U.S. Tax of Greece Income, Assets & Accounts
U.S. Tax of Greece Income, Assets & Accounts: The international tax laws between the United States and Greece involve a number of common issues. These typically involve earned income, rental income, dividends, interest, and capital gains. Greece and the United States are on good-terms, and have entered into several agreements, including:
- Income Tax Treaty
- Estate Tax Treaty
- Totalization Agreement
- FATCA Agreement
It would be impossible to provide a comprehensive detailed summary in one article (and still keep you awake).
Income Tax Treaty & the IRS
United States and Greece have an income tax treaty in place. The main purpose of the tax treatment is to ensure proper tax treatment of monies earned by US citizens, Greece citizens, ex-pats and residents of each other’s country.
When a tax treaty is in place, it will usually provide for reduced taxes on passive income, the elimination of certain taxes such as foreign interest income earned by residents of the other country, and the prevention of double taxation.
Estate Tax Treaty
The United States has entered into 19 estate tax treaties with various different countries, including Greece. This may result in significant estate and inheritance benefits.
You should speak with an estate planning attorney prior to executing an estate plan, if you are a US person who has significant assets in Greece.
Receiving a Gift or Inheritance From a Foreign Person
If you are a U.S. Person and receive a gift from a Foreign Person, Foreign Business or Foreign Trust, you may have to file a Form 3520. The failure to file these forms may lead to IRS Fines and Penalties (see below).
Resources: Form 3520
FATCA is the Foreign Account Tax Compliance Act. It is a US tax law designed to combat offshore tax evasion and facilitate the reporting of foreign accounts.
There are more than 110 countries that have entered into FATCA agreements with the United States, and Greece is one of them.
Greece was one of the hold-outs, but in the end, Greece relented and signed the FATCA Agreement late in 2017 – prior to signing the agreement, Greece had entered into an agreement “in substance” in 2014.
What Does This Mean to You?
It means that hundreds of thousands of Foreign Financial Institutions (FFIs) worldwide (including Greece) are proactively reporting US account holder information to the United States.
Many FFIs appear to simply be gathering and reporting individuals to the U.S. if there are any ties between the account-holder and United States (current U.S. address, former U.S. address, U.S. citizen or U.S. Legal Permanent Resident status).
FATCA Reporting can have very serious consequences for many reasons:
– Non-Reporting of FBAR (Penalties range from a penalty waiver, all the way up 100% value of the penalty in a multi-year audit and determination of willfulness)
– Penalty Non-Compliance with FATCA Penalties ($60,000 Max)
– Discovery of Nominee or other Unreported Companies not properly reported on Form 5471 or 8865
– Discovery of PFIC (Passive Foreign Investment Companies) and penalties under 8621 (non-monetary, but still intrusive)
– If an Account was used to receive or transfer a monetary gift (s) to the U.S., it may lead to various penalties as well
The United States has made international tax compliance a key enforcement priority, and recently announced several new tax compliance groups designed to focus on offshore and foreign money.
Which Banks in Greece Report U.S. Account Holders?
As of now, there are nearly 400 Foreign Financial Institutions, within Greece that report US account holder information to the IRS. The list can be found here: Greece FFI List.
What is important to note, is that the list is not limited to just bank accounts. Rather, when it comes to FATCA or FBAR Reporting, it may involve a much more broad spectrum of assets and accounts, including:
- Bank Accounts
- Investment Accounts
- Retirement Accounts
- Direct Stock Ownership
- ETF and Mutual Fund Accounts
- Pension Accounts
- Life Insurance or Life Assurance Policies
The purpose of a Totalization Agreement is to help individuals avoid double taxation on Social Security (aka U.S. individuals living abroad and who might be subject to both US and foreign Social Security tax [especially self-employed individuals] from having to pay Social Security taxes to both countries).
As provided by the IRS: “The United States has entered into agreements, called Totalization Agreements, with several nations for the purpose of avoiding double taxation of income with respect to social security taxes. These agreements must be taken into account when determining whether any alien is subject to the U.S. Social Security/Medicare tax, or whether any U.S. citizen or resident alien is subject to the social security taxes of a foreign country”
The United States has only entered into 26 Totalization Agreements, including Greece
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
Contact our firm today for assistance.