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Kosmidis & Partners, solicitors

Partnering international businesses in Greece

Taxes on the Possession and Use of Real Estate in Greece

Up until 2007 in Greece, the imposition of the Large Property Tax applied only to real estate owners of property whose total actual value exceeded certain limits. Besides this tax, 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.

Nonetheless, in 2010, the Yearly Real Estate Tax has been abolished and the Large Property Tax has been re-introduced. The latter will apply for the first time for the financial year of 2010 and will relate to property whose value exceeds 400.000 €

For the purposes of estimating Substantial Real Estate Tax, the following are deemed to amount to real estate property: the right to absolute or high ownership, 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.

Large Property Tax

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.

The following persons are liable to pay tax:

1. Those who have acquired a real estate through purchase or by any other means, irrespective of the registration of title in the Land Registry Office
2. 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. Paragraphs 2 and 3 of this Article state that the value of high ownership 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 a high owner.

The value which arises based on the objective system of determination is used to calculate the value. Various factors influence the final value of the tax payable by natural persons as stated in the following chart:

Example of a calculation: for real estate property which has a total actual value of 650.000 €, the tax is calculated: for property worth 600.000 €, total tax of 400 € The remaining 50.000 € are levied tax (according to the above chart) with 0,6%. Thus, 50,000 X 0,6% = 300 € Tax total is therefore 400 € + 300 € = 700 €

The value of real estate property of legal persons is taxed with a factor of 0,6%. For legal persons of a non-profitable nature, a factor of 0,3% is applied. A factor of 0,033% is applied for hotel businesses.

Income Tax

According to Article 20 onwards of law 2238/1994 (income tax code), 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.

In addition, 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 to amount to real estate income.

In practice, the most common case of taxable income generated from real estate property is income made from leasing. This income is taxed on the grading scale which applies for natural persons or adheres to the tax provisions of companies; this occurs provided it is company income from the leasing of real estate property.

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 favour 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 composition of a contract for sale, if confirmation of payment from the municipality which regulates the real estate in question is not obtained, i.e. it must be confirmed that Real Estate Tax proportionate to the area of the real estate has been paid.