Property taxation in Greece is regulated by a particular legislative framework, which, in order to determine any tax obligation, takes into account significant factors of both property ownership status and property value.
In this article, we will briefly cover the basic topics to provide fundamental knowledge to all those interested in engaging in property transactions.
Generally, property taxation could be divided into three parts:
Taxation of property acquisition from a burdensome cause (e.g., sale, exchange),
Taxation of property acquisition from a gratuitous cause (e.g., inheritance, donation, parental provision),
Taxation of property retention.
If you are a property owner or intend to become one soon, it is good to know the tax regime that applies in the current period. Specifically, the taxes related to the purchase of a property are as follows:
Value Added Tax (VAT), which is borne by the buyer,
Property transfer tax (PTT), which is borne by the buyer,
Property transfer surplus tax, which is borne by the seller,
Single property tax (ENFIA), paid by the property owner every year, and in any case, must be paid before signing the purchase agreement,
Property ownership fee (TAP), paid by the property owner every year through electricity bills.
Value Added Tax - VAT [Φόρος προστιθέμενης αξίας - ΦΠΑ]
According to current Greek legislation, the purchase of real estate imposes a 24% VAT on the sale price for the purchase of secondary, holiday homes, offices, or stores with a building permit issued after January 1, 2006. However, it should be noted that, according to the latest legislative changes, VAT for the purchase of new properties has been suspended until December 31, 2024. Buyers who acquire their first residence are exempt from paying VAT and are subject to the property transfer tax exemption.
Property Transfer Tax [Φόρος μεταβίβασης ακινήτου - ΦMΑ]
Every buyer who proceeds with the purchase of a property is required to pay the property transfer tax. The tax must be paid before the signing of the purchase agreement. Additionally, the property transfer tax can now be paid electronically. The buyer applies to the competent Tax Office (DOY), and then the DOY issues the relevant payment identity for the payment of the tax. The property transfer tax amounts to 3% of the objective value of the property. Municipal taxes also apply, corresponding to 3% of the property transfer tax.
The buyer is exempt from the obligation to pay tax if it is a purchase of a primary residence with an objective value up to:
€200,000 for single buyers,
€250,000 for married buyers or those in a civil partnership without children,
If there are up to two children in the family, the buyer is exempt from €25,000 additional for each child. For three children and above, for each additional child, the thresholds are increased by €30,000.
Property Overvalue Tax [Φόρος υπεραξίας ακινήτου]
According to legislation (Law 4172/2013), a tax of 15% is imposed on the positive difference (overvalue) resulting from the sale of property at a price higher than the price at which it was acquired. If three or more property sales have been made within a two-year period, then the overvalue tax will have a higher rate because the seller is now considered by the tax office as a businessperson, and the overvalue from the sale of the properties will be characterized as income from business activity. Therefore, it is taxed based on the income tax scale for self-employed professionals ranging from 9% to 44% (Article 29 of the Income Tax Code). However, the implementation of the law has initially been suspended until December 31, 2022, and subsequently extended until December 12, 2024, with the aim of supporting the real estate market.
Unified Property Tax (ENFIA)
The Unified Property Tax (ENFIA) is paid by property owners every year. ENFIA is calculated as the sum of the main and supplementary taxes.
The main ENFIA is calculated based on a zone pricing scale and determination coefficients, which are adjusted according to specific characteristics of the building, such as age, floor, area, and use. ENFIA generally ranges from €0.001 to €13 per square meter.
The new ENFIA clearance is different from previous years. Specifically, due to the new objective values, the new clearance includes:
The new total value of the property, which has resulted from the readjustment of the objective values,
The main tax,
The discount or surcharge of the main tax in relation to the total value of the property,
The discount (e.g., for property owners with low incomes),
Supplementary tax (if you have property with a total value greater than €200,000, then the additional amount is taxed additionally at a rate from 0.1% to 1.15%),
The total amount of ENFIA.
Property Tax (TAP)
In addition to ENFIA, a property is also subject to municipal taxes and the Property Tax (TAP). TAP depends on the area, age, and zone price of the property and is calculated using coefficients ranging from 0.025% to 0.035% of the property's objective value. Certain buildings are exempt from paying TAP, specifically: common areas of apartment buildings, buildings classified as "historical monuments," as well as those under construction for 7 years after the issuance of the construction permit or until they are leased or used in any other way before the 7-year period expires.
Property Rental
If you're a property owner - a natural person - and you're renting out the property, then you'll be taxed on the income from the lease as follows:
at a rate of 15% for amounts up to 12,000 euros,
at a rate of 35% for amounts from 12,001 to 35,000 euros, and
at a rate of 45% for amounts above that.
After the passing of Law 4646/2019, the owner must cover 30% of their annual actual income from the rents they've received with expenses for goods and services purchased and provided, which they will have paid electronically.
For legal entities, i.e., companies that own rental properties, the net income from property leasing is added to business profits and taxed at a rate of 29%. If the tenant is a business, then the rents are subject to a 3.6% stamp duty, and depending on the personal agreement, either the owner or the tenant will bear it.
The above applies at the present time and may be subject to change.
Yorumlar