As an independent estate agency, PropertyLink understands how purchasing a property in Greece can be a daunting task. Our goal is to make your buying process smooth and stress-free. There are a number of costs involved when you buying a property in Greece like property taxes, legal fees and some other fees of related matters. It is therefore, essential to understand these taxes, fees and expenses before, so your final decision on the property purchase will be the right one and above all well budgeted.
List of Taxes
- Transfer tax
- Rental tax
- Capital gains tax
- Annual property taxes
- Special tax on property (SRET)
- Taxes on exit
When you purchase a property in Greece, you pay a transfer tax. The tax rate is 3.09% of the taxable property value. In Greece, there’s a system of “Objective Value”. This system calculates how much a property should be worth depending on its size, location, and technical specification. In cases where the Objective Value is higher than the purchase price, you pay tax on that value instead on the purchase price. Alternatively, for large investment properties, transfers can be made by means of a share deal which under this way, the real estate transfer tax is zero.
The government has made some changes to the VAT (value-added tax) rates over the past 4 years. Previously, the VAT rate for new properties – the properties with planning permission after January 2006 – was 24%. But the government in 2019, in order to boost the sector has decided to grant an exemption on VAT for new properties for a duration of three years and more recently has extended it further, till 2024. Therefore, at the moment the transfer tax on new properties is zero.
When you rent your property out, you’ll need to pay tax on the rental income. For individuals, there are progressive tax rates, depending on the gains from the rent as below:
Up to a rental amount of €12,000: 15%
Between €12,000 and €35,000: 35%
More than €35,000: 45%
A “solidarity contribution” of up to 10% can apply. It is determined according to the total income which is declared. Declaring your income is crucial because Greek authorities are very strict on this. They keep track of homeowners who rent properties. For corporations, the rental income is part of the taxable income in the normal way. The corporate tax rate is 29%, while the dividend withholding tax rate is 15%.
Foreign investors may benefit from the Parent-Subsidiary Directive exemption if they own Greek companies through an EU-based company. In this case, no dividend WHT will apply.
Capital Gains Tax
If you hold a property for less than 5 years, and you decide to sell it, you will be subject to a 15% tax on the profit you make. However, if you keep and own the property for more than 5 years, then, the profit will be exempt from taxation. Please note that if you are a resident of another country, you may be subject to higher capital gains tax rate.
Annual Property Taxes
There is a uniform real estate property tax called ENFIA. It is charged annually to both physical and legal entities who own a property in Greece. You can pay your ENFIA through ‘Taxis-net’ the online platform, either as a lump sum or in 5 monthly installments between September and January. The tax rate of ENFIA is the objective value of the property that is assessed and calculated by tax authorities on January 1st of each year.
There are 2 different tax amounts regarding ENFIA.
Primary tax: This is levied on each property. There are several factors determining the tax. For example, the floor, the price zone, the surface, the building’s age, the facade, the percentage of ownership, and other certain conditions.
Secondary tax: Regarding individuals, the tax is levied on the total value of the owner’s property exceeding €200,000. There is another secondary tax for the excess amount. It ranges from 0.1 percent to 1.15 percent. Regarding legal entities, the tax is levied on each owner’s property’s total value. It is 0.55 percent of the total value of all the properties. The tax rate for immovable property is 0.10% for properties used for conducting/producing business activities of all kinds.
TAP (Telos Akinitis Periousias)
TAP is the municipal tax that is charged at 0.025% to 0.035% of the objective value of the property. TAP is usually charged via electricity bills. It is imposed on the property owner. However, if the bill is issued in the tenant’s name, then the amount is deducted through the monthly rent. Municipalities may also impose other taxes based on the region, activities, and other conditions.
Special Tax on Property (SRET)
This applies to all companies in Greece which own real estate. By this tax, the government aims to prevent the companies from avoiding disclosure of their real estate property. If there is no exemption for the company, it has to pay an annual rate of 15 percent on the objective value of the property.
Certain exemptions are as follows:
Companies with registered shares all the way up to an individual. The condition is that the companies must be resident in Greece or in another country. Also, the ultimate individual shareholders must maintain a Greek tax registration number.
Companies owned by banks and institutional investors, which do not have to disclose their ownership up to the individual if the latter is not set up in “non-cooperative state” countries. Also, if they are supervised by an acknowledged supervisory authority of the related state. According to the Greek Income Tax Code, the non-cooperative states are non-EU member states not having concluded agreements of administrative assistance in the tax sector with Greece or with the other 12 states, and they are listed in an annual Ministerial Decision.
Shipping or ship owner companies having set up offices in Greece for the property they use or rent to other shipping companies exclusively as offices or warehouses.
Companies with shares listed on an organized exchange.
Companies conducting commercial, manufacturing, or industrial activities in Greece. The condition is that during the relevant fiscal year, the gross income from this activity must be higher than the gross income from the real estate property they own. Regardless of the country of their establishment, if the said legal entities construct premises to use exclusively for the exercise of their commercial, manufacturing, or industrial activity (self-use), an exemption from the SRET is available for a duration of seven years starting from the filing of all the necessary documentation for the issuance of the building permit.
Legal entities aiming for charitable, cultural, religious, and educational purposes, for the buildings used for such purposes, and for empty buildings or property they exploit. The condition is that any gains arising must be made available for the mentioned purposes.
Insurance funds or social security organizations as well as companies of collective investments in real estate and regulated funds supervised by a competent authority of their registered seat, except for those whose registered seat is in non-cooperative states.
Companies whose registered shares or parts belong to a national or foreign institution seeking charitable purposes in Greece, for the buildings used for such purposes.
Taxes on Exit
When a company sells a real estate property, the gains from the sale are considered part of the taxable profits of the company. So, they are taxed at the normal income tax rate. Yet, a share deal is the most common exit structure. The non-listed shares’ transfer in Greek companies by Greek entities is subject to a 29 percent income tax rate. There are two groups that are not subject to capital gains tax when they sell shares in a Greek or foreign company owning real estate property in Greece. These are:
Individuals being a tax resident in countries that the Greek government has DTA (Double Taxation Agreement) with, and non-Greek legal entities not maintaining a permanent establishment in Greece.
Normally, you should show up at a tax office to obtain your tax number. Yet, most foreign buyers appoint their lawyers to do that for them.
If you gain rental income in Greece, you need to file your report for the tax year that ends in the previous December, until June.
It may be useful to work with an accountant for tax filings, just to be safe and not to face any inconveniences in the future. Many foreign owners are already doing this. It will cost you around €1,000 a year.