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Taxes on the Greek Real Estate Market. Legal information.

The Greek real estate market is burdened by various taxes, which are required by various laws; these taxes must be paid prior to the completion of transfer of the real estate. It is important to note that transferal taxes apply only in the case of drawing up the final contract for sale. In any other case, such as the drawing up of the pre-agreement, even if it is drawn up by a notary public, such taxes are not required to be paid.

The various transferal taxes are calculated by considering the price settled upon by the contracting parties. Due to past incidents of persons declaring lower prices than the ones actually contractually agreed in an attempt to pay lower taxes, Greek legislators established a system for the objective calculation of the value of real estates. Based on this system, if the contracting parties declare a price lower than the actual price, they will be charged taxes based on the actual price.

This objective calculation system is based on certain minimal values of the real estates which are initially assigned by areas (‘price zones’). Eventually these price zones are influenced by other factors which shape the final objective value of the real estate. These factors are the size of the real estate, the floor on which it is located (if it is an apartment), the length of the facade (if it is a store), whether an elevator and/or heat installations exist in the building etc.

In practice however, and for many years, the objective value of real estates was, in many cases, lower than the market value of the real estates; in certain areas the objective value was found to be twice or three times less than the market value. Due to successive increases in objective values, the divergences in some areas are not so wide. A new increase in objective values is expected by the end of 2015 which will effectively narrow the gap between the objective value and the market value. The basic taxes that are imposed on a real estate sale are the Real Estate Transfer Tax and Value Added Tax (V.A.T.).

We should note that the Real Estate Transfer Tax is regulated by law no. 1587/1950 in connection with law 4226/2013 while V.A.T. was established mainly by law no. 3427/2005. Furthermore, law 4172/2013 introduced a capital gains tax payable by the seller.

Real Estate Transfer Tax

Real Estate Transfer Tax is imposed on any transfer of real estate against a price in money or in land this tax is levied on the price stated in the contract. However, if this price is below the objective value of the estate, the tax is calculated on the objective value of the estate. This tax is charged by law on the purchaser of the property, who has to pay, in full, the competent Tax Office which regulates the real estate prior to concluding the transfer deed.

As per the new tax provisions, the tax factor amounts to 3%.

Value Added Tax (V.A.T)

Law no. 3427/2005 modified the V.A.T. Code (law no. 2859/2000) and brought about the imposition of V.A.T. for new buildings. According to the new tax provisions, V.A.T. at 23% is levied where a newly-erected real estate is acquired against a price and in money, for which building permission was issued after 1.1.2006. V.A.T. is to be paid by the purchaser- contractor and prior to signing the contract for sale in which case, Real Estate Transfer Tax does not apply.

Capital gains tax

Law 4172/2013 introduced the capital gains tax for the first time in Greek legislation and is imposed on property sale transactions as of 1.1.2014. Such tax is payable by the seller and is calculated at 15% on the difference between acquisition and sale price. There is a scale reducing the taxable capital gains based on the years that the seller kept the property before selling it, while an exemption is provided for capital gains up to 25.000 € as well as in case where the seller had acquired the property before 1.1.1994.

Volonakis Law Firm, lawyers

Partnering international businesses in Greece

Taxes on the Possession and Use of Real Estate in Greece

In Greece, up until 2007, the Large Property Tax applied only to owners of property whose total actual value exceeded certain limits. A tax for the preservation of ownership of a real estate did not exist.

During 2008 and 2009, Greek law provided for the replacement of the Large Property Tax with the Yearly Real Estate Tax, which applied to all real estate property, with the exception of the largest real estate of an owner valued up to 300.000 €. A significant difference between the two taxes is that the Yearly Real Estate Tax was imposed on the real estate property of all owners with the exception of the main residence.

In 2010, the Yearly Real Estate Tax was abolished and the Large Property Tax was re-introduced. The latter applied for the first time for the financial year of 2010 and related to property whose value exceeds 400.000 €.

In 2013, in an attempt by the Greek government to set the basis for a harmonized and long-term taxation of real estate, a new law was passed which introduced the “Uniform tax on real estate”, in Greek called “ENFIA”. From 1.1.2014 onwards, ENFIA will be the uniform tax on any rights held on real estate in Greece. Main difference between the ENFIA and previous taxes on real estate is that it is applicable on a property-per-property basis, i.e. irrespective of the total value of the property a person holds in Greece. The ENFIA is levied both on buildings and on any parcels of land. In the following section we will provide a short presentation of the way the ENFIA is calculated as regards buildings.

The ENFIA

For the purposes of estimating the ENFIA, the following are deemed to amount to real estate property: the right to absolute ownership or ownership deprived of the right to use, the right to enjoyment or residence, the contractual right to exclusive use of parking spaces, secondary spaces and swimming pools which are found on jointly-owned parts of a basement, an outdoor lower ground space (‘piloti’ in Greek) parking area, an attic or any uncovered space of the building, etc.

Every person, regardless of their origin and place of residence, is levied tax on their real estate property which is situated in Greece. Taxes are levied on the 1st of January of the tax year, regardless of the changes which may arise during that year.

Persons liable to pay the ENFIA are particularly:

Those who have acquired a real estate through purchase or by any other means, regardless of the registration of title in the Land Registry Office

Preliminary purchasers of a real estate, whereby, the purchaser is entitled according to a preliminary contract, by power of attorney, to conclude the final purchase agreement even without the participation of the seller. If a real estate is acquired by final judgment, its possessor is not entitled to a refund of the tax he has paid.

