Tax Implications of Owning Multiple Properties in Greece

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Table of Contents

• Introduction
• Overview of Greek Property Taxation
• Taxes on Property Acquisition
• Annual Property Taxes
• Rental Income Taxation
• Capital Gains Tax on Property Sales
• Tax Considerations for Non-Resident Property Owners
• Strategies for Tax Optimization
• Recent Changes in Greek Property Tax Laws
• Conclusion
• FAQs

Introduction

As the Greek real estate market continues to attract both domestic and international investors, understanding the tax implications of owning multiple properties in Greece has become increasingly important. This comprehensive guide aims to provide a detailed analysis of the various taxes associated with property ownership in Greece, offering insights into recent changes, potential optimization strategies, and the broader economic context surrounding these fiscal policies.

Greece, with its stunning landscapes, rich history, and vibrant culture, has long been a desirable destination for property investors. The country’s real estate market has shown remarkable resilience in recent years, bouncing back from the economic challenges of the past decade. As more investors turn their attention to greek property for sale, it’s crucial to navigate the complex tax landscape that accompanies multiple property ownership in this Mediterranean nation.

Overview of Greek Property Taxation

The Greek tax system for property ownership is multifaceted, encompassing various taxes and fees that apply at different stages of property acquisition, ownership, and disposal. These taxes are designed to generate revenue for the government while also influencing real estate market dynamics and investment behaviors.

Key components of the Greek property tax system include:

• Property Transfer Tax
• Unified Property Tax (ENFIA)
• Income Tax on Rental Earnings
• Capital Gains Tax
• Special Property Tax for offshore companies

Each of these taxes plays a significant role in shaping the overall financial implications of owning multiple properties in Greece. Let’s delve deeper into each of these components to provide a comprehensive understanding of their impact on property investors.

Taxes on Property Acquisition

When acquiring property in Greece, investors must be prepared for several upfront taxes and fees. The most significant of these is the Property Transfer Tax, which is levied on the transfer of real estate ownership.

Property Transfer Tax

The Property Transfer Tax in Greece is currently set at 3% of the property’s taxable value. This rate represents a reduction from the previous 3.09%, implemented as part of the government’s efforts to stimulate the real estate market. The taxable value is determined by the tax authorities and may differ from the actual purchase price.

For new constructions with building permits issued after January 1, 2006, VAT at 24% applies instead of the Property Transfer Tax. However, this VAT can be suspended until December 31, 2024, under certain conditions, as part of measures to boost the construction sector.

Additional costs associated with property acquisition include notary fees, land registry fees, and legal fees, which typically amount to 2-3% of the property’s value.

Annual Property Taxes

Once you own property in Greece, you’ll be subject to annual property taxes, primarily in the form of the Unified Property Tax (ENFIA).

Unified Property Tax (ENFIA)

ENFIA is an annual tax imposed on all property owners in Greece, both individuals and legal entities. It consists of two parts:

1. Main tax: Calculated based on the property’s location, size, age, and other characteristics.
2. Supplementary tax: Applied to individuals owning property with a total taxable value exceeding €300,000.

For owners of multiple properties, the supplementary tax can significantly increase the overall tax burden. The tax is calculated on a progressive scale, ranging from 0.15% to 1.15% of the total property value exceeding the €300,000 threshold.

Recent reforms have aimed to reduce ENFIA for many property owners, with reductions of up to 30% implemented in stages. However, owners of high-value or multiple properties may still face substantial annual tax obligations.

Rental Income Taxation

If you choose to rent out your Greek properties, the income generated is subject to taxation. Understanding these tax implications is crucial for investors looking to maximize their returns.

Income Tax on Rental Earnings

Rental income in Greece is taxed at progressive rates based on the total amount earned:

• Up to €12,000: 15%
• €12,001 to €35,000: 35%
• €35,001 and above: 45%

For non-resident property owners, a flat rate of 15% applies to rental income up to €12,000, with the progressive rates applying to income above this threshold.

It’s important to note that expenses related to property maintenance, repairs, and management can be deducted from the rental income before tax is calculated, potentially reducing the overall tax burden.

Capital Gains Tax on Property Sales

When selling property in Greece, investors need to be aware of the potential Capital Gains Tax (CGT) implications. The current CGT regime in Greece has undergone several changes in recent years, reflecting the government’s efforts to balance fiscal needs with market stimulation.

Current Capital Gains Tax Regime

As of 2023, Capital Gains Tax on property sales in Greece has been suspended until December 31, 2024. This suspension, initially introduced in 2019, has been extended multiple times to support the real estate market and encourage property transactions.

When in effect, the CGT is calculated at a flat rate of 15% on the difference between the acquisition price and the sale price. The tax applies to properties acquired after January 1, 2001.

It’s crucial for investors to stay informed about potential reintroduction of CGT, as it could significantly impact the profitability of property investments, especially for those owning multiple properties.

