ECONOMY

New tax plan to hurt large property owners

The government presented a revised plan on Thursday for the new Single Property Tax that now includes a supplementary levy on big properties and lightens the load on farmers, as a result of pressure from the coalition’s MPs.

The new plan has been approved by the country’s international creditors but it will result in a fiscal gap of 250 million euros that will have to be covered through other means, something which the creditors also stressed.

According to this latest draft, the government expects to collect 2.65 billion euros from the new tax to apply from January 1, 2014, which will replace the existing so-called FAP property tax and the extraordinary levy known as EETA that is paid via electricity bills. For the planned amount to be collected, the Finance Ministry will need to issue bills for a total of 3.22 billion euros, as the government expects one in every five property owners to be unable to pay the tax.

The plan will come as bad news to owners of large properties in cities as the taxes will be calculated using objective property values (the rates used for tax calculation purposes), which today are much higher than actual market values.

Owners of properties valued at 300,000 euros or over will have to pay more from 2014. They account for just 5 percent of all taxpayers (some 400,000 people) and will have to pay both the new property tax and the supplementary tax, which will amount to 380 million euros in total.

While the main tax will be calculated on each property (building, plot or farm) individually, the supplementary tax will be calculated on all of each taxpayer’s properties, with a tax-free threshold to be set at 300,000 euros per person and a progressive scale.

There will be 12 brackets, starting from 2 euros per square meter for properties in zones with an objective value of up to 500 euros/sq.m. and reaching up to 13 euros/sq.m. for properties in zones with values of more than 5,000 euros/sq.m. The tax is based on the surface area, the age of the building and, in the case of apartments etc, which floor they are on. Special purpose buildings will have their tax reduced by 50 percent and farm structures will pay zero tax. Auxiliary rooms such as storage spaces will be taxed at 10 percent of the main property.

For plots outside town planning, the use factor comes into play, depending on whether each plot is a farm, a forest, a quarry etc, but all farms will be treated the same, regardless of what is cultivated there. A criterion in previous drafts that would have upped the tax for proximity to the sea has been scrapped.