Property Taxation

Standard Income Tax

For Greek companies (S.A. & Ltd) the income tax was at a flat rate of 35%. The government has now reduced this rate to: 32% for the fiscal year 2006, 29% for the fiscal year 2007, 25% for the fiscal year 2008 which will then remain stable.

Additional Rent Income Tax

Irrespective of legal form, all undertakings are liable to an additional tax on rent income from real estate, which is calculated as the less of 3% of gross rent income and the total amount of income tax payable by the owner. For individuals the tax rate is 1.5% and the government is seriously looking into exempting this.

Occupational Taxes

These taxes are payable by the occupier of a property, and are also collected through the electricity bill. Tax rates are set by the municipalities and are different for residential and commercial properties. In the case of vacant properties the owner is liable for the tax payment.

If, however, the property is not connected to the electrical power grid, the owner can get an 80% discount. The Municipal Tax is a tax on the occupation of property and equal to 0.2-0.3% of the Objective Value per annum.

Transfer Tax

The most significant tax incurred in the acquisition of property is the 'transfer tax', which is payable by the purchaser of property. Transfer tax on property transactions below €15,000 are 9% and above €15,000 are 11%. The calculated transfer tax has an addition 3% duty that is payable to the agricultural pension fund.

In an effort to reduce the tax payable, many transacting parties (except the most tax sensitive such as large companies), declare the (often lower) 'objective value' of the property, which is the value assessed by the Finance Ministry for tax purposes of the property.

Company Transfer Tax

On the sale of a company (Societe Anonyme) transfer tax is payable at a rate of 5% on the value of the transaction, payable by the seller. As the level of taxation on company sales is lower than the transfer of direct property, it is common for large commercial properties to be transferred as single asset companies.

Value Added Tax (V.A.T.)

Value Added Tax at the full rate of 19% is payable on all new property purchases for properties with building permits issued after 1st January 2006. Where applicable VAT replaces transfer taxes.

Construction Profit Tax

Contractors of property are assumed to make a profit of 15% on the total cost of the project and this is taxed at the standard corporate rate. This is part of the reason why many contractors prefer to sell completed developments rather than hold onto them as 'income producing' investments. In reality, profits of 20 - 30% are often realised thereby providing developers with a substantial tax-free profit.

Source: Lambert Smith Hampton