Published August 09, 2022 16:18 PM
Here Are The Things You Should Know
In Greece, the transfer of a newly constructed building (before its initial use or occupancy) as well as the land on which it is located are often subject to VAT, provided that the building permit is given or changed as of January 1, 2006, and construction work has not started before this date.
Any building or structure that is fixedly and permanently affixed to the ground or to a building is referred to as property in this sense. Greece also views the transfer of specific construction projects as a delivery of a building or building components.
With the exception of situations where the property is situated on one of the Aegean Sea islands of Chios, Samos, Lesvos, Kos, or Leros, where the reduced VAT rate of 17 percent is applicable, the appropriate VAT rate is 24 percent.
VAT Suspension
In order to increase the appeal of the vast inventory of unsold houses and to generally stimulate construction activity, the Greek government recently announced an optional VAT suspension program. The transfer of a newly built property (as mentioned above) is exempt from VAT under this plan between December 12, 2019, and December 31, 2022. Applicants for this scheme must submit their applications within six months of the building permit’s issuance date. The application deadline was June 12, 2020, for building permits issued before the suspension plan went into effect (i.e., before December 12, 2019).
The Greece property transfer tax at a rate of 3% (plus 3% municipality tax on the amount of the transfer tax) is applied and payable by the buyer in the event that the constructor chooses the VAT suspension scheme.
A number of Greece property taxes initiatives, including the previously mentioned optional VAT suspension scheme, the reduced corporate income tax rate of 24 percent, the reduced withholding tax rate on dividends of 5 percent, and the three-year suspension of the capital gains tax (15 percent) applicable to individuals in case of property sale transactions, serve as examples of the Greek government’s strategy to boost the real estate sector and other related industries.
Suggested Reads: Benefits of buying property in Greece, How to transfer property in Greece, Why you should invest in real estate
The Greece Property Taxes | Investors Might Be Of Interest
Special Property Tax
The annual Special Property Tax, which is applicable to any real estate company that holds ownership or usufruct rights on a specific property in Greece, is significant to note in addition to the aforementioned analysis of the VAT framework. This tax is equal to 15% of the property’s objective value as of the first of each year.
Companies that declare a physical person with a Greek Tax Number as their final Ultimate Beneficial Owner or that are listed on a stock exchange market are exempt from this Greece property taxes, among others. So, it is important to carefully study and assess the SPT framework before making a decision to invest in the Greek real estate market.
ENFIA (Uniform Real Estate Property Tax) Greece Property Taxes
An annual real estate property tax known as “ENFIA” is levied against taxpayers who have ownership interests in property as of January 1 of each year. ENFIA is not imposed on the objective value of real estate; rather, it is determined based on a number of factors, such as m2, floor, year built, road view, price zone, property use (main or ancillary use), etc., according to the final registration of the property at the land registry or ownership title.
TAP (Real estate property fee)
Real estate property fee is collected through electricity bills (if the property is not connected to an electricity provider, it is payable to the Municipality annually) and is equal to 0.025%-0.035%.
Greece Rental Income Tax
Greece levies taxes on rental revenue at a graduated rate of 15 to 45 percent. Income-producing costs are deducted from gross income. Taxpayers may use standard deductions in place of itemized deductions: 40% for expenses that generate income (together with supporting invoices) and 10% for depreciation.
Greek corporations are now subject to a 24 percent corporate income tax rate, which is applied to profits beginning in 2020. It is anticipated that the Greek government would reduce it to 20%, which is most likely to occur in the autumn of 2020. According to the applicable Double Tax Treaties, the WHT rate is the one that applies (DTT). The “Parent-Subsidiary EU Directive” states that there is no WHT between businesses with EU locations.
Additionally, Greek firms must pay an annual set cost of 1,000 euros, known as the Annual Professional Fee, along with their annual tax return.
Capital Concentration Tax
On properties that you have owned for under five years, capital gains from selling real estate are taxed at a flat rate of 15 percent. The gains on real estate aren’t taxed if it’s been owned for longer than five years. Selling price less all linked costs and expenses equals taxable capital gains.
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This article’s information is meant to serve as a general introduction to the topic. You should seek specialized guidance regarding your unique circumstances.