A Comprehensive Guide to Ongoing Property Taxes and Fees in Greece

Introduction to Property Taxes in Greece
ENFIA: The Unified Property Tax
Municipal Property Taxes
Special Property Taxes
Property Transfer Taxes
Income Tax on Rental Properties
Inheritance and Gift Taxes
Property Insurance Requirements
Utility Costs and Fees
Maintenance and Repair Costs
Property Management Fees
Legal Considerations for Foreign Property Owners
Tax Incentives and Exemptions
Recent Changes in Greek Property Tax Laws
Tips for Managing Property Taxes in Greece
Conclusion
FAQs

1. Introduction to Property Taxes in Greece

Greece, with its stunning landscapes, rich history, and Mediterranean charm, has long been an attractive destination for property investors and second-home buyers. However, owning property in this beautiful country comes with financial responsibilities, including various taxes and fees. This comprehensive guide aims to demystify the complex world of ongoing property taxes and fees in Greece, providing valuable insights for both domestic and foreign property owners.

Understanding the Greek tax system is crucial for anyone considering property investment or already owning real estate in the country. The Greek government has implemented several changes to property taxation in recent years, aiming to boost revenue and simplify the tax structure. As a property owner, staying informed about these changes and your obligations is essential to avoid penalties and ensure compliance with local laws.

2. ENFIA: The Unified Property Tax

The Unified Property Tax, known as ENFIA (Ενιαίος Φόρος Ιδιοκτησίας Ακινήτων), is the primary property tax in Greece. Introduced in 2014, ENFIA replaced several previous property taxes and is now the main annual tax burden for property owners.

How ENFIA is Calculated

ENFIA is calculated based on several factors:

The property’s location
Size of the property
Age of the building
Floor (for apartments)
Property usage (residential, commercial, etc.)
Objective value of the property

The tax is divided into two parts: the main tax and the supplementary tax. The main tax applies to all properties, while the supplementary tax is levied on individuals owning properties with a total value exceeding €300,000.

ENFIA is typically paid in five monthly installments, starting from September of each year. However, property owners can choose to pay the entire amount in a lump sum, often receiving a small discount for doing so.

Recent Changes to ENFIA

The Greek government has made several adjustments to ENFIA in recent years, generally aiming to reduce the tax burden on property owners. These changes include:

An average reduction of 22% in ENFIA rates implemented in 2019
Further reductions planned for subsequent years
Adjustments to the calculation method to make it more equitable

It’s important to stay updated on any new changes to ENFIA, as they can significantly impact your annual property tax obligations.

3. Municipal Property Taxes

In addition to ENFIA, property owners in Greece are subject to various municipal taxes and fees. These charges are typically collected through utility bills and can vary significantly depending on the municipality.

Common Municipal Charges

Street Cleaning and Lighting Tax (TAP): This tax covers the cost of municipal services such as street cleaning and public lighting. It’s usually calculated based on the property’s size and location.
Waste Collection Fee: This fee funds the municipality’s waste management services and is often based on the property’s size and usage.
Municipal Fee for Common Areas: In some areas, property owners may be charged a fee for the maintenance of common areas in their neighborhood.

These municipal charges are typically included in electricity bills and are paid along with the regular electricity consumption charges. It’s important to review these bills carefully to understand the breakdown of charges and ensure accuracy.

4. Special Property Taxes

Certain properties in Greece may be subject to special taxes based on their characteristics or location. These can include:

Luxury Tax

Properties considered “luxury” may be subject to an additional tax. This typically applies to large villas, properties with swimming pools, or those in highly sought-after locations. The luxury tax is calculated as a percentage of the property’s objective value and is paid annually.

Special Duty on Properties Supplied with Electricity

This is an additional charge imposed on properties that are connected to the electricity grid. The rate varies depending on the property’s location and size.

Special Tax on High-Value Real Estate

Individuals or legal entities owning high-value properties may be subject to an additional tax. This tax is applied to the total value of an individual’s property portfolio when it exceeds a certain threshold.

5. Property Transfer Taxes

While not an ongoing tax, it’s important to be aware of property transfer taxes when buying or selling real estate in Greece. The main transfer tax is called the “Property Transfer Tax” (Φόρος Μεταβίβασης Ακινήτων).

