Exploring the enchanting landscapes and rich cultural heritage of Greece has long been a dream for many, and for those considering investing in property within this Mediterranean haven, understanding the intricacies of Greece’s property tax system is paramount.
This article serves as a guide for foreign buyers and investors, offering a detailed overview of the Greek property tax landscape. From navigating the different types of property taxes to understanding the recent changes in regulations, we delve into the essentials that prospective investors need to know before making their mark on the Greek real estate market.
Whether you are captivated by the historic charm of Athens, the sun-kissed islands, or the picturesque coastal villages, this guide will empower you with the knowledge to make informed decisions and unlock the potential of your Greek property investment.
An Overview
1. Transfer Tax:
- Rate: 3.09%
- Applicability: Upon property purchase.
- Calculated based on the property’s “Objective Value,” accounting for size, location, and technical specifications.
- Share deals for sizable investments may be employed to circumvent real estate transfer tax.
2. Rental Tax:
When considering renting out your property in Greece, it’s important to be aware of the tax implications associated with rental income. Individuals are subject to progressive tax rates applied to their gross rental income. This means that taxes are calculated based on the total rental income for each owner. It’s crucial to factor in these tax considerations when planning to rent out your property in Greece.
Generally, it is advantageous for couples to make a purchase jointly, using both names, as the applicable tax rates are determined on a per-owner basis.
Progressive tax rates for individuals leasing properties:
- Up to €12,000: 15%
- €12,000 to €35,000: 35%
- Over €35,000: 45%
When two individuals are involved in the purchase, the tax brackets are structured as follows:
- Up to €24,000 in rental income: 15 percent
- Between €24,001 and €70,000 in rental income: 35 percent
- Exceeding €70,000 in rental income: 45 percent
This joint ownership approach can lead to potential tax savings and optimize the financial implications associated with the acquisition.
One also should consider that:
- A solidarity contribution of up to 10% may be levied based on total income.
- Corporations face a 29% corporate tax rate and a 15% dividend WHT.
3. Capital Gains Tax:
- 15% tax on profits if a property is sold within five years of acquisition.
- Properties held for over five years are exempt from capital gains tax.
- Non-residents may be subject to capital gains tax in their home country.
Under the current legislative framework, Greece has temporarily suspended the capital gains tax until 2024, with a high likelihood of subsequent extensions every two years. This translates to a favorable scenario for individual sellers, as profits from property sales won’t be subjected to taxation in Greece. It’s important to note that if you are a resident of another country, there might be capital gains taxes applicable in your home jurisdiction. Fortunately, Greece has established treaties to prevent double taxation with numerous nations. For comprehensive insights, it is advisable to seek guidance from a tax professional in your home country.
4. VAT
Typically, when transferring newly constructed homes to their initial owners, building companies or professional builders are required to impose a 24% VAT charge
A noteworthy aspect in Greece is the concept of a “VAT exemption.” Until the conclusion of 2024, Greek developers have the option to seek a VAT exemption for their construction projects. In such cases, buyers are relieved from the obligation to pay the standard 24% VAT for a house within the project. Instead, a nominal 3.09% transfer tax is levied upon the buyer. This initiative by the Greek government aims to streamline the process of acquiring newly-built properties.
However, it’s important to note that if you purchase a plot with the intent of constructing a home, the transfer tax (3.09%) is applicable to the plot’s purchase. During the construction phases, invoices with VAT will be issued by the contractor, and VAT exemption cannot be applied to these invoices.
5. Annual Property Taxes:
- ENFIA (Uniform Real Estate Property Tax):
- Charged annually to individuals and legal entities.
- Calculated based on objective property value.
- Components: Primary tax based on property factors and secondary tax for total property value over €200,000.
ENFIA stands as the primary ongoing property tax in Greece. Its computation hinges on your designated tax zone, leading to higher rates in sought-after locations while being more moderate in rural areas. Typically, for residences in the countryside, the annual ENFIA rate ranges from 3 to 4 euros per built square meter. To illustrate, a dwelling spanning 100 square meters would incur ENFIA taxes totaling 300 to 400 euros annually, contingent on its precise location. Notably, the expenses associated with ENFIA for undeveloped plots are notably minimal.
- TAP (Municipal Tax):
- Charged at 0.025% to 0.035% of the objective property value.
- Collected via electricity bills or deducted from monthly rent.
- SRET (Special Tax on Property):
- Applies to companies owning real estate.
- Annual rate of 15% on objective property value.
- Exemptions for specific entities, including charitable, cultural, and educational organizations.
6. Taxes on Exit:
- Profits from property sales are considered taxable.
- Share deals are common exit structures.
- Non-listed shares’ transfer is subject to a 29% income tax rate.
- Exemptions for individuals in countries with Double Taxation Agreements and non-Greek entities without a permanent establishment in Greece.
To ensure proper compliance with taxation requirements in Greece, it is imperative to follow a few key steps.
Firstly, obtaining a tax number from the tax office is a fundamental prerequisite. This unique identifier is essential for various financial transactions and interactions with tax authorities.
Secondly, for individuals involved in renting out properties, an annual obligation exists to report rental income, with the deadline set for June each year. This timely reporting is crucial for maintaining transparency and adherence to regulatory standards.
Lastly, considering the complexity of tax filings, particularly for property-related transactions, it is advisable to contemplate the engagement of a qualified accountant. This professional support can contribute to accurate and efficient tax submissions. This proactive approach ensures a smooth and compliant handling of tax-related matters in Greece.
