Adored for its idyllic island lifestyle and glorious beaches, Greece should become even more attractive when generous new tax rules kick in for foreign retirees. We take a closer look and suggest some expat hot spots…

Greece is on course to becoming one of Europe’s most appealing retirement destinations, thanks to a new scheme that will see foreign pensioners enjoy very low taxation. In July, the Greek government tabled a draft initiative that will see the introduction of a flat income tax rate of just seven per cent for foreign pensioners who transfer their tax residence to Greece. The favourable rate will apply to whatever income the applicant receives, including pensions, rental income and dividends, and the benefit will last for 10 years.

Greece is already popular for its stunning beaches and pretty fishing towns, both on the mainland as well as the islands, not to mention its laid-back culture and affordable Mediterranean lifestyle. Enabling retirees to pay less tax should make it even more appealing to retired expats. Similar schemes have been introduced successfully by other European destinations, including Portugal, Cyprus, Malta and Italy.

In order to qualify for the scheme, overseas retirees will need to come from a country that has a double-taxation treaty with Greece, such as the UK, prove their pension status and agree to spend more than six months in the country each year. In addition, they should not have been a tax resident of Greece over at least five out of the six financial years before their tax relocation. To benefit from the scheme this year, the expected deadline for applications is September 30th.

Even without this new tax initiative, Greece is a desirable place to own a second home or retire to. Here are three of its most popular destinations to own a property.

Mykonos
Deemed the trendiest and most cosmopolitan of all the Greek islands, Mykonos in the Cyclades is often compared to Ibiza or Mallorca in Spain’s Balearics. Like other islands, its picturesque whitewashed capital, Hóra, has pretty cobbled streets and a lively waterfront, but it also offers plenty to keep hipsters entertained, including chic night spots, gourmet restaurants and boutique shopping. One notable residential area is Alefkántra (Little Venice), an 18th century district, dominated by grand mansions with colourful balconies. Other family-oriented hot spots on the island include Órnos and Psaroú. Mykonos is reachable by ferry or a connecting flight from Athens.

Crete
The largest Greek island and most popular with UK homeowners, Crete has something for everyone. Most of the island’s development and resorts are along its north coast. The eastern Lasithi region, which is the flattest area, is home to stunning beaches and the island’s most prominent tourist resorts, including glitzy Elounda and lively Agios Nikolaos, both on Mirabello Bay.

Meanwhile, Chania is not only the island’s most western region but also its greenest, thanks to the White Mountains. Expats in search of a more peaceful and authentic lifestyle head to this part, where villages 5-10 minutes from the coast are favourite locations. The Apokoronas district, conveniently located between the cities of Chania and Rethymnon, and further west the Akrotiri Peninsula and old fishing town of Kolimbari are popular.

Much of Crete’s interior is mountainous and untouched by tourism, especially towards the west, and along its southern shore. Crete has direct flights from the UK, but out of season a connection with Athens might be required.

Corfu
This lush island in Greece’s northern Ionian Sea gained popularity through its ties with zoologist and author Gerald Durrell, but Corfu has been on the radar of discerning British homeowners since the 19th Century when it was a colony.

The north of Corfu has traditionally been the place for holiday homes, especially the north and north-east coast, dubbed Kensington-on-Sea. Hot spots there, which have major tourist development and retain an air of exclusive charm, include the areas around Kalami, Agni and the fishing village Agios Stephanos, which has been compared to Padstow for its combination of seaside charm and upmarket dining. Another sought-after area is the pretty bay of Kassiopi, overlooked by tavernas and restaurants. The south of Corfu is more touristy but less expensive and includes resorts such as Benitsis and Kavos.