Explosive news in Greek real estate! What has the tax authority decided?

The real estate sector has been hit again with the release of an explanatory letter from the General Directorate of Tax Police (AADE) regarding Law 5073/2023 on short-term rentals!

After the law was passed, which requires owners with at least 3 short-term rental properties to establish a business, the tax police decided to impose a business tax of 1800 euros per year on them!

According to this law, legal entities engaged in short-term rentals are required to pay a business tax of 600 euros for each unit or room within a residential property, if it is rented out independently and is located in separate premises from the other existing residential units.

Therefore, they are recognized as branches of an enterprise, the establishment of which is required by the state for owners of 3 or more properties once granted on short-term leases!

Critics of this decision argue that it is unreasonable, as they believe it is impossible to impose a tax on entrepreneurial activities for each entity that is not located in the same building and is considered a branch.

Point 15 of the explanatory letter states: "Real estate that is leased or subleased based on the provisions of Article 111 of Law 4446/2016 by legal entities or legal subjects without providing any other services, except for providing bedding, is considered professional premises (head office and branches) of the mentioned entities and the provisions of Article 31 of Law 3986/2011 on business activity tax apply."

The same applies to individuals who rent or sublet three (3) or more properties and earn income from business activities in accordance with paragraph 1 of Article 39A of the Tax Code.

Regarding the tax on business activities for premises located in the same residential unit or single-family home, as well as for premises located in the same building, the provisions adopted in paragraph 1 of P.O.L.1156/2017 apply. This means that the business activity tax is levied once, regardless of whether they operate as a main office or a branch.

If the business expands to other buildings, a separate business tax will be levied for each additional building in which the installations are located."

Photo by Eurokinissi.