Real estate taxation holds significant importance in Greece's fiscal policy, with the Greek Ministry of Finance and local municipalities overseeing the associated regulations. Presented below is a concise summary of real estate taxation in Greece. This article aims to provide an explanation of the various property taxes applicable in Greece.
When acquiring property in Greece, it is essential to fulfill obligations pertaining to property taxes, including both acquisition and annual taxes. Moreover, if you opt to rent out your property, taxes on rental income apply. The advantageous aspect is that property taxes in Greece generally tend to be lower compared to those in the United States, albeit some may slightly exceed the European Union average. Nevertheless, the tax system itself is user-friendly and easy to navigate. Upon property acquisition, you receive a tax identification number, which can be conveniently managed online.
Transfer Tax
When purchasing a property in Greece, one needs to pay a real estate transfer tax. This tax is calculated at a rate of 3.09% of the taxable value of the property. To determine the property’s value, in December 2021, the Greek Ministry of Finance introduced a new system called the Objective Value. The Objective Value system establishes prices per square meter in 13,808 property areas across the country, considering factors such as location, size, and technical specifications. The determined Objective Value is then used to calculate the transfer tax payment required from the buyer.
It’s important to note that if the Objective Value exceeds the purchase price, the tax will be based on the Objective Value.
In some cases, larger investment properties may be transferred through a share arrangement, which exempts them from real estate transfer taxes.
Rental Tax
When considering the rental of a property in Greece, it’s crucial to have an understanding of the taxation applied to rental earnings. The tax rates applied to rental income follow a progressive structure and are based on the level of income generated.
Here is a breakdown of the rates:
- 15% for rental income up to €12,000
- 35% for rental income between €12,000 and €35,000
- 45% for rental income exceeding €35,000
For corporations, rental income is considered part of their taxable income. The corporate tax rate is 29%, with a 15% dividend withholding tax (WHT). However, foreign investors who own Greek companies through an EU-based corporation may qualify for the Parent-Subsidiary Directive exemption, eliminating the dividend WHT in this scenario.
Rental income is also subject to the solidarity contribution, which is calculated on a progressive tax scale of up to 10%. The total income of an individual is considered to determine mutual assistance.
It is important to note that the Greek government closely monitors rental income, and landlords are expected to declare their overall income accurately. Failure to disclose rental revenue can result in penalties. Therefore, it is important for homeowners to comply with the tax regulations and ensure they accurately report their rental income to avoid any legal repercussions.
Capital Gains Tax
When you sell a property in Greece, the tax on any profits you make depends on the duration of your ownership. If you have owned the property for less than five years, the profits will be subject to a 15% tax. However, if you have owned the property for more than five years, the profits will not be taxed. For residents of other countries, the capital gains tax rate could potentially be higher.
ENFIA
The ENFIA tax is a standard property tax in Greece, applicable to both individuals and legal entities that own real estate in the country. This annual obligation is mandatory. When it comes to fulfilling the ENFIA payment, you’re presented with a choice: you can make a one-time lump sum payment or you can select the option of breaking it down into five monthly installments, due between September and January.
The ENFIA tax in Greece is based on the objective property value determined on January 1st each year.
The tax authorities assess the ENFIA tax using two different tax rates:
- Primary Tax – Each property is subject to a primary tax, which is determined based on various criteria such as the property’s floor, price zone, surface area, age of the building, facade, proportion of ownership, and other specific elements.
- Secondary Tax – For individuals, a secondary tax is applicable when the total value of their properties exceeds €200,000. The excess amount is subject to an additional secondary tax ranging from 0.1% to 1.15%. For legal entities, the secondary tax is calculated as 0.55% of the total value of all the properties owned.
Furthermore, there is a specific tax rate of 0.10% for immovable properties used for conducting or producing business activities. This rate applies to properties utilized for business purposes.
TAP
TAP (Telos Akinitis Periousias) is a municipal tax in Greece that is usually included in electricity bills. It is calculated based on a percentage ranging from 0.025% to 0.035% of the property’s actual value. The property owner is responsible for paying this tax. However, if the electricity bill is issued in the tenant’s name, the TAP amount is deducted from the monthly rent.
Special Tax on Property (SRET)
The special property tax in Greece is applicable to all Greek corporations that own real estate. The purpose of this tax is to prevent businesses from concealing their real estate assets. If a company is not exempt, it is required to pay a yearly tax rate of 15% based on the objective value of the property.
The following exemptions apply:
- Corporations and individuals – The tax disclosure requirement applies to corporations and individuals who are residents of Greece or another country. Individual shareholders must ensure that their Greek tax identification number is up-to-date. However, banks and prominent investors are exempt from disclosing ownership information to individuals unless they are established in non-cooperative states and supervised by an authorized authority.
- Listed organizations – Organizations whose shares are listed on a regulated exchange are exempt from the tax.
- Shipping companies – Shipping or ship owner firms with Greek offices that utilizing their real estate exclusively for office space, warehousing, or leasing to fellow shipping enterprises are eligible for an exemption.
- Philanthropic, educational, cultural, and religious organizations – Legal entities focused on these activities are exempt from this tax, for buildings used to support these purposes or for abandoned buildings or other properties that they utilize. Profits generated from these properties must be allocated to the aforementioned goals.
- Companies operating in commerce, industry, or manufacturing – If the gross income from these activities exceeds the gross income from the real estate owned during the fiscal year, companies operating in Greece are exempt from this tax. They may also be eligible for a seven-year exemption if they construct a space solely for their commercial, manufacturing, or industrial activity (self-use), starting from the submission of the necessary paperwork for building permits.
- Philanthropic institutions – Companies whose registered shares or parts belong to national or foreign institutions seeking philanthropic objectives in Greece are exempt.
- Social security organizations, insurance funds, and regulated real estate mutual investment companies – These entities, as well as regulated funds supervised by the competent authority of their place of registration, are exempt, except for those with a registered office in non-cooperative states.
Our firm specializes in Israeli and international taxation, allowing us to provide expert guidance on a wide range of tax-related matters. Additionally, we assist individuals exploring real estate acquisitions in Greece. To connect with a member of our team, please click here.
