ECONOMY

New twist in property tax saga

A Council of State decision on Friday that forces the government to adjust the so-called objective values of properties within six months will lead to a fresh change to property taxation next year.

The verdict from the country’s highest administrative court means that the property prices used for tax purposes will have to change around the country by May 2015, while the government’s planning had provided for the completion of the new electronic system for the objective determination of property values no sooner than January 2016.

Crucially, the decision creates an additional headache for the Finance Ministry as the single property tax (ENFIA) and the supplementary property tax are calculated on the current objective values. Budget provisions for next year’s revenues also take into account collections of property tax calculated with the existing objective values.

Despite statements by government officials about trying to bring the objective values down to the actual market rates, that would have been quite unlikely before 2017 according to a deal with the country’s creditors – i.e. 10 years after their last revision in 2007. The ministry’s argument is that market prices will have to stabilize and transaction volumes increase for a sufficient sample to become available for all of the country’s regions – which does not appear likely to happen any time soon given the current economic conditions.

The issue was taken to the Council of State by 13 property owners from various parts of the country who complained about the ministry’s refusal to adjust objective values. They were supported in court by liberal party Drasi. Yesterday’s verdict said that the state has neglected to perform the necessary adjustments to the objective values, which according to a law dating from 1982 must be adjusted every couple of years.

A few days ago a Bank of Greece analyst had stated that the objective values of properties currently stand at about 15 to 20 percent above market rates.