Your Guide to Greece Property Taxes
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In Greece, you are subject to taxation on a property when you buy it and rent it out. In addition, you also pay taxes on the acquisition, and you pay a property tax each year.
In this article, you’ll learn the property taxes in Greece such as:
- Transfer tax
- Rental tax
- Capital gains tax
- Annual property taxes
- Special tax on property (SRET)
- Taxes on exit
Before jumping on to the details of any property tax in Greece, you can check the below table to get a general idea:
|Type of Tax||Rate|
|Corporate Income Tax||29%|
|Real Estate Transfer Tax||3.09%|
|ENFIA (Uniform Real Estate Property Tax)||0,0037-€11.25/sq. (principal tax)|
|TAP (Municipal Tax)||0,025%-0,035%|
When you purchase a property in Greece, you pay a transfer tax, which is FMA. The tax rate is 3.09% of the taxable property value. There’s a system of “Objective Value”. It calculates how much a property should be worth depending on its size, location, and technical specification. In cases where the Objective Value is higher than the purchase price, you pay tax on that value instead of the price. Alternatively, for large investment properties, transfers can be made by means of a share deal. It is not subject to any real estate transfer tax.
The government has made some changes to the VAT (value-added tax) rates. Previously, the VAT rate for new properties was 24 percent. By new properties, they mean all properties of which planning permission is after January 2006. Yet recently, the government has changed it. It decided to grant an exemption on VAT for new properties for a duration of three years from 2019.
When you rent your property out, you’ll need to pay tax on the rental income. For individuals, there are progressive tax rates, depending on the gains from the rent. You can see the rates below.
- Up to a rental amount of €12,000: 15 percent
- Between €12,000 and €35,000: 35 percent
- More than €35,000: 45 percent
A “solidarity contribution” of up to 10 percent is also possible. It is determined according to your total income which you need to declare. You must definitely declare your income because the Greek authorities are very careful about this. They keep track of homeowners who rent properties. So, they can penalize the homeowners if they do not declare their rental income. For corporations, the rental income is part of the taxable income in the normal way. The corporate tax rate is 29 percent, and a 15 percent dividend WHT also applies. Foreign investors may benefit from the Parent-Subsidiary Directive exemption if they own Greek companies through an EU-based company. In this case, no dividend WHT will apply.
Capital Gains Tax
If you hold a property for less than five years, and if you sell it, you are subject to a 15% taxation on any profit you make. However, if you own a property for more than five years, then the gains you made from that will be exempt from taxation. You should also note that if you are a resident in another country, you may be subject to higher capital gains tax rates there.
Annual Property Taxes
There is a uniform real estate property tax called ENFIA. It is charged annually to both natural and legal entities who own properties in Greece. When you buy a new property, it is advisable to check the comparable properties around its region. You can pay your ENFIA as a lump sum or you can pay it in five monthly installments between September and January. The tax base of ENFIA is the objective property value on January 1st of each year. Tax authorities assess this. There are two different tax amounts regarding ENFIA.
- Primary tax: This is levied on each property. There are several factors determining the tax. For example, the floor, the price zone, the surface, the building’s age, the facade, the percentage of ownership, and other certain conditions.
- Secondary tax: Regarding individuals, the tax is levied on the total value of the owner’s property exceeding €200,000. There is another secondary tax for the excess amount. It ranges from 0.1 percent to 1.15 percent. Regarding legal entities, the tax is levied on each owner’s property’s total value. It is 0.55 percent of the total value of all the properties. The tax rate for immovable property is 0.10% for properties used for conducting/producing business activities of all kinds.
TAP (Telos Akinitis Periousias)
TAP is the municipal tax that is charged at 0.025 to 0.035 percent of the objective value of the property. TAP is usually charged via electricity bills. It is imposed on the property owner. However, if the bill is issued in the tenant’s name, then the amount is deducted through the monthly rent. Municipalities may also impose other taxes based on the region, activities, and other conditions.
Special Tax on Property (SRET)
This applies to all companies in Greece which own real estate. By this tax, the government aims to prevent the companies from avoiding disclosure of their real estate property. If there is no exemption for the company, it has to pay an annual rate of 15 percent on the objective value of the property. Certain exemptions are as follows:
- Companies with registered shares all the way up to an individual. The condition is that the companies must be resident in Greece or in another country. Also, the ultimate individual shareholders must maintain a Greek tax registration number.
- Companies owned by banks and institutional investors, which do not have to disclose their ownership up to the individual if the latter is not set up in “non-cooperative state” countries. Also, if they are supervised by an acknowledged supervisory authority of the related state. According to the Greek Income Tax Code, the non-cooperative states are non-EU member states not having concluded agreements of administrative assistance in the tax sector with Greece or with the other 12 states, and they are listed in an annual Ministerial Decision.
- Shipping or ship owner companies having set up offices in Greece for the property they use or rent to other shipping companies exclusively as offices or warehouses.
- Companies with shares listed on an organized exchange.
- Companies conducting commercial, manufacturing, or industrial activities in Greece. The condition is that during the relevant fiscal year, the gross income from this activity must be higher than the gross income from the real estate property they own. Regardless of the country of their establishment, if the said legal entities construct premises to use exclusively for the exercise of their commercial, manufacturing, or industrial activity (self-use), an exemption from the SRET is available for a duration of seven years starting from the filing of all the necessary documentation for the issuance of the building permit.
- Legal entities aiming for charitable, cultural, religious, and educational purposes, for the buildings used for such purposes, and for empty buildings or property they exploit. The condition is that any gains arising must be made available for the mentioned purposes.
- Insurance funds or social security organizations as well as companies of collective investments in real estate and regulated funds supervised by a competent authority of their registered seat, except for those whose registered seat is in non-cooperative states.
- Companies whose registered shares or parts belong to a national or foreign institution seeking charitable purposes in Greece, for the buildings used for such purposes.
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Taxes on Exit
When a company sells a real estate property, the gains from the sale are considered part of the taxable profits of the company. So, they are taxed at the normal income tax rate. Yet, a share deal is the most common exit structure. The non-listed shares’ transfer in Greek companies by Greek entities is subject to a 29 percent income tax rate. There are two groups that are not subject to capital gains tax when they sell shares in a Greek or foreign company owning real estate property in Greece. These are:
- Individuals being a tax resident in countries that the Greek government has DTA (Double Taxation Agreement) with, and
- Non-Greek legal entities not maintaining a permanent establishment in Greece.
- Normally, you should show up at a tax office to obtain your tax number. Yet, most foreign buyers appoint their lawyers to do that for them.
- If you gain rental income in Greece, you need to file your report for the tax year that ends in the previous December, until June.
- It may be useful to work with an accountant for tax filings, just to be safe and not to face any inconveniences in the future. Many foreign owners are already doing this. It will cost you around €1,000 a year.