The existing property tax framework in Greece hampers the expansion of its real estate sector, a report published this week in Athens has found.
The study by the Foundation for Economic and Industrial Research (IOBE) noted that the introduction of the Single Property Tax (ENFIA), including its supplementary tax concerning owners of properties worth more than 200,000 euros, at the height of the country’s economic crisis reduced yields in property sector investments, diminished transactions and discouraged investors from acquiring more properties in Greece.
It said that abolishing one of the taxes would boost the country’s output and employment.
The economic impact of property taxation is estimated at an annual 6 to 9 percent of the country’s GDP, and a total of 70,000 to 100,000 jobs, the report pointed out. It also entails the loss of tax revenues of between 2.3 and 3.3 billion euros per year owing to the reduction of economic activity.
The report estimated that if the government abolished the supplementary property tax, it would bolster property prices by 5.1 percent and increase the country’s GDP by between 1.1 and 1.4 billion euros, or by 0.6 to 0.7 percent, every year till 2022. It would also add some 33,000 jobs over the five years after abolition.
The report highlighted that with ENFIA in place, “investment in real estate becomes less attractive in terms of returns the greater the total value of a taxpayer’s assets is. Yields even turn negative when an owner’s total property exceeds 870,000 euros.”
It expressed concern that this would discourage the acquisition of additional property. European Commission data showed that in 2016 Greece had the fourth highest ratio of property taxation in the European Union, at 3.2 percent of its gross domestic product.