Newly released guidance on the taxation of capital gains from the alienation of real estate properties located in Greece held by individuals

The Independent Authority for Public Revenues has recently issued guidance (Circ. E.2031/2023) regarding the taxation of capital gains resulting from the sale of real estate properties in Greece owned by individuals, whether they are local or foreign taxpayers. According to the Greek Income Tax Code (L. 4172/13), as a general rule, individuals are subject to a 15% tax on capital gains. Notwithstanding this, however, an exception has been put in place for individuals who sell real estate assets, as these gains are currently exempt from taxation until 31 December 2024.

In this context, it is important to note that individuals who are not registered with Greek tax authorities as conducting business activities in Greece may be subject to individual income taxes up to 44%, along with fines and penalties, if they execute at least three real estate sales transactions within a two-year period. The starting point for this two-year period is the date of the first real estate contract for the sale of the property. Selling multiple properties to the same buyer with one or more contracts on the same day is considered a single transaction. If, however, the properties are sold to the same buyer with contracts concluded on different dates, they are considered separate transactions. The criterion for determining the number of transactions is based on the number of different contracts concluded, not the actual number of real estate properties sold.

It should also be borne in mind that for real estate transactions that occurred prior to the 2019 tax year, even a single real estate sale could be considered a business activity aimed at realizing gains, depending on the specific circumstances of each case. Factors that will be taken into account include the acquisition price, selling price, duration of property ownership, and any new constructions or improvements made to the property.

Lastly, it is important to remember that several exemptions apply to the aforementioned rules. For instance, the tax implications mentioned above do not apply in cases where the real estate properties are transferred to the taxpayer through inheritance or donation from close relatives up to the second degree. Additionally, if the taxpayer has owned the properties for more than five years, the tax rules mentioned above will also not be applicable. The rationale behind this is that, in these cases, the main purpose of acquiring the real estate properties was not to generate capital gains.

For any tax and real estate enquiries you may have, including questions on capital gains taxation, contact our dedicated team at Ecovis Hellas Ltd. at athenstax@ecovis.com to find out how we can assist you!