Property taxes in Greece. Current situation

On January 1, 2014, a number of changes in tax legislation came into force in Greece. Their goal is to stimulate investment in real estate in a country still in a difficult economic situation. In general, we can say that taxes on the purchase and ownership of real estate have become more convenient to calculate, and the amount of tax payments has decreased significantly. However, there are some peculiarities of individual taxes. Real estate purchase tax Prior to the introduction of the new legislation, the tax on the purchase of real estate was 8% for purchases up to 20,000 euros and 10% for purchases of real estate worth more than 20,000 euros. Under the new legislation, the amount of purchase tax is now 3% on any type of real estate, regardless of the value of the property. Purchase tax is payable upon signing a notarized sale and purchase agreement on the transfer of ownership of the property to another person. Property Ownership Tax The annual property ownership tax in Greece applies to individuals and legal entities. The tax is calculated at the objective value, which is established by the tax office annually on January 1. With the introduction of the new law, from January 1, 2014, Greece has a Unified Property Tax, which replaced the old emergency tax introduced in October 2011, better known as "haratsi". The flat tax applies to all types of real estate. It is calculated individually for each specific object and depends on many parameters - the type of object, its area, location, type of use, age of the building, etc. Now, unlike the "haratsi", the Single Tax is not paid together with the electricity bill, but a separate receipt of the tax service with the ability to pay it in full at once or in equal installments for 5 months. After the introduction of the changes, the amount of the annual property tax decreased. In addition to the general property tax, there is a local property ownership tax in Greece, which is paid by the owner to local municipalities. The tax amount varies between 0.025% and 0.035% of the value of the property and is paid on a single receipt along with the electricity bill. Progressive tax In Greece, from January 1, 2014, there is also an additional tax on property owners with a total value (if there are several properties in the property or expensive real estate) of more than 300,000 euros of the contract value. Its rate depends on the value of the object and ranges from 0.1% of the cost to 1% (for objects worth more than 1 million euros) per year. Land tax In January 2014, a land tax was introduced for the first time in Greece. Until that moment, land plots were not taxed and were of a separate interest for investors. It is quite possible that already in the middle of summer 2014, after taxation for land plots, the land market will be significantly replenished with offers from owners for their sale. The amount of tax on land plots varies from 0.003 to 9 euros per sq. m. depending on the cost of the site. Legalization of Illegally Built Premises The Law on the Legalization of Illegally Built Premises in Greek Houses, in force since September 2011, made it possible, on the one hand, to legalize all illegally built residential areas and ancillary premises that were previously used as residential by paying fines to the tax office. On the other hand, it enabled new owners to buy houses with fully legalized living space. For the tax system as a whole, this gave additional income from taxable real estate. Capital Gains Tax Another change in legislation is that in Greece the capital gains tax on the sale of real estate, which was abolished in 2008, came into effect again. It is 15% of the increase in value and is calculated from the difference between the purchase price and the sale price of the property without limitation on the limitation period and method of acquisition. The tax applies to sales and purchases made from 01.01.2014. Prices for the calculation are taken from the relevant agreements on the change of ownership of the property. The amount for taxation is reduced by the percentage of inflation. In addition, a reduction factor of up to 40% is applied depending on the duration of ownership of the property before sale. Now there is a lot of discussion around this tax, mainly in connection with all the difficulties in assessing the value of the object. However, there is a hope that the tax burden for the seller will be reduced, otherwise it will be unprofitable for him to indicate the real sales value of the object in the contract. Tax on rental income from real estate The Greek government is pursuing a targeted policy to attract tourists by improving infrastructure and eliminating the shadow market for resort rentals. So from January 2014 in Greece, the tax on rental income is drawn up as a separate tax. Its rate is 11% on income up to 12,000 euros and 33% over this amount (calculated from the difference between the total rental income minus 12,000 euros). In general, it can be said that the tax on rental income of real estate has increased since this year. Income Tax Foreigners who do not reside in Greece are required to pay tax on all types of income earned in Greece. Spouses are taxed individually. In addition, foreigners who do not reside in Greece, being residents of the EU countries, can also claim tax deductions, provided that they receive 90% of their income in Greece. Income tax applies to income from employment, income from free activities and investment income. Also, non-residents are subject to an additional tax of 5% on incomes up to 12,000 euros, if they are not residents of the EU countries. The costs associated with earning income are deducted from the tax base: 40% for costs and 10% for depreciation. Daniil Burygin HomesOverseas.ru The editors of the portal would like to thank Isabel Razi ( IRM Aegean Estate Ltd ) and Natalia Kovaleva ( Real Estate Services ) for their help in preparing the material.