Property taxes in Greece: what should an investor expect?

Contents

Housing in Greece is one of the most affordable in the EU

After the 2008 crisis, the property market in Greece had been through a deep recession for many years. It began to recover only in 2016, and we saw a rapid rise in prices in 2018. Still, real estate in Greece is almost the cheapest among all EU countries. If we compare prices for a hypothetical 120 m² apartment in the central metropolitan area, we see that property is cheaper only in Cyprus. But even then, we should bear in mind that Cyprus is not part of the Schengen zone. So, Greece wins in this hypothetical race with its competitors on the Golden Visa Program.

Property taxes in Greece are also very affordable, which, combined with low prices, creates a high level of demand in the real estate market.

Important! In Greece, the taxes can vary significantly depending on the region. The taxes can be higher on some islands popular with tourists. Besides, there are large differences in taxes for individuals and legal entities.

Buyer's expenses at the time of purchasing the property

According to Greek law, a home buyer pays several types of property taxes in Greece:

• VAT;

• tax on the transfer of ownership;

• stamp duty.

Moreover, an investor has to make several additional payments: notary services, state duty, possible legal services, payment for banking services, etc.

VAT tax

Its amount is 24%, but if an investor pays it only in some cases if the object of purchase was built or became inhabited after January 1, 2006. Besides, Greece has temporarily cancelled VAT on the purchase of property in new buildings for two years (starting from 2020).

Transfer tax

It is charged in all cases when you do not need to pay VAT. Its amount is 3%. The tax office can charge it both on the assessed value and the real transaction price, depending on which of the prices is greater. The tax is always taken from the larger amount.

In popular tourist regions, the cadastral value of villas and large apartments is often less than their market value. But inexpensive economy housing in cities is often actually cheaper than its cadastral valuation.

The stamp duty

The stamp duty when buying Greek non-residential property is 3.6%.

Additional expenses

They may be different. We can single out:

• the registration fee (420 euros);

• the services of a lawyer (1–2% of the transaction), without which it is very problematic to buy a house in Greece;

• real estate agent's fee. In Greece, it is also common to divide the agent's fee (0.8 –1%) in half with the seller.

Important! It is worth noting that the fiscal laws of Greece are very complex and confusing — they are replete with various exceptions and additions. That is why we mentioned above that it is very problematic to buy housing in this country without the services of a lawyer.

Taxes and expenses while owning a property

Real Estate Tax (ENFIA)

It is paid annually by all, without exception, homeowners in Greece, both residents and foreigners.

The basic part of the tax is from 2 to 13 euros per 1 m². Both individuals and legal entities pay this part. The calculation of this part is complex — it takes into account many factors: the size of the housing, its location, age, purpose, estimated value, etc.

The extra part differs depending on whether the owner is an individual or a legal entity. Individuals pay this part only when the price of the property exceeds €250 thousand. The rate for them is calculated on a progressive basis, and it ranges from 0.15% to 1.5% (if housing is more expensive than 2 million euros).

For legal entities, this part of the tax is fixed. It is 0.1% of the cadastral value if the company actually uses the property for its own needs, and 0.55% if the company leases the object. There are also separate benefits for non-profit organizations.

Special Real Estate Tax (SRET)

It is charged at 15% of the cadastral value and only applies to companies that own real estate. There are several ways to avoid paying this tax. In particular, companies whose income from active commercial activities exceeds passive income do not pay it.

Municipality Duty (called Telos Akinitis Periousias or TAP).

It depends on the region of the country and ranges from 0.025 to 0.035%.

Rental income tax

It is also different for individual and corporate property owners. For companies, the tax rate is fixed at 24%, while all expenses for the maintenance of real estate are deducted from the gross income.

For individuals, this tax is progressive, ranging from 15 to 45%, depending on the amount of rental income. Maintenance costs are also deducted from gross income, but on a fixed basis — 5% of the received income.

You can also reduce the tax by collecting data on the renovation or energy modernization of the building carried out during the year. But it should be no more than € 16,000.

Utility bills

There are not only property taxes in Greece that investors should pay annually. For a general understanding, we will give utility average payment data. Utility fees in Greece are from 100 to 300 euros per month. So, for an apartment in Athens, you will have to pay from 700 to 1800 euros per year, for a villa on the coast — from 2 thousand to 5 thousand euros. This amount includes utilities and management company services.

Here are some numbers that give an idea of the Greek utility charges.

• Electricity. Cost of 1 kW. h amounts to approximately 0.1–0.2 euros.

• Water. It is more expensive on the islands and the coast, and it is cheaper in the northern part of the country. Per person, it will cost from 20 to 80 euros in a year.

• Communication services. The annual fee for landline and Internet will be from 180 to 600 euros from one apartment. It depends on the provider, as well as on the region, quality and set of services.

• For villas, the maintenance of the garden, swimming pool and adjoining grounds takes up a large share of the costs.

Property insurance costs

The laws of the country do not oblige owners to insure the property. Yet, villa owners usually do this by paying 250–500 euros per year.

Expenses during the sale of a property

Capital gains tax and exit tax

Greece has a very loyal approach to capital gains tax for property owners. Individuals are temporary, generally exempted from it, but under two conditions:

• one owner has sold no more than two properties in the last two years;

• the sale of real estate is not considered entrepreneurial activity.

But if an individual sells real estate as part of a business, he pays capital gains tax. The amount is 15 to 45%, depending on the income received on an annualized basis.

The capital gain tax for companies is fixed at 24%.

But when a legal entity transfers its assets or tax residency outside Greece, the economic value of any capital gains is also taxable. You pay it in Greece even though, at the time of release, this benefit had not yet been realized. It is called exit taxation. Tax can be paid partially for 5 years after the residency change.

Inheritance tax

In Greece, the Inheritance tax is calculated in a very complex way, taking into account several factors. First of all, it is the degree of kindred between the former owner and his heirs. A certain starting amount is fixed, which is not taxed at all. For close relatives, it is equal to €150 thousand per person. Generally speaking, inheritance tax rates vary from 1% to 40%. It increases as the price of the object rises and the degree of kinship decreases.

Conclusion

We devoted our material to what costs (taxes and payments) the owner of a property in Greece bears at all stages: from purchase to sale. As you can see, the Greek laws in this matter are very complex and confusing — moreover, they often change. To get legally accurate information, we advise you to contact specialists on property purchasing and taxes.