Quick overview of Greek Real Estate tax matters

This first part of the RSM Greece Real Estate Tax Guide, provides an overview of the tax implications on the following matters:

• Rental income and capital gains on Greek real estate
• Rental income
• Capital gains
• Greek VAT & transfer taxes
• Value Added Tax
• Transfer Taxes
• Greek Local taxes
• Greek Net Wealth/worth taxes 
• Vehicles for Greek real estate
• Specific real estate vehicles for Greek real estate

For more information on acquiring, holding, selling and transferring Greek real estate please visit the relevant articles of the RSM Greece Real Estate Tax Guide, or contact our trusted advisors.

Rental income and capital gains on Greek real estate

Rental income

Individuals

Introduction
Rental income is taxed as ordinary private or business income.

Liability to tax 
Rental income received by individuals is subject to individual income tax.

Basis to tax
Income of individuals is allocated to one of the following four categories (schedules):

• Income from employment and pensions
• Business income
• Investment income
• Income from capital gains

Rental income is categorised as investment income and is taxed at the following rates:

Companies

Introduction
Rental income is taxed as business income.

Liability to tax 
Rental income earned by companies is subject to corporate income tax as business income. Business income is the profit resulting from the deduction of expenses from gross revenue i.e. the profit and loss account determined in accordance to Greek accounting standards.  All forms of legal entities (including limited liability companies, private limited companies and partnerships) are subject to income tax under identical rules.

Basis to tax
Business income is taxed at the rate of 22%.

Capital gains

Individuals

Introduction
In general, capital gains realised by individuals are subject to personal income tax (see basis
of tax below).

Liability to tax
Capital gains realised by individuals are calculated as the difference between sales and purchase price and are subject to income tax at a rate of 15%.

Basis of tax
Capital gains are generally taxable at a rate of 15%. The taxation of capital gains realised on the disposal of real estate is deferred until 31 December 2022. This deferral has been enacted every year since 2013 and is expected to continue until other taxes on real estate are rationalised.

Companies

Introduction
Capital gains realised by companies are subject to corporate income tax as business income.

Liability to tax
Business income is taxed at a rate of 22%.

Greek VAT & transfer taxes

Value Added Tax

Individuals

Introduction
Value-added tax is a tax based on the increase in the value of a product or service at each stage of the supply chain.

Liability to tax
If an individual performs commercial or professional activities in Greece, it will be in principle subject to VAT.

Basis of tax
As a general rule, the supply and lease of immovable property are exempt from VAT. However, VAT is charged if a newly created building is sold prior to its first occupation. The applicable VAT rate is 24%.

Interaction with transfer tax
Where VAT is charged because a newly created building is sold within two years of its first occupation, the transfer of the real estate is exempt from transfer tax.

Companies

The same rules as for individuals apply.

Transfer Taxes

Individuals

Introduction
Transfer tax is a tax on the passing of real estate from one person or company to another. Rights of immovable property qualify as real estate. 

Liability to tax
Transfer tax applies to the acquisition of the legal or economic ownership of Greek real estate and is payable by the purchaser.

Basis of tax
Real estate transfer tax is levied on the taxable value (commonly referred to as ‘objective’ value) which is calculated based on a number of factors such as the location and other characteristics of the property.

Exemptions
There are various exemptions available in the case of first residence and agricultural land. However, various detailed conditions apply.

Companies

The same rules as for individuals apply.

Greek Local taxes

Introduction
Every municipality levies an annual municipal tax on Greek real estate. The annual municipal tax is deductible from rental income.

Liability to tax
Every owner or user of residential or commercial buildings in Greece is liable to local municipal tax.

Basis of tax
The local tax is based on the size of the property. Local authorities determine the local tariffs.

Greek Net Wealth/worth taxes

Individuals

Introduction
Annual real estate tax (ENFIA) is a tax levied on the total value of real estate owned by an individual or company.

Liability to tax
Annual real estate tax is due on the total value of real property owned by an individual on January 1^st of each year.

Basis of tax
The basic tax depends on the size and location of each property and varies from €0.003 to €9.00 per square meter. The additional tax is levied on the total taxable value of an individual’s properties at rates ranging from 0% to 1%.

Companies

Same rules as for individuals apply.

Vehicles for Greek real estate

Commonly used vehicles for Greek real estate

Limited
The so-called ‘AE’, the Greek limited liability company, and the ‘IKE’, the Greek personal limited company are the most frequently used vehicles for the ownership of Greek real estate. The equity is divided into shares and the shareholders of the AE and IKE are not personally liable for debts of the business.

Partnership & joint ventures
Partnerships and limited partnerships are rarely used for holding real estate.

Trusts
The concept of the trust is not known under Greek law. For tax purposes, the assets and liabilities of a trust are allocated to the trustor as personal income. Profits realised by the trusts will be taxed on the trustor as personal income tax.

Unlisted legal entities which do not disclose their beneficial owners are subject to an annual special tax levied on their taxable (objective) value at the rate of 15%. Evidently, this is a prohibitive anti-tax evasion tax.

Specific real estate vehicles for Greek real estate

Real estate investment companies

Real Estate Investment Companies (ΑΕΕΑΠ) are limited liability companies with a minimum share capital of Euro 25 million, which invest exclusively in real property. ΑΕΕΑΠs enjoy considerable tax exemptions from property taxes and are subject to income tax, not on their profit, but on a percentage of their portfolio of real property.

More information?

For more detailed information and questions please contact your trusted RSM advisor.