As of 2021, the standard rate for this tax is 3% of the property’s value. However, for first-time homebuyers purchasing a primary residence, there may be exemptions or reduced rates available, subject to certain conditions.

It’s worth noting that in some cases, particularly for newer properties, VAT (currently at 24%) may apply instead of the transfer tax. Always consult with a local tax professional to understand the specific obligations for your property transaction.

6. Income Tax on Rental Properties

If you own a property in Greece and generate rental income from it, you’ll need to declare this income and pay income tax. The tax rates for rental income are progressive and depend on the total amount of rental income received:

For annual rental income up to €12,000: 15% tax rate
For annual rental income between €12,001 and €35,000: 35% tax rate
For annual rental income exceeding €35,000: 45% tax rate

It’s important to note that these rates can change, and there may be additional solidarity contributions or other charges applied to rental income. Keeping accurate records of your rental income and expenses is crucial for proper tax reporting.

7. Inheritance and Gift Taxes

When property is transferred through inheritance or as a gift, it may be subject to inheritance or gift tax. The rates for these taxes vary depending on the relationship between the donor and the recipient, as well as the value of the property being transferred.

Inheritance Tax Rates

For close relatives (spouse, children, parents), the inheritance tax rates are:

For property value up to €150,000: 1%
For property value between €150,001 and €300,000: 5%
For property value between €300,001 and €600,000: 10%
For property value exceeding €600,000: 20%

Higher rates apply for more distant relatives and non-relatives.

Gift Tax Rates

Gift tax rates are similar to inheritance tax rates but may have slight variations. It’s advisable to consult with a tax professional for the most up-to-date information and to understand how these taxes might apply to your specific situation.

8. Property Insurance Requirements

While not a tax, property insurance is an important consideration for property owners in Greece. Some types of insurance may be mandatory, while others are highly recommended to protect your investment.

Earthquake Insurance

Given Greece’s seismic activity, earthquake insurance is often required by mortgage lenders and is generally advisable for all property owners. The cost of this insurance can vary depending on the property’s location, construction, and value.

General Property Insurance

Comprehensive property insurance covering risks such as fire, theft, and water damage is not mandatory but is strongly recommended. The cost of this insurance will depend on factors such as the property’s value, location, and the level of coverage chosen.

9. Utility Costs and Fees

Property owners in Greece are responsible for various utility costs and fees. These can include:

Electricity: Billed bi-monthly, includes consumption charges and various taxes and fees
Water: Typically billed quarterly
Gas: If applicable, usually billed monthly
Internet and Phone: Various providers and plans available

It’s important to budget for these ongoing costs when considering property ownership in Greece. In some cases, such as for vacation properties, you may need to pay minimum charges even when the property is not in use.

10. Maintenance and Repair Costs

Regular maintenance is crucial to preserve the value and functionality of your property in Greece. While not a tax or fee, these costs should be factored into your budget as a property owner:

Annual painting and weatherproofing
HVAC system maintenance
Plumbing and electrical system checks
Garden or landscape maintenance (if applicable)
Pool maintenance (if applicable)

For properties in apartment buildings or complexes, you may also need to contribute to common area maintenance fees (koinochrista). These fees cover the upkeep of shared spaces, elevators, and other communal facilities.

11. Property Management Fees

If you don’t live in Greece year-round or prefer not to handle property management tasks yourself, you may choose to hire a property management company. These services typically charge a percentage of the rental income (for rental properties) or a flat fee for their services, which can include:

Handling utility payments
Organizing maintenance and repairs
Managing rental bookings and guest relations (for vacation rentals)
Ensuring compliance with local regulations

While this is an additional cost, many property owners find that professional management services can save time and ensure smooth operation of their Greek property, especially if they’re not frequently in the country.

12. Legal Considerations for Foreign Property Owners

Foreign property owners in Greece should be aware of several legal considerations that may affect their tax obligations and property rights:

Residency Status

Your tax residency status can impact your property tax obligations. If you spend more than 183 days per year in Greece, you may be considered a tax resident, which could affect your overall tax liability.

Double Taxation Agreements

Greece has double taxation agreements with many countries. These agreements can help prevent you from being taxed twice on the same income or property. It’s important to understand how these agreements apply to your specific situation.

