
“Technology allows us to choose where we live and work,” Alex Patelis, economic adviser to Prime Minister Kyriakos Mitsotaksi, told reporters at an unveiling of the plan in November. “Besides the sun, the country can now offer tax incentives too.” The current tax rate in Greece is 44% for annual earnings over 40,000 euros ($47,000). Under the proposed scheme, the rate would drop to 22% for seven years. The proposal will go to the Greek parliament before the end of the year.
The centre-right government hopes the move will attract digital migrants, people who relocate to Greece while continuing to work remotely for a company or clients in other countries. The offer would be available to any person, Greek or non-Greek, who moves their residency to Greece in 2021. They must not have been a Greek tax resident in the past seven years. The tax initiative aims to counteract the drain of professional talent that came about during a decade-long sovereign debt crisis that shrunk Greece’s economic output by 25% and saw around 800,000 Greeks leave their homeland.
While the tax break would be available to all occupations and income levels, Mitsotakis’s government hopes the move will attract independent finance and IT professionals. This would lay the groundwork for Greece to shift away from its dependency on tourism, an industry whose vulnerabilities were exposed when the pandemic hindered travel. Overall, Greek tourism revenues fell 78% in the first nine months of 2020, according to data from the Bank of Greece.
“The new incentives are being introduced at the right time, not only because they coincide with the imminent Brexit, but also as they come at a time when the focus of new foreign direct investment in Greece is shifting toward R&D, whether this is in the form of clinical trials for the pharma industry or software development and data processing & analysis,” Angelos Benos, tax partner at accounting firm PwC Greece, told DW.
The plus side of a pandemic
“Greece’s favourable climate and low property prices in comparison with other European countries, as well as the relatively successful management of the coronavirus pandemic have laid the groundwork for this,” said Alternate Minister for Fiscal Policy Theodoros Skylakakis in November.
At the start of the coronavirus outbreak, Greece was much quicker than many of its neighbors to impose a lockdown, and an extensive media campaign encouraging people to stay home also helped. In the spring, Greece had just a fraction of the virus cases and deaths seen in Spain and nearby Italy. The country is riding that momentum through the pandemic. Greece is capitalising on the moment to make what Maria Demertzis, deputy director at the economic think tank Bruegel, called “incredible leaps” in improving IT infrastructure to be on par with other developed economies. During the first lockdown, dozens of public services that required in-person visits were moved online seemingly overnight. This rapid digitalisation has continued.
— This article has been provided by Deutsche Welle