The basic rule in Greek law is that if a deceased has a left a single-name bank account (in the name of the deceased, only) his/her heirs, named in a Will or intestate, have to declare their share on such a bank account and pay inheritance taxes to the Greek tax authority. On the contrary, if the bank account is a joint bank account, in the name of the deceased and at least one more person, who survives the deceased, the balance of the account on the day of the passing, remains in the ownership of the surviving joint owner. The bank considers the surviving joint owner or owners as the full owner of the bank account. The Greek tax office does not claim inheritance taxes from the surviving joint owners.
The law in Greece says that, if one of the assets of the estate is a joint bank account, kept in the name of the deceased and one or more persons, the balance on the day of the passing will not go to the heirs of the deceased and will not be taxed as inheritance, provided the account was opened at the bank with a specific clause that upon the passing of one joint owner, the balance is owned by the remaining joint owner(s). In Greece, almost every joint bank account has this clause, by default. This means that in case of death of one of the joint owners, the surviving owners do not have to prove much to the tax authority to avoid inheritance taxation.
The balance of the bank account is not even included in the inheritance tax declaration, which is filed to the tax authority within four or twelve months from the passing, or from the probation of the Will. The Greek tax authority considers that all joint bank accounts in Greece have been opened with the specific clause that upon the death of one joint owner, the balance belongs to the surviving joint owners and not to the heirs of the deceased.
However, in the court case 59/2020 of the Three Member Administrative Court of Athens, the estate of the deceased included joint account and portfolios in foreign banks and other financial institutions. The tax authority in Greece did not accept that, by default, the crucial clause (that upon the death of one joint owner, the surviving owners take the balance) was in force, and imposed inheritance taxes on the heirs of the deceased. The heirs challenged the action of the Greek tax authority as a breach of European Union law, since, they claimed, the Greek state (tax authority), required by them to specifically prove that the crucial clause had been agreed upon at the opening of the foreign joint bank accounts, while it does not require the same level of proof, when the joint bank accounts are kept with banks in Greece. The court ruled that the Greek state, through the tax authority, did not breach the law, since the law in Greece does not differentiate between Greek and foreign banks and it applies equally the law that if such a clause is entered during the opening of the account, the surviving joint owners do not have to pay inheritance tax. The problem is that the law is the same for Greek and foreign joint bank accounts alike, but the application of the law by the Greek tax authority seems discriminative against the surviving joint owners of foreign bank accounts.
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Following such a ruling, every joint owner of a bank account kept at a bank outside of Greece, who expects to have to file an inheritance tax declaration to the Greek tax authority, must ensure that such a clause is entered into during the opening or the operation of such a foreign joint bank account. Unless, it can be proven that such a clause is by default part of every contract or agreement with the bank, when the joint bank account is opened.
Christos ILIOPOULOS is an attorney at the Supreme Court of Greece, LL.M. www.greekadvocate.eu e-mail: bm-bioxoi@otenet.gr