What are the property taxes in Greece for foreign buyers?

Tax aspects of buying and selling real estate in Greece

In this article, we will thoroughly examine the tax issues related to the buying and selling of real estate in Greece, as well as discuss taxes on property maintenance and rental. It is important to remember that taxation can vary depending on the specifics of the transaction, so understanding these nuances is a crucial aspect for those planning to invest in Greek real estate.

Taxes on real estate purchases

The tax rate on purchasing property in Greece is3.09%This tax includes both the property transfer tax and the local municipal tax. This tax rate is uniform for all types of properties, including apartments, houses, land plots, and shares in hotels.

The tax burden is equally applied to both new and secondary properties. Previously, there was a VAT rate of24%for new constructions, but starting from 2024, it will lose its validity due to the introduction of a temporary moratorium. It is important to note that until2014The tax rates at the time of purchase were significantly higher and ranged from8% to 10%This tax reduction has become one of the measures to support the country's economy during difficult times.

Taxes on real estate sales

The tax rate remains constant regardless of the region where the purchase is made. As for the sale of real estate, there are currently no tax obligations for the seller. All expenses related to the transaction and tax payments are the responsibility of the buyer. A seller who is not engaged in commercial transactions simply deregisters the property with the tax service after all payments are completed.

As of today, income from the sale of real estate is not subject to taxation, as there is a temporary moratorium on capital gains tax in the country. However, if the seller is engaged in commercial activities or has completed more than two transactions in the last two years, they are required to pay tax. The amount is determined individually and depends on various factors, such as the location of the property, the year it was built, the duration of ownership, and other parameters. In some cases, the tax can amount to up to15%from the difference between the selling price and the original cost of the property.

Taxes for companies

If the transaction is conducted through a legal entity, then such an enterprise is required to pay profit tax within the limits of22-24%.

Taxes on property maintenance

Property taxes in Greece are divided into two types: the state tax (ENFIA) and the local tax (TAR). The ENFIA tax goes to the national budget, and its amount varies from0.01 to 13 eurosper square meter, which depends on the area of the property and other factors such as its purpose, number of floors, market value, and year of construction.

For example, in Halkidiki, the tax can be around3 eurosfor each square meter of living space. Higher tax rates are observed in popular areas of Athens and Attica, which potential buyers should take into account.

Interest of foreign citizens

Many citizens of Russia and Belarus are interested in the opportunities for purchasing real estate in Greece. As of today, this is quite possible, and a large number of foreigners have already acquired various properties. This interest is heightened by attractive investment conditions and the chance to obtain residency permits.

The need to understand one's tax obligations is now becoming an important step for clients who want to approach the process of purchasing real estate in this country with confidence.

Tax assessments ENFIA in Greece

In Greece, every March, owners of residential and commercial properties face charges known as ENFIA, which can be seen in tax offices. The collection of this tax is the responsibility of local authorities, and its amounts depend on the location of the properties.

The tax rate is divided into several parts and is included in the electricity bills. The local tax rate ranges from0.025%to0.035%The market appraisal value of real estate is determined by a variety of factors, such as location, the age of the building, and its size.

Additional taxes for large owners

For owners whose total asset value exceeds300,000 eurosan additional tax of1%from the total value of the property. Interestingly, taxation significantly depends on the age of the buildings, which provides some opportunities for property owners.

• If you buy a property in an old building and make significant improvements to it, the owners can reduce their tax liabilities.
• The age of the building will remain the same, which will help maintain a low tax burden.

Progressive rental tax rates

The Greek tax system also includes progressive rates for those who rent out their property. If the annual rental income does not exceed12,000 eurosThe tax rate will be15%.

For an income range of12,000to35,000 eurosthe tax rate increases to35%And what if the income exceeds?35,000 eurosa tax will be established at the rate of45%.

Examples of tax liabilities

Now let's look at specific examples of tax obligations.

Example 1: Villa in Nikiti

The villa in Nikiti, Halkidiki has an area of100 square metersand the cost350,000 eurosThe tax on the transfer of ownership rights when purchasing is3.09%what is equivalent to10,815 euros.

In addition, the annual ENFIA tax for such a villa will amount to300 euros (by 3 eurosper square meter), and the municipal tax will amount to100 euros.

If the owner decides to rent out their villa and receives30,000 euros, then:

• The first12,000 eurosare taxed at a rate15%.
• Remaining18,000 euros— at the rate35%.

Thus, after paying taxes, the net income will be21,900 euros.

Example 2: Apartment in Perey

Another example could be an apartment in Perey, located in the suburbs of Thessaloniki. The area of this apartment is51 square metersand its cost is160,000 euros.

The tax on the transfer of ownership rights in this case will also amount to3.09%what corresponds4604 eurosThe annual ENFIA tax for this apartment will be204 euros, and the municipal tax —102 euros.

If the apartment owner receives12,000 eurosfrom rental income, then all this income is taxed at the rate15%that will give him a net income of10,200 eurosafter paying taxes.

Cadastral and market value

It should be noted that the tax on the transfer of property rights is calculated based on the market value of the property, which is usually higher than the cadastral value. In cases where the cadastral value exceeds the market value, the cadastral value is used instead. Typically, cadastral values are used for property tax calculations, as this helps to reduce the tax burden.

Example 3: Villa in Corfu

Now let's consider another example - a villa in Corfu, valued at500,000 euroswith an area240 square metersIn this case, the cadastral value is180,000 euros.

Understanding such nuances of tax legislation is of great importance for property owners in Greece and can significantly impact their financial obligations and rental income.

Tax on the transfer of ownership in Greece

The property transfer tax in Greece is determined based on the highest present value.

Conclusion

In conclusion of our research on real estate taxation in Greece, I would like to highlight important aspects that will be useful for both potential buyers and investors. Greece, with its exceptional climate and rich culture, continues to attract international real estate buyers, including Russians and Belarusians. Taxes on the purchase, sale, and ownership of property in the country have become more favorable in recent years, creating additional incentives for investment.

According to the new tax legislation, buyers are required to pay a tax of3.09%that is significantly lower than the previous rates, which reached up to10%This indicates that the government is aiming to attract more investments in real estate and ease the financial burden on buyers. Additionally, the current moratorium on VAT for new buildings is in effect until...2024 yearis a significant advantage for those looking to invest in new residential real estate.

Taxes on property maintenance

It is also important to pay attention to the various taxes that arise from owning real estate. The property maintenance tax is divided into federal and state taxes.ENFIA) and local (TAR), and its size can vary depending on the characteristics of the property. This should be taken into account when planning the budget for maintaining your property.

Taxes on rental income

Taxes on rental properties in Greece have progressive rates, which makes them fairer. For example, the first...12,000 eurosare taxed at the rate15%This is quite acceptable for tenants who do not exceed this threshold. It creates an opportunity for property owners to receive stable income without excessive tax burden.

Important conclusions

• Greece offers low tax rates on real estate purchases.
• The VAT moratorium for new buildings provides additional opportunities.
• Property maintenance taxes vary depending on the characteristics of the property.
• A progressive tax scale for rental income makes the system fairer.

In summary, it can be said that the Greeks are actively working on simplifying the tax system and creating favorable conditions for foreign investors. Bureaucratic hurdles are gradually being removed, and access to tax information is becoming more transparent. Potential buyers should pay attention to details and carefully consider all tax obligations, as proper planning and knowledge of the rules can help reduce unnecessary expenses and make investments more profitable.

Anyone considering buying property in this sunny country should be cautious about reckless steps, but at the same time, they can be confident that Greece offers many opportunities for comfortable living and successful investing.