After many months of deliberation, “media leaks” and constant revisions, the Ministry of Finances has finally released its ambitious real estate tax bill in Parliament, which is intended to generate 2.63 billion euros of revenue in 2014. The new tax, which replaces a number of previous taxes on property, essentially integrates the controversial emergency tax that has been collected by DEI until now.
According to the bill, every apartment, office, store or plot of land is taxed from the first square meter, without any tax-free thresholds. The tax on buildings ranges from 2 to 13 euros, depending on location. New buildings (up to four years old) will pay 25% more tax than older buildings, while the view and access to main roads will also determine the value.
Additionally, if the tax payer’s property has an “objective value” in excess of 300,000 euros, he or she will be liable for an additional tax. For land with an objective value of up to 1,000,000 euros, this additional tax ranges from 100 to 3,800 euros; for land valued over 1,000,000, the tax is equal to 1% of its objective value.
The tax bill contains many serious omissions and injustices; aside from the objective values according to which land is tax being arbitrarily based on market values before the onset of the crisis, there are no exemptions for property without access to power supply. Furthermore, the exemption criteria for the disabled and large families with 3 children or more are unrealistic: low income and have absolutely no debts to tax authorities or insurance funds.
Tax on real estate
The basic tax on plots of land is between 3 and 9,000 euros per acre, in 25 different rates. The rate is determined by the area, the development of the land, commercial activities etc.
For agricultural land the basic tax is between 1 and 3 euros per acre depending on location, with additional tax depending on use: 0.1 to 0.3 euros for forests, 0.4 to 1.5 for pastures, 2 to 6.6 euros for farming and 5 to 15 euros for agricultural land with a dwelling. The tax excludes buildings for agricultural use, such as pens, coops, warehouses, etc).
Strict tax exemptions
There is a 50% tax exemption for owners whose property is less than 150 square meters (for dwellings) and do not have any debts with tax offices or insurance funds. Additionally, the taxpayer must be on a low income: up to 9,000 euros if unmarried, 10,000 euros if married, 11,000 euros if married with one child and 12,000 euros if married with two children. These same strict criteria also apply so that taxpayers with large families (three children and above), or those with an 80% disability rate can receive a full exemption from the tax.
Other changes in payments and procedures
The tax returns must be submitted between 1st of February and 30th of April each year, with the tax being payable in three bimonthly installments (May, July, September). SMEs will still have to make a 55% down payment of their tax. Auditors will have a greater set of tools and power at their disposal to perform checks for tax evasion and other financial crimes. The taxation for people and businesses on islands with fewer than 3,100 residents will be reduced. The offsetting of debt will be implemented in all areas of the public sector. Additionally, ship owners will be liable for an emergency tax.
