Overview of Property Taxes in Greece

Greece is one of the three EU countries successfully selling residency permits to investors from third countries through the so-called "Golden Visa." In most cases, this happens through the purchase of real estate.

However, when buying property in Greece, investors are often concerned about the taxes they’ll need to pay and the costs required to maintain the property over the 5-year period (the minimum time the property cannot be sold according to the Golden Visa conditions). The purpose of this article is to provide a general overview to satisfy this natural interest.

The information provided here is of a general, informative nature.

In any country, including Greece, tax regulations and various payments related to real estate often undergo changes. Fiscal policies are not static; they always take into account a multitude of economic and social factors that are more volatile than ever today. Therefore, the figures provided here should not be considered legally precise. In reality, they may differ slightly, and if you need absolute accuracy, you should consult the managers at our company, GARANT.

This does not mean that the information in the article is incorrect. It is quite close to reality and generally reflects the current situation in the Greek real estate market.

Real Estate in Greece: The Cheapest in the EU!

After the 2008 crisis, the Greek real estate market experienced a prolonged deep recession. Recovery began only in 2016, with rapid price growth starting in 2018. This history largely explains why real estate in Greece remains among the cheapest in the EU. The table below confirms this, as we intentionally compare Greece not only with its Golden Visa competitors but also with other developed European countries.

The table requires some clarification. It uses data from Global Property Guide. The price level in Greece (€3,619 per m²) is taken as 100%, and refers to a hypothetical 120 m² apartment in a central area of the capital. As we can see, property is cheaper only in Cyprus, but it’s worth noting that Cyprus is not part of the Schengen Zone.

Property taxes in Greece are also quite moderate, which, combined with low prices, creates high demand.

Important! In Greece, tax rates can vary significantly depending on the region (especially on some tourist-popular islands). Additionally, there are major differences in taxes for individuals and legal entities.

Buyer's Expenses When Purchasing Real Estate

According to Greek law, the buyer pays several types of taxes:

• VAT;
• Property Transfer Tax;
• Stamp Duty;
• Municipal Tax.

Additionally, there are other costs: notary fees, state duty, possible legal fees, bank charges, etc.

VAT

The VAT rate is 24%, but it is only applicable in certain cases, such as if the property was built or occupied after January 1, 2006. Furthermore, VAT on new construction properties has been temporarily suspended for two years (starting from 2020).

Property Transfer Tax

This tax is paid in all cases where VAT is not applicable. The rate is 3% and may be calculated on either the assessed value or the actual sale price, depending on which is higher (the tax is always based on the higher amount).

Interesting! In popular tourist regions, the cadastral value of villas and large apartments is often lower than their market value, whereas low-cost economic housing in cities is often cheaper than its cadastral value.

Municipal Tax

This is typically 0.9% and is paid along with the property transfer tax (before the deal is finalized).

The stamp duty for purchasing Greek real estate is 3.6%.

Additional Costs

These can vary. The registration fee (€420) and legal fees (1-2% of the transaction) are notable; it is difficult to buy property in Greece without a lawyer. It is also customary to split the real estate agent's fee (0.8-1%) with the seller.

Taxes and Costs While Owning Property

Real Estate Tax (ENFIA)

All property owners in Greece, both residents and foreigners, must pay this annual tax.

The base part of the tax is between €2 and €13 per m² and is the same for individuals and legal entities. This part of the tax is complex, considering various factors: property size, location, age, purpose, assessed value, etc.

The additional part differs depending on whether the owner is an individual or a legal entity. Individuals only pay this part if the property value exceeds €250,000. The rate is calculated on a progressive scale, ranging from 0.15% to 1.5% (for properties worth over €2 million).

For legal entities, this part of the tax is fixed: 0.1% of the cadastral value if the company uses the property for its own needs, and 0.55% if the property is rented out. There are also specific exemptions for non-profit organizations.

Important! Greek fiscal laws are complex and convoluted, with many exceptions and additions. This is why we noted earlier that buying property in this country without a lawyer is very challenging.

