Greek Income Tax on Military Retired Pay and VA Compensation
The 1950 U.S.-Greece tax treaty exempts U.S. government pensions, a term it defines to include payments for injuries, from Greek tax, but its saving clause has no exceptions, so Greece may still tax a resident of Greece as if the treaty did not exist. A Greek resident's relief is a credit for U.S. tax, not an exemption.
Also called: tax, income tax, tax treaty, military retired pay, VA disability, Social Security, Souda Bay.
The U.S.-Greece income tax convention was signed in Athens on February 20, 1950 and brought into force by the protocol of exchange of 1953. It is far older than the other treaties in this catalog, and it works differently.
What it exempts. Article XI(1) says wages, salaries and similar compensation and pensions paid by one country to an individual for services rendered to it "shall be exempt from taxation by the other Contracting State." Article XI(3) defines "pensions" as periodic payments made in consideration for services rendered "or by way of compensation for injuries received." On its face that reaches both U.S. military retired pay and VA disability compensation for injuries in service.
Why that does not help a resident. Article XIV(1) says that "notwithstanding any provision of the present Convention" each country, in taxing its citizens, subjects, residents or corporations, may include all items of income taxable under its own law "as though this Convention had not come into effect." Unlike every later treaty in this catalog, it carves nothing out. So for someone resident in Greece, Greek law decides whether retired pay or VA compensation is taxed, and the Article XI exemption protects only someone who is not a Greek resident or citizen.
The relief the treaty does give a resident is a credit. Under Article XIV(3), Greece allows against Greek tax a credit for U.S. tax imposed on income from sources within the United States, up to the amount of Greek tax on that income. Because the United States taxes a citizen's retired pay, a U.S. retiree in Greece is not taxed twice on it, but pays whichever country's tax is higher. VA compensation is exempt from U.S. tax under 38 U.S.C. 5301, so there is no U.S. tax on it to credit; whether Greece taxes it is a question of Greek law, which this entry does not answer.
The convention has no article on social security payments.
Thresholds
Thresholds for Greek Income Tax on Military Retired Pay and VA Compensation
Gate
Rule
No rating requirement
The treaty turns on the kind of payment and residence, not on any disability percentage.
No protection for residents of Greece
Article XIV(1) lets Greece tax its residents as though the convention had not come into effect, with no exceptions; Article XIV(3) gives a credit for U.S. tax on U.S.-source income instead.
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Disclaimer
VetTOC is not affiliated with the U.S. Department of Veterans Affairs or the Department of Defense. Information is for reference only and is not an eligibility determination. Verify with VA, the relevant state or territory, or an accredited VSO.