JT Law Sydney offices (in 2010)
Significant changes on the way of taxation of conveyances of real estate property with exchange, have come into effect pursuant to laws 2859/2000 and 3427/2005, according to the provisions of which, a different taxation system applies for conveyances of real estate properties in Greece with exchange, than the previous taxation system of law 1521/1950, which was in effect for a period of more than fifty years.
According to the provisions of the above laws, the conveyance of real estate properties whose building permit was issued or revised for any reason after January 1, 2006 and works on the construction have not begun before the aforementioned date, is subject to Value Added Tax (V.A.T.) in Greece, with a fixed percentage of 19%.
Subject to V.A.T. taxation in Greece is every natural person or legal entity of any form that constructs buildings for sale. The building construction may be effected directly by them or by appointing sub-constructors, regardless of the fact the construction is performed in their own plots or through the system of exchange ("antiparohi").
Each natural or legal entity, that is engaged professionally in the construction business, is subject to the V.A.T. in Greece. In furtherance to the above, any person occupied occasionally with building construction, may request the application of the V.A.T. system on him for the conveyance of the properties that he will construct. It is clear from the above, that any natural person /owner of a building plot that assigns the building construction by the system of giving in exchange ("antiparohi"), is not subject to the V.A.T. in Greece for any conveyance of properties under exchange ("antiparohi"), that he will effect.
Necessary conditions for taxation of conveyances, according to the provisions of this law, are: a) the conveyed real estate property to be a building, b) that the constructor will receive exchange for this conveyance, c) the conveyance is effected by a constructor, who constructs buildings for sale and d) the building permit has been issued after January 1, 2006 or the permit has been reviewed after this date and no works have been performed before the review of the building permit.
Greek tax law provides several exemptions from the V.A.T., such as the exemption of "first home" residence for purchases of newly built properties.
The previous law 1521/1950 which regulates the taxation of conveyances of real estate property in Greece, does not apply on conveyances of real estate properties under exchange, when the property has been acquired by the seller after January 1, 2006. In this case, capital gains tax is imposed on the seller.
Subject to such taxation is the difference between the value of the property at the time of the purchase and the value of the property at the time of the sale. This value is always estimated by the objective tax system, when the property is located in an area where the objective tax system applies. As indicated above, this tax burdens the seller and is estimated on a fixed percentage on the difference between the value of the property at the time of the acquisition and the value of the property at the time of the property's disposal, progressively reduced (starting from 20%, reducing up to 5%), depending on the number of years that the seller had the property in his possession. Conveyances of real estate properties by virtue of Greek Court Rulings, partition of properties, exchanges, conveyances of undivided interest shares on a plot as result of the system of exchange ("antiparohi"), exchange or unification of real estate and the conveyances of undivided share interests to the building plot, given as exchange for construction agreement, are not subject to capital gains tax.
Additionally, in cases that Greek real estate property was acquired by any reason after January 1, 2006, except for the capital gains tax in Greece, which is paid by the seller, the buyer is obliged to pay the transaction fee, which arises to 1% on the value of the real estate property in Greece that the parties have agreed to. The value on which the tax is applied, is the market value of the property, as depicted in the conveyance Deed. In case that such value is lower than the objective tax value of the property, then the tax is applied on the higher objective tax value.
The competent tax authority for the submission of the capital gains tax in Greece is the tax authority of the property's location. The execution of Notarial Deeds is prohibited without attaching to the Deed, a copy of the submitted Tax statements and the receipt from the Tax authority that the imposed tax has been paid in full.
All the above procedures for your Greek Property, can be accomplished through a limited Power of Attorney to a specialised lawyer in Greece, like our Law Firm.