Special Real Estate Tax (SRET)

This tax is 15% of the cadastral value and applies only to companies owning property. There are several ways to avoid this tax. For instance, companies whose income from active commercial activity exceeds passive income are exempt.

Municipal Tax

This varies by region and ranges from 0.025% to 0.035%.

Rental Income Tax

This also differs for individuals and legal entities. For companies, the tax rate is fixed at 24%, with all maintenance costs deducted from gross income.

For individuals, this tax is progressive, ranging from 15% to 45%, depending on the rental income. Maintenance costs are also deducted from gross income, but on a fixed basis—5% of the profit received.

The tax can be reduced by documenting renovations or energy upgrades performed during the year, but only up to €16,000.

Utility Costs

To provide a general understanding, utility costs in Greece average between €100 and €300 per month. For an apartment in Athens, this would amount to €700 to €1,800 per year, and for a villa by the sea, from €2,000 to €5,000 per year. This includes utility services and property management fees.

Here are some figures that give an idea of Greek utility costs:

• Electricity: The cost of 1 kWh is about €0.1 to €0.2.
• Water: More expensive on the islands and along the coast, cheaper in the northern part of the country. For one person, it amounts to €20 to €80 per year.
• Communication Services: Annual costs for phone and internet in one apartment range from €180 to €600, depending on the provider, region, quality, and scope of services.

For villas, a significant portion of expenses involves garden, pool, and grounds maintenance.

Home Insurance Costs

The country's laws do not require property owners to insure their real estate. However, villa owners typically do so, paying €250-500 per year.

Costs When Selling Property

Greece has a very lenient approach to capital gains tax for property owners. Individuals are temporarily exempt from this tax until the end of 2022, under two conditions:

• The owner sells no more than two properties within the last two years;
• The sale of real estate is not considered a business activity.

If, however, an individual sells property as part of a business, they pay capital gains tax ranging from 15% to 45%, depending on the income earned per year.

For companies, the tax is fixed at 24%.

Inheritance Tax

In Greece, inheritance tax calculation is quite complex, considering several factors, primarily the degree of kinship between the former owner and the heirs. A certain initial amount is exempt from tax. For close relatives, this amount is €150,000 per person. In general, inheritance tax rates range from 1% to 40%, increasing with the property value and the weakening of kinship.

Golden Visa and Preferential Tax Regime for Foreign Citizens in Greece

In 2020, the Greek government approved tax incentives for foreign citizens who want to become tax residents of the country and are willing to invest their capital in the national economy.

The opportunity to optimize taxes and spend most of the year in sunny Greece has become an attractive proposition for wealthy citizens of third countries.

The adoption of an alternative tax regime within the framework of the existing Golden Visa program is not unique in Europe. Similar tax regimes exist in Portugal, Spain, and Italy.

Tax Benefits in Greece

Tax incentives are primarily aimed at wealthy foreign citizens. The appeal of the preferential regime lies in a fixed tax on global income instead of a progressive rate of 22-43%.

Table 1. Income Tax Rates in Greece

The mandatory payment is €100,000 per year and must be paid in a lump sum by July 31 of each year. Upon changing tax residency, the first tax payment must be made within 30 days of submitting the application.

If a foreign citizen who meets the conditions for Golden Visa obtains tax residency, this regime is valid for 15 years.

Under the new tax regime, the €100,000 lump sum can be increased by €20,000 for each family member (spouse, children, parents, and spouses’ parents).

The new tax regime has no restrictions on the amount of income or its sources. However, all income must be received from sources outside Greece. There is also no requirement to bring capital into the country, but the transfer of money or securities to local banks may be considered an additional advantage.

Investments in Greece

To qualify for the preferential tax regime, the applicant must have been a tax resident of another country for at least seven of the previous eight years and have invested €500,000 in the Greek economy over the past three years. Possible investments include the purchase of real estate (not related to Golden Visa), shares, local business investments, etc.

If the conditions are met, the government will consider all previous income to have been received in Greece. Additionally, there are no additional social contributions (usually €1,050-€7,032 per year).

The special tax regime provides for an exemption from gift and inheritance tax on all assets located outside Greece. However, assets transferred to Greece will be subject to the standard inheritance tax.