Recent tax laws 4172/2013 and 4223/2013 have caused significant changes on taxation of Greeks residing abroad. More specifically:
Capital Gains Tax
A new tax is imposed on sellers of property located in Greece: the Capital Gains Tax.
How is it calculated? On the difference between the value of the property at the time of its acquisition (through purchase, inheritance, gift, dowry, etc) and the sale value, depending of course on the number of years that the current seller had kept the property under his or her ownership. The sale value however cannot be lower than the tax value. The tax rate is 15 per cent.
Are there any exemptions from capital gains tax? Yes, when the difference between the value of the property at the time of its acquisition and the value of the property at the time of its sale is less than 25,000 euros and the real estate has been in possession of the seller for more than five (5) years.
Property Tax (EN.F.I.A.)
This new tax has replaced previous property taxes, which were in force until 2013. It is imposed not only on buildings (houses, apartments, etc) and plots within the zoning plan, but moreover on land, wherever it is located in Greece (including agricultural lots).
The basis for its calculation is the tax profile that individuals have declared for fiscal years 2005 to 2014 in their E-9 tax statements, as they appear in the Tax Authority’s database (‘Periousiologio’).
How is this tax calculated? Basic tax rises from 2 to 13 euros per sq.m. Factors for adjustments, include location, size, use, age, floor and faces to roads.
Similar factors are also foreseen for plots within the zoning plan, based on the tax values that the Greek Ministry of Economics provides for the specific area.
The law is particularly severe in case of non-payment:
a) Public Notaries are prohibited from executing conveyances, including inheritance Deeds, unless a certificate from the Tax Authority is produced certifying that the tax has been paid up, or settled and;
b) Courts refrain from the hearing of cases regarding real estate matters, if the above certificate is not produced.
Reduction on conveyance tax
In order to boost the frozen real estate property market, the Greek Ministry has reduced conveyance tax from 8 and 10 per cent, to 3 per cent.
Provisions on income tax in countries, with which Greece has not entered a Treaty for the Avoidance of Double Taxation (such as Australia)
Tax paid (for the same income) in a foreign state with which Greece has not signed such a Treaty, is set off from the income tax that is imposed on the tax payer in Greece.
However, this set off cannot exceed the respective tax that the tax payer would pay in Greece for this income. For example, if an individual received income in Australia, which is taxable in Greece as well, and paid the respective income tax in Australia but the Australian tax is higher than the tax that the individual would pay in Greece, then the Greek tax authorities will deduct from his Greek tax imposition the respective tax that would be paid in Greece for this income, but not the higher tax that he paid in Australia.
Tax clearance certificate for foreign residents
Pursuant to a recent ruling of the Greek Ministry of Economics, permanent foreign residents, either foreigners or of Greek origin, who have Greek citizenship (i.e. they are registered with a Greek Municipality) and do not receive any income in Greece, are not obliged to produce tax clearance certificates. Such certificates were required by Notaries and were attached to their Conveyance Deeds, Gifts, Parental Gifts, etc.
* John Tripidakis LL.B. (Athens), LL.M. (London) is an Australian registered foreign (Greek) lawyer, entitled to practice foreign (Greek) law only.