The government decided on Friday to halt the capital gains tax on properties for two years, on the recommendation of Deputy Finance Minister Giorgos Mavraganis. In the coming days another amendment will be tabled to suspend the capital gains tax on stocks, too, but only until the local bourse reverts to normality.
The capital gains tax on properties, which came into force this year, appears to have created more problems than it solved as the revenues it generated for state coffers were insufficient to make a great difference. Hundreds of contracts were canceled as a result of the tax, while the legislation had undergone a number of amendments introducing exemptions before the measure was enforced. The circular issued for the application of the law was also seen by the market as a typical example of bureaucracy in Greece, merely adding to the mountains of red tape.
The capital gains tax amendment, to be tabled immediately, has already been negotiated with the creditors and provides for the suspension of the tax up to December 31, 2016, according to a ministry statement. The ministry argued that the tax is being suspended in a bid to bolster the property market and provide a boost to the Greek economy in general.
“This initiative follows other measures the government has taken in the same direction, such as the drastic cut in the property transfer tax from 10 to 3 percent,” the ministry’s statement read.
The two-year suspension will have no real impact on the budget, as the revenues projected from the tax for next year amounted to just 4.99 million euros, and zero for this year.
The Finance Ministry is also planning to temporarily halt the capital gains tax on stock transactions for “professional investors,” with members of the association of the bourse’s shareholders being informed on Thursday that the minister will immediately table an amendment to that effect. The clause on “professional investors” is not to be found in other European markets. By “professional investor” the state means people who have made at least 10 transactions totaling at least 250,000 euros per quarter in the last year.