Golden Visa Program

Greece offers a residency-by-investment program, known as the Golden Visa. This program allows non-EU citizens to obtain residency permits by investing in Greek property. While this can provide certain benefits, it’s important to understand all associated costs and obligations.

13. Tax Incentives and Exemptions

The Greek government occasionally offers tax incentives or exemptions to encourage property investment or support certain groups of property owners. Some examples include:

Reduced ENFIA rates for certain islands or economically disadvantaged areas
Exemptions or reductions for properties significantly damaged by natural disasters
Tax breaks for energy-efficient renovations
Exemptions for certain categories of vulnerable property owners (e.g., large families, disabled individuals)

These incentives and exemptions can change over time, so it’s advisable to consult with a local tax expert or legal advisor to understand current opportunities and how they might apply to your situation.

14. Recent Changes in Greek Property Tax Laws

The Greek property tax landscape has seen several changes in recent years, aimed at simplifying the system and attracting foreign investment. Some notable changes include:

Reductions in ENFIA rates
Suspension of VAT on new building permits until 2022 to stimulate the construction sector
Introduction of tax incentives for major renovations and energy upgrades
Changes to objective values (government-assessed property values) in many areas

Staying informed about these changes is crucial for property owners to understand their current obligations and potential opportunities for tax savings.

15. Tips for Managing Property Taxes in Greece

To effectively manage your property taxes and fees in Greece, consider the following tips:

Keep detailed records of all property-related expenses and income
Stay informed about changes in tax laws and regulations
Consider hiring a local accountant or tax advisor familiar with Greek property taxes
Pay taxes and fees on time to avoid penalties and interest charges
Review your property’s objective value periodically and appeal if you believe it’s overvalued
Explore available tax incentives and exemptions that may apply to your property
If renting out your property, ensure compliance with all relevant regulations and tax reporting requirements

16. Conclusion

Owning property in Greece can be a rewarding experience, offering the opportunity to enjoy the country’s beautiful landscapes, rich culture, and Mediterranean lifestyle. However, it’s crucial to understand and manage the ongoing taxes and fees associated with property ownership to ensure a positive and compliant experience.

From the annual ENFIA tax to municipal charges, rental income taxes, and various other fees, property ownership in Greece comes with significant financial responsibilities. By staying informed about current regulations, planning for ongoing costs, and seeking professional advice when needed, you can navigate the Greek property tax landscape more effectively.

Remember that tax laws and regulations can change, and individual circumstances can greatly affect tax obligations. Always consult with local experts, such as tax advisors or legal professionals, to ensure you have the most up-to-date and accurate information for your specific situation.

With proper planning and management, you can enjoy your Greek property while fulfilling your financial obligations and potentially benefiting from various tax incentives and exemptions available to property owners in this beautiful Mediterranean country.

FAQs

1. How often do I need to pay ENFIA tax in Greece?

ENFIA is an annual tax, typically paid in five monthly installments starting from September each year. However, you can choose to pay the entire amount in a lump sum, which may offer a small discount.

2. Are there any exemptions from property taxes for foreign owners in Greece?

Generally, foreign owners are subject to the same property taxes as Greek citizens. However, there may be specific exemptions or reductions based on factors such as property value, location, or the owner’s personal circumstances. It’s best to consult with a local tax expert for the most current information.

3. How can I reduce my property tax burden in Greece?

Some ways to potentially reduce your property tax burden include: taking advantage of available tax incentives for renovations or energy upgrades, appealing an overvalued property assessment, and exploring any applicable exemptions based on your personal circumstances or property characteristics.

4. What happens if I don’t pay my property taxes in Greece?

Failure to pay property taxes in Greece can result in significant penalties, including fines, interest charges, and potentially legal action. In severe cases, it could lead to asset seizure or restrictions on selling the property. It’s crucial to stay current with all tax obligations.

5. Do I need to file a tax return in Greece if I own property there but don’t live in the country?

Yes, if you own property in Greece, you generally need to file an annual tax return, even if you’re not a resident. This is particularly important if you generate rental income from the property. Non-resident property owners should consult with a Greek tax professional to ensure compliance with all filing requirements.