Tax Considerations for Non-Resident Property Owners

Non-resident individuals and entities owning property in Greece face some additional tax considerations and obligations.

Tax Representative Requirement

Non-resident property owners are required to appoint a tax representative in Greece. This representative acts as a liaison with the Greek tax authorities and is responsible for ensuring compliance with local tax laws and regulations.

Double Taxation Treaties

Greece has double taxation agreements with numerous countries, which can help non-resident property owners avoid being taxed twice on their Greek property income. It’s advisable to consult with a tax professional to understand how these treaties might apply to your specific situation.

Special Property Tax for Offshore Companies

Legal entities owning property in Greece, particularly those based in tax havens or low-tax jurisdictions, may be subject to a Special Property Tax of 15% on the property’s objective value. This tax aims to discourage the use of offshore structures for property ownership and can significantly impact the overall tax burden for such entities.

Strategies for Tax Optimization

While adhering to all applicable tax laws, property owners in Greece can employ several strategies to optimize their tax position:

1. Timing of Property Acquisitions and Disposals

Given the current suspension of Capital Gains Tax, investors might consider timing their property sales to take advantage of this tax-free period. However, it’s crucial to balance this with market conditions and personal investment goals.

2. Structuring Rental Agreements

Carefully structuring rental agreements can help optimize the tax treatment of rental income. For instance, long-term leases might offer more favorable tax treatment compared to short-term rentals in some cases.

3. Leveraging Deductions and Exemptions

Familiarize yourself with all available deductions and exemptions. For example, expenses related to property maintenance and management can often be deducted from rental income, reducing the taxable amount.

4. Consider Property Location

The location of properties can significantly impact their ENFIA assessment. Investing in areas with lower objective values might result in lower annual property taxes.

Recent Changes in Greek Property Tax Laws

The Greek government has implemented several changes to property tax laws in recent years, aiming to stimulate the real estate market and attract foreign investment. Key developments include:

• Reduction of ENFIA rates by up to 30% for many property owners
• Extension of the Capital Gains Tax suspension
• Introduction of the “Golden Visa” program, offering residency permits to non-EU investors making significant property investments
• VAT suspension on new buildings to support the construction sector

These changes reflect a broader trend of the Greek government using tax policy as a tool to manage economic recovery and attract investment in the real estate sector. Property owners and potential investors should stay informed about ongoing developments in Greek tax legislation, as further changes may impact the financial aspects of property ownership.

Conclusion

Owning multiple properties in Greece can be a rewarding investment strategy, but it comes with complex tax implications that require careful consideration and planning. From acquisition taxes to annual property taxes, rental income taxation, and potential capital gains tax, each aspect of property ownership carries specific fiscal obligations.

The Greek government’s recent efforts to stimulate the real estate market through tax incentives and policy changes have created a dynamic environment for property investors. While these measures have generally been favorable for property owners, they also underscore the importance of staying informed about legislative changes and their potential impact on investment strategies.

As with any significant investment, it’s crucial to conduct thorough due diligence and seek professional advice tailored to your specific circumstances. By understanding the nuances of Greek property taxation and employing strategic approaches to tax optimization, investors can navigate this complex landscape more effectively, maximizing returns while ensuring compliance with all relevant tax laws and regulations.

The Greek property market continues to offer attractive opportunities for both domestic and international investors. By staying informed, adaptable, and strategic in your approach to property ownership and taxation, you can position yourself to benefit from the potential of this vibrant and historically rich real estate market.

FAQs

1. How often is the Unified Property Tax (ENFIA) calculated and paid?

ENFIA is calculated annually based on property ownership as of January 1st each year. It is typically paid in monthly installments from March to February of the following year, although the exact payment schedule can vary.

2. Are there any exemptions from property taxes for foreign investors in Greece?

While there are no blanket exemptions for foreign investors, the “Golden Visa” program offers certain benefits, including residency permits, for non-EU nationals making significant property investments. However, standard property taxes still apply.

3. How does the Greek tax system treat short-term rentals, such as those through platforms like Airbnb?

Income from short-term rentals is subject to specific tax regulations. For individuals, it’s taxed at rates ranging from 15% to 45%, depending on the total income. There are also additional requirements for registration and reporting of short-term rental activity.

4. Can property taxes in Greece be paid from abroad?

Yes, property taxes can be paid from abroad through various methods, including bank transfers. However, non-resident property owners are required to have a Greek tax number (AFM) and may need to appoint a tax representative in Greece.

5. How does inheritance tax work for properties in Greece?

Inheritance tax in Greece is calculated based on the relationship between the deceased and the beneficiary, as well as the value of the inherited property. Rates range from 1% to 40%, with close relatives benefiting from higher tax-free thresholds and lower rates.

Article reviewed by Marco Rossi, Private Equity Portfolio Director | Transforming Distressed Assets into High-Performance Investments, on April 1, 2025