From 1st January, 2014 in Greece came into effect a number of changes in tax legislation. Their goal is to encourage investment in the real estate of the country, which is still in a difficult economic situation.
Generally speaking, these taxes on purchase and ownership of real estate became more convenient for calculation, and amount of tax payments has decreased significantly. However, there are some features of individual taxes.
Tax on purchase of real estate
Prior to introduction of new legislation, the amount of tax on real estate purchase was 8% for the purchase of up to 20,000 euros and 10% on the purchase of real estate worth more than 20,000 euros. Under the new legislation, the amount of tax on the purchase decreased to 3% on any type of real estate, regardless of the value of the object. Purchase tax is payable at signing of the notarial sales contract on the transfer of ownership of property to another person.
Tax on home ownership
The annual tax on ownership of real estate in Greece applies to individuals and legal entities. Tax is calculated on the objective value, which sets the tax inspection annually on January 1. With the introduction of the new law on January 1, 2014 in Greece operates single tax on real estate, which replaced the old emergency tax, introduced in October 2011, better known as “haratsi.” Single tax applies to all types of real estate. It is calculated individually for each specific object and depends on many parameters – type of object, its size, location, type of use, age of building, etc.
Apart from the general property tax, in Greece there is a local tax on the ownership of real estate, that the ownerhas to pay to local municipalities. The amount of tax varies between 0.025% and 0.035% of the amount of purchase and is payable on a single receipt with the bill for electricity.
In Greece, from 1 January 2014 also in operation an additional tax on the total cost for the owner of property of more than 300 000 euros contract value. This rate depends on the value of the property and ranges from 0.1% to 1% of the cost (to the objects worth more than 1 million euros) per year.
Tax on land plots
In January 2014, for the first time in Greece, there was introduced a tax on land plots. Up to this point land is not taxed and represented a separate interest to investors. It is possible that in the middle of the summer of 2014, after putting up taxes for the land, land market significantly replenished by proposals from owners about their sale. Income tax on the land ranges from 0,003 to 9 euros per square meter depending on the value of the site.
Legalisation of illegally built premises
The law on the legalisation of illegally built premises in homes, operating since September of 2011, allowed, on the one hand, to legalise all illegally built residential areas and barns previously used as a dwelling by the payment of fines to the tax office. On the other hand, it gave the new owners the opportunity to buy homes with fully institutionalised living area. To the tax system as a whole, it gave additional income from taxable estate.
Capital gains tax
Another change in the law is that in Greece the newly came into effect the capital gains tax on the sale of real estate, that had been previously canceled in 2008. It is calculated from the difference between the purchase price and the selling price of the property and equals 15% of the value increase.
Tax on income from rental real estate
The Greek Government pursues a policy of attracting tourists by improving infrastructure and the elimination of the black market of resort rentals. Since January 2014 in Greece tax on rental income became a separate tax. Its rate is 11% on income up to 12,000 euros and 33% for income above this sum (calculated as the difference between total revenue from rent minus 12.000 euros).
Foreigners who do not live in Greece, are required to pay tax on all income received in the territory of Greece.
Income tax applies to income from employment, income from operations and free investment income. Also, persons who are not residents, are subject to an additional tax of 5% on revenue, reaching up to 12 000 euros if they are not residents of the European Union. If you are facing a large tax bill, you will want to contact the best tax attorney lawyers in your country of residence for advice and the best pathway to go down.