GREECE: An Introduction to Tax
After recovering from the deep financial crisis, Greece has been undertaking a considerable number of reforms aiming at strengthening its economy. In terms of this framework and during 2023, Greece enacted a series of amendments focusing mainly on two pillars: tackling tax evasion and generating economic growth. The main weapon for achieving the abovementioned two objectives is, according to government officials, digitalisation. For that reason, Greece adopted a sequence of initiatives targeted at: (i) the expansion of the use of electronic means of payment, so that a large part of commercial transactions can be traced, (ii) the compulsory use of e‐books and e‐records, (iii) the reduction of the VAT-gap, which is related to the reduction of the tax revenue and (iv) the enhancement of its administrative co-operation with the tax authorities of other member states. In the current article, some of the measures adopted by the Greek State in 2023 are briefly presented, as follows.
Establishment of Compulsory Sale and Purchase of Real Estate Only by Bank Means of Payment
As of 11 December 2023, the sale and purchase of real estate property can be carried out only through bank transfers and electronic payments under Article 3 of Law 5073/2023. Cash payments are no longer allowed in respect of sale and purchase of real estate property and render the final notarial deed and the pre-contract, in which it is not specifically stated that the total amount of the sale and purchase of real estate have been paid by electronic means of payment, null and void.
Reduction of the Tax Rate Applicable to the Sale of Listed Shares
According to Article 50 of Law 5073/2023, the applicable tax rate on transfer of shares listed in the regulated market or multilateral training mechanism is reduced from 2% to 1%. The new reduced tax rate is applicable to transactions settled on or after 2 January 2024.
New Provisions on Short-Term Rentals
By virtue of Law 5073/2023, new provisions are applicable in respect of short-term rentals as of 1 January 2024. More particularly, the term “short-term lease” has been redefined and concerns leases having a maximum duration of 60 days, instead of one year, as this was the case under the previous tax regime. It is noted that the 60-day period is related to each single lease and there are no restrictions on the number of leases permitted throughout the tax year.
Income earned by legal persons or legal entities from short-term rentals is subject to income tax from business activity at a rate of 22%, while income earned by individuals, who lease at least three properties, is also considered as income from business activity and is levied at a progressive rate ranging from 9% to 44% following the deduction of business expenses. That being said, natural persons leasing three or more properties for short-term rental purposes are required to declare the start of a business activity before the competent tax authority, while they will be subject to VAT at a reduced rate of 13%.
Moreover, a stayover municipality duty, calculated at 0.50% of the turnover of the short-term leases, as well as a new climate crisis resilience fee, ranging from EUR1.50 to EUR10 per night from March to October and from EUR0.50 to EUR4 from November to February, depending on the period of rental and the type of accommodation, which is expected to facilitate the financing of compensation for extreme weather, are imposed on short-term rentals and aim at addressing the conditions of unfair competition that existed between hotel accommodation – which is also subject to the aforesaid taxes – and short-term rentals.
It is noted that individuals leasing less than three properties are subject to income taxation for immovable property, at a progressive rate ranging from 15% to 45% depending on the amount of the lease, provided that no services other than the supply of bed linen are offered.
Transposition of DAC7 Into the Greek Tax Legislation
Ιn order to tackle tax evasion and tax avoidance arising from the rapid growth of the digitalisation of the economy and concurrently being consistent with its obligations as an EU member state, Greece adopted Law 5047/2023 on 7 September 2023, by virtue of which it incorporated into domestic tax legislation the Council Directive EU 2021/514 of 22 March 2021, known as DAC7, which constitutes the sixth amendment of the Directive 2011/16/EU on administrative co-operation in the field of taxation.
Under the new provisions the operators of digital platforms are obliged to collect, verify and report to the Greek tax authority the details of transactions carried out by sellers operating through these platforms, while the information shall be automatically exchanged between the Greek tax authorities and the competent tax authorities of the member state of residence of the seller or of the member state where the real estate is located, in case the seller provides services related to the rental of immovable property. Interestingly, the new provisions provide for the conduct of joint audits, which can be carried out jointly by the competent Greek tax authorities and the tax authorities of one or more other member states with regard to one or more persons of common or complementary interest to the competent authorities. Moreover, administrative co-operation and automatic exchange of information between Greece and other member states is extended to VAT and the other indirect taxes apart from income tax, in respect of which it has already been applicable.
The operators bearing the reporting obligations are tax residents/incorporated/have their place of management or permanent establishment in Greece or are established outside the EU but facilitate sellers to carry out reportable activities through platforms in Greece or reportable activities associated with the rental of immovable property in Greece. As regards the term “reportable seller”, it means any platform user (individual or legal entity), who is tax resident in a member state or rents real estate located in a member state and is registered on the platform at any time during the reference period and conducts the Relevant Activity. The latter concerns (i) the rental of immovable property, (ii) the provision of personal services, (iii) the sale of goods, or (iv) the rental of any means of transport.
The required information shall be reported to the competent tax authorities until January 31st of the year following the calendar year, when the seller was identified as a reportable seller. Under this framework, the first submission of information by platform operators to the competent authority shall take place no later than 31 January 2024, with a reportable period from 1 January 2023.
Fines for failure to report or late reporting, submission of incomplete or inaccurate information, failure to respond to requests from the competent authority, as well as non-compliance with the rules for reporting, range from EUR100 per case to a cumulative amount of EUR500,000. In the event of a repeated offence within five years, the fines are doubled – ie, up to EUR1 million. Failure of the reportable operators to comply with their reporting obligations will also lead to the termination of access to the websites of their digital platforms.
In light of the foregoing, it can be concluded that tackling tax evasion, tax avoidance and tax fraud remain high on the agenda of the Greek state. The effectiveness of the measures described above, which are expected to restore the competitiveness and increase the economic growth of the Greek state, will be visible within the next years.