ECONOMY

Taxing properties abroad for appearances’ sake, not substance

taxing-properties-abroad-for-appearances-sake-not-substance

Market professionals and the Italian experience suggest that imposing a tax on properties abroad owned by Greek taxpayers would have negligible benefits for the state coffers – a planned measure that appears to be based more on ideology than any financial substance.

Property market insiders say the Finance Ministry’s attempt to collect taxes from properties abroad would entail an exceptionally complicated process with doubtful results for state revenues. They note it would be very difficult to identify the owners and their properties, while it would also be very complicated to offset the various levies owners have paid on their assets against the tax the government is planning.

Therefore, even if all properties were declared – which is highly unlikely – the expected revenues would be minimal, as in most cases the tax would be reduced in line with double-taxation avoidance agreements and to prevent contravention of European law.

Another obstacle has arisen with the very announcement of the plan to tax properties abroad: Sector officials say that the ministry’s stated intention “has already led many owners to defensive moves to avoid taxation.” Some owners have already started liquidating their assets, while others have transferred their properties to companies, which are even more difficult to identify and tax on their real estate assets.

Mario Monti’s austerity tax in Italy, on which the Greek plan is said to be based, only targeted properties owned by taxpayers abroad and not by companies. The data that Kathimerini has obtained from Italian authorities show that the tax fetched less than 10 percent of the anticipated revenues when it was imposed in 2012.

In Greece’s case, the value of properties that Greeks have in London – the main location of such investments – comes to 150 million euros, so the annual tax revenues from that could not top 1.5 million euros, showing that the measure is more about appearances than substance.

Property professionals also stress that special care should be taken with foreign owners of holiday homes in Greece who are also considered tax citizens of this country for staying in Greece for over six months of the year. These people are very likely to have chosen to retain their property in their home country too, so they are running the risk of being taxed for their assets at home both by their own country and by Greece. Given that the vast majority of foreign owners in Greece are from Germany and Great Britain, it is quite likely that there would be such cases.