In calculating the tax, the value of the real estate or the value of the rights on the real estate are considered on the 1st January of the tax year. When the beneficiary of the right to enjoyment is a natural person, the value of the right to enjoyment is determined at the rate of the value of the right of absolute ownership depending on the age of the beneficiary as such:

• At 8/10, if the beneficiary is not over 20 years of age
• At 7/10, if the beneficiary is over 20 years of age
• At 6/10, if the beneficiary is over 30 years of age
• At 5/10, if the beneficiary is over 40 years of age
• At 4/10, if the beneficiary is over 50 years of age
• At 3/10, if the beneficiary is over 60 years of age
• At 2/10, if the beneficiary is over 70 years of age
• At 1/10, if the beneficiary is over 80 years of age

When the beneficiary is a legal person, the value of the right to enjoyment is set at 8/10 of the value of the right to absolute ownership. The law provides that the value of ownership deprived of the right to use is the value which results when the value of the right to enjoyment is removed from the value of the right to absolute ownership. The right to reside is equivalent to the right to enjoyment and therefore, the absolute owner is taxed as an owner without right to use the property.

The ENFIA is calculated by multiplying a “basic tax” which depends on the tax value (i.e. the value as calculated by the tax office) of the area that the property is situated. Such basic tax is then multiplied by several other factors; such basic factors are i) the age of the property, b) the floor it is in, c) how many facades the property has, d) if the property contains any supplementary spaces e.g. storage rooms, etc.

The basic tax is calculated as follows:

Tax value (€/square meter) Tax factor

(€/square meter)

0 – 500 2,00

501 – 750 2,80

751 – 1.000 2,90

1.001 – 1.500 3,70

1.501 – 2.000 4,50

2.001 – 2.500 6,00

2.501 – 3.000 7,60

3.001 – 3.500 9,20

3.501 – 4.000 9,50

4.001 – 4.500 11,10

4.501 – 5.000 11,30

5.001+ 13,00

The age of the building is calculated as follows:

Age Building age factor

Over 26 years 1,00

20 έως και 25 years 1,05

15 έως και 19 years 1,10

10 έως και 14 years 1,15

5 έως και 9 years 1,20

Μέχρι και 4 years 1,25

The floor factor equals to 0,98 for properties in the basement, 1,00 for properties on the ground and 1st floor, 1,01 on the 2nd and 3rd floor, 1,02 on the 4th and 5th floor and 1,03 on the 6th floor and above.

Supplementary spaces in properties is not allowed to be used for the same purpose as the main spaces of a property, e.g. storage rooms can only be used for storage and not used as residential space. Therefore, the law calculates a factor of 0,1 on such spaces, so that tax burden is low.

For persons owning real estate of a tax value higher than € 300,000.00, there is a supplementary tax which is calculated as follows:

Grading Scale Tax Factor per Scale Tax Amount per Scale Total Value of Property Tax Total

0.01 – 300,000 € 0 0 300,000 € 0

300,000.01 – 400,000.00 € 0,1 % 100 € 400,000 € 100 €

400,000.01 – 500,000.00 € 0,2 % 200 € 500,000 € 300 €

500,000.01 – 600,000.00 € 0,3 % 300 € 600,000 € 600 €

600,000.01 – 700,000.00 € 0,6 % 600 € 700,000 € 1.200 €

700,000.01 – 800,000.00 € 0,7 % 700 € 800,000 € 1.900 €

800,000.01 – 900,000.00 € 0,8 % 800 € 900,000 € 2.700 €

900,000.01 – 1,000,000.00 € 0,9 % 900 € 1,000,000 € 3.600 €

excess 1,0 %

The value of real estate property of legal persons is taxed with a factor of 0,5%. For legal persons of a non-profitable nature, a factor of 0,25% is applied.

Income Tax

According to the Greek income tax code (law 4172/2013), income generated from real estate property is that which is produced in every financial or agricultural year, either from the leasing or requisition or the indirect private residence or private use or the grant of use to a third party without payment of one or more buildings or from leasing the area. This income is acquired by every person who has been legally assigned by a final contract or has been granted by court order or due to occupation, the right of absolute ownership, the right of enjoyment or the right of residence. Furthermore, this income is also obtained by a person who has been legally assigned the right to enjoyment by contract depending on the case.

Additionally, the right which is obtained by the owner of the land in respect of buildings which have been erected on land owned by a third party is also considered as real estate income.

In practice, the most common case of taxable income generated from real estate property is income acquired from leasing. This income is taxed according to the following grading scale:

Income Tax factor

0.01 € – 12,000.00 11%

12,000.01 € and above 33%

Commercial and professional leasing in Greece falls under proportionate tax of up to 3.6% on the agreed lease, while all the registered leases must be declared to the tax office along with the submission of a copy of the lease agreement within 30 days from its conclusion.

Real Estate Tax – Sanitation and Lighting Tax

Real Estate Tax and Sanitation and Lighting Tax are collected in Greece along with the bills paid to the Public Electricity Providers (electricity bill) and they relate to receipts in favor of the Greek State as opposed to the previous taxes which relate to individual municipalities tax. The amount payable is mainly determined by the size of the real estate in question. The law prohibits public notaries from allowing the completion of a contract for sale, if confirmation of payment from the municipality which regulates the real estate in question, is not obtained. It must be confirmed that Real Estate Tax proportionate to the area of the real estate has been paid.