Greece Property Taxes
Greece Property Taxes - A Complete Guide
Table of Contents
Your Guide to Greece Property Taxes
At Greece Visa Homes, we collaborate with investors and families worldwide who are interested in acquiring property in Greece.
Reach out to us and consult our knowledgeable advisors, who can address any inquiries you may have regarding property acquisition in Greece and associated tax obligations.
When purchasing and renting out property in Greece, taxation applies. This includes taxes on acquisition, rental income, capital gains, annual property taxes, and the special tax on property (SRET). Additionally, there are taxes upon selling the property.
Read next our detailed guide on Buying Real Estate in Greece.
To provide a general overview of property taxes in Greece, please refer to the table below before delving into the specific details:
|Type of Tax||Rate|
|– Corporate Income Tax||29%|
|– WHT Dividend||15%|
|– Real Estate Transfer Tax||3.09%|
|– Uniform Real Estate Property Tax (ENFIA)||0,0037-€11.25/sq. (principal tax)|
|– Municipal Tax (TAP)||0,025%-0,035%|
|– Special Tax||15%|
When purchasing a property in Greece, a transfer tax known as FMA is applicable. This tax is calculated at a rate of 3.09% based on the taxable value of the property. The “Objective Value” system determines the property’s worth based on factors such as size, location, and technical specifications.
If the Objective Value is higher than the purchase price, the tax is calculated on that value instead. However, for large investment properties, transfers can be made through a share deal, exempting them from real estate transfer tax.
Additionally, the government has recently made changes to the VAT (value-added tax) rates for new properties. Previously, the VAT rate for new properties, defined as those with planning permission after January 2006, was 24 percent. However, the government has now introduced a three-year exemption on VAT for new properties starting from 2019.
When you decide to rent out your property, it’s important to be aware of the tax implications on your rental income. For individuals, the tax rates are progressive and depend on the amount earned from the rent. Here’s a breakdown of the rates:
- Up to €12,000 in rental income: 15 percent tax
- Between €12,000 and €35,000 in rental income: 35 percent tax
- Rental income exceeding €35,000: 45 percent tax
Additionally, there is a possibility of a “solidarity contribution” of up to 10 percent, which is determined based on your total income and must be declared. It’s crucial to report your rental income as the Greek authorities closely monitor homeowners who rent out their properties. Failure to declare rental income can result in penalties.
For corporations, rental income is considered part of the taxable income in the regular manner. The corporate tax rate is 29 percent, and a 15 percent dividend withholding tax (WHT) is also applicable. Foreign investors who own Greek companies through an EU-based company may qualify for the Parent-Subsidiary Directive exemption, which exempts them from dividend withholding tax.
It’s important to understand these tax regulations and obligations to ensure compliance and avoid any potential penalties or issues.
Capital Gains Tax
If you sell a property within five years of owning it, you will be subject to a 15% tax on any profit made. However, if you hold the property for more than five years, the gains you earn from it will be exempt from taxation. It’s important to note that if you are a resident of another country, you may be subject to higher capital gains tax rates there.
Annual Property Taxes
ENFIA, a uniform real estate property tax, is annually imposed on individuals and organizations who own properties in Greece. When purchasing a new property, it is advisable to assess comparable properties in the vicinity. ENFIA can be paid in a lump sum or through five monthly installments from September to January. The tax base for ENFIA is determined by the objective property value as of January 1st each year, assessed by the tax authorities. There are two types of ENFIA taxes:
- Primary tax: This is levied on each property, taking into account factors such as floor, price zone, surface area, building age, facade, percentage of ownership, and other specific conditions.
- Secondary tax: For individuals, this tax is imposed on the total value of the owner’s property exceeding €200,000, with an additional secondary tax applied to the excess amount ranging from 0.1 percent to 1.15 percent. For legal entities, the tax is levied on the total value of all owned properties at a rate of 0.55 percent. The tax rate for immovable properties utilized for business activities is 0.10 percent.
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TAP (Telos Akinitis Periousias)
The Municipal Property Tax (TAP) is levied on the objective value of the property, typically ranging from 0.025 to 0.035 percent. TAP is commonly collected through electricity bills and is the responsibility of the property owner. However, if the bill is issued in the tenant’s name, the amount is deducted from the monthly rent. Additionally, municipalities may impose other taxes based on regional factors, activities, and specific conditions.
Special Tax on Property (SRET)
This tax applies to all companies in Greece that own real estate. The government’s objective is to prevent these companies from avoiding disclosure of their property. If a company is not eligible for exemption, it must pay an annual rate of 15 percent based on the objective value of the property.
The following exemptions apply:
- Companies, including those with registered shares, must be resident in Greece or another country. Additionally, individual shareholders must maintain a Greek tax registration number.
- Banks and institutional investors are exempt from disclosing ownership to individuals if the individuals are not located in “non-cooperative state” countries. This exemption also applies if the companies are supervised by an acknowledged regulatory authority of the related state. Non-cooperative states, as defined by the Greek Income Tax Code, are non-EU member states that have not concluded administrative assistance agreements in the tax sector with Greece or 12 other states. The list of these states is published annually in a Ministerial Decision.
- Shipping or ship owner companies that establish offices in Greece solely for the purpose of using or renting them to other shipping companies as offices or warehouses.
- Companies with shares listed on an organized exchange.
- Companies engaged in commercial, manufacturing, or industrial activities in Greece. The condition for exemption is that during the relevant fiscal year, the gross income from these activities must exceed the gross income from the real estate they own. Irrespective of the country of establishment, if the said legal entities construct premises exclusively for their commercial, manufacturing, or industrial activities, an exemption from the tax is available for a period of seven years starting from the filing of all the necessary documentation for the issuance of the building permit.
- Legal entities established 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 from these activities must be made available for the mentioned purposes.
- Insurance funds, social security organizations, collective investment companies in real estate, and regulated funds supervised by a competent authority of their registered seat. This exemption does not apply to those registered in non-cooperative states.
- Companies with registered shares or parts owned by national or foreign institutions seeking charitable purposes in Greece, for the buildings used for such purposes.
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Taxes on Exit
When a company sells a real estate property, the profit from the sale is considered as part of the company’s taxable profits and is subject to the normal income tax rate. The most common exit structure is a share deal. In Greece, when Greek entities transfer non-listed shares in Greek companies, they are subject to a 29 percent income tax rate.
However, there are two groups exempt from capital gains tax when selling shares in a Greek or foreign company that owns real estate property in Greece. These groups include individuals who are tax residents in countries with a Double Taxation Agreement (DTA) with Greece, and non-Greek legal entities that do not have a permanent establishment in Greece.
- Typically, obtaining a tax number requires a visit to the tax office. However, many foreign buyers opt to have their lawyers handle this task on their behalf.
- If you generate rental income in Greece, it’s important to submit your tax report for the previous calendar year by June.
- Engaging an accountant for tax filings can be beneficial to ensure compliance and avoid future inconveniences. This practice is already adopted by many foreign property owners and typically costs around €1,000 per year.