Capital Gains Tax in Greece

 Capital Gains Tax in Greece

Capital Gains Tax 15% in Greece 

According to Law  4172 , Article 41, regarding property transactions, as it has been amended by new legislation   that was voted for on the 31st of March 2014  : 

 Any income arising from capital gains  from  transferring real estate property , which transferring does not constitute business , is subject to personal income taxes . The meaning  of this capital gains  income includes the market value of the building that has been erected on land owned by a third person by expenses of the tenant and is returned to the occupancy of the third person upon the expiration or termination of the lease agreement.

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Capital gains are the difference between the purchase (acquisition) price paid by the taxpayer and the selling price payable to him/her  as it is estimated below. 

The purchase price is determined as follows : 

a) In the case in which the  ownership was acquired by purchase , the acquisition price is  the price that was  paid,  as it derives from the relevant notary contract,

b ) In the case of acquisition through  inheritance or donation , the acquisition price is the value based on which the inheritance taxes or donation taxes were calculated or the value upon which the acquirer was exempted from paying taxes , as this value derives from the relevant notary contract or any other public document,

c ) In any other case , it is calculated as follows :  The acquisition price  is equal to the transfer price multiplied by the house price rate ( DTKat ) of the  year of acquisition through the  DTKat of the previous to the transfer year . The DTK means  the average house price rate of  urban areas of  the period  from January to December of each year , as  it is announced  by the Bank of Greece . If at the time of the transfer the average DTKat has not been published, the relevant rate of the previous year is  taken into account .

If the acquisition price or value  cannot be determined, it shall be deemed to be zero.

The selling price is the price that is written on the contract at the time of the transfer or in the case of the exchange , the objective value of the real estate that was given in exchange for every person who took part in the contract and in the case in which this objective value does not exist, the taxed value. Any expenses that are related  directly with the purchase or the sale of the real estate are not included in the acquisition price or the selling price . 

In the case in which a building that has been erected on land owned by a third person by expenses of the tenant and is returned to the occupancy of the third person upon the expiration or termination of the lease agreement, then  the capital gain is determined as the purchase price of the building , which can not be lower then the 2/3 of the objective price of the land plot with its building. 

If the acquisition price or value  cannot be determined, it shall be deemed to be zero. 

The acquisition date is the date of the acquisition of the percentage of at least 75% of the transferred right on the real estate. In the case in which the date of acquisition does not derive according to the above, the following apply :

a) In the case of a transfer of a building that was built , with self – supervision and care or by the system of contract-building whereby the manufacturer of the building gives a portion of the building land to the owner in exchange for the ability to build and operate the remaining land from the manufacturer,   the date of acquisition is determined as the date after 5 years from the date of the issuance or 2 years from the date of the renewal of the building license , except for the case in which the transfer took place within the above periods.

b) In the case of a legalization in total of an illegal building, the date of acquisition is determined as the date that is declared as the date of the erection of the building and is certified by the mechanic on the relevant application for legalization and if this does not derive, the expiration of the periods of time that are stipulated in the law 4178/2013 (regarding legalization of illegal buildings).

c) in the case of a partial legalization of an illegal building, the acquisition date is determined as the date of acquisition of the legal building. 

 

In the case of usucaption, the acquisition date is determined as the date of the 21st year before the transfer. 

By a decision of the Minister of Finance, the date of acquisition can be determined in every other case and also any other necessary issue can be settled for the enforcement of the above. 

 In the case in which the estimation of the capital gain according to the above paragraphs  leads to a negative amount , then the capital gain is deemed to be zero. 

 The capital gains derived according to the above paragraphs , are reducted by applying the following rates of impairment :

Years of holding        Impairment rate              
1 100.00%
2 98.20%
3 96.40%
4 94.70%
5 93.00%
6 91.20%
7 89.50%
8 87.80%
9 86.10%
10 84.50%
11 82.80%
12 81.10%
13 79.50%
14 77.90%
15 76.40%
16 74.80%
17 73.20%
18 71.70%
19 70.20%
20 68.70%
21 67.20%
22 65.70%
23 64.20%
24 62.80%
25 61.50%
26+ 60.00%

From this capital gains, as it derives after its reduction according to the above, the amount of 25.000 Euros is subtracted , provided that the taxpayer has held the real estate for at least 5 years , and  the rest of the amount is taxed. 

The capital gains taxes are 15% on the capital gains (as estimated above). 

According to explanatory decisions of the Ministry of Finance, 

  • - In the case where there are deeds of formation of horizontal of vertical independent properties (on shared plots) , without the alteration of the right of the person who is transferring, as it was prior to the deeds, the acquisition time is determined as the time of the acquisition of the initial right. 
  • - In the cases in which land plots are transferred after the certification of  the application of building plans (by the Building – Urban Development Authority) , then the time of acquisition is determined as the time of the certification of the application of the building plan. 
  • - In the cases of acquisition of immovable property by inheritance , donation or parental gift , the acquisition price is determined as the time of induction of heritage (time of death of the person inherited) or as the time of the issuance of the contract of donation or parental benefit .
  • - In the case of acquisition of  a real estate by a contract which includes a delay  term  or period  , then the time of acquisition is determined as the time of the fulfillment of the  delay term or the lapse of the period of time. The same is applied in the case of acquisition of a real estate by virtue of a donation by the cause of death. 
  • - In the case of acquisition of  a real estate by a contract which includes an invalidating  term  or period  , then the time of acquisition is determined as the time of the issuance of the relevant contract. 
  • - In the cases in which the right of ownership without usufruct and the right of usufruct were obtained at different times , the time of acquisition of full ownership is determined as the time in which at least the 75%  of the value of the full ownership was obtained, according to the stipulations of the Law 2961/2001 (article 15). 
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