The annual benefit to the state from the increase in taxation on real estate investment companies will be just 25 million euros, while the local property market and the economy in general are at risk of losing great amounts of capital, according to a letter from the Hellenic Bank Association to the government.
Addressed to Deputy Prime Minister Yiannis Dragasakis, Finance Minister Euclid Tsakalotos and Economy Minister Giorgos Stathakis, the letter warns that the increased taxation will lead to the devaluation of the sector, will drastically cut the value of investments made in properties and discourage any new institutional investors from entering the market, while also shaking confidence in the local property market that is inextricably linked to growth and employment.
As the Hellenic Bank Association’s general secretary Christos Gortsos says in the letter, the sector’s companies have received funds adding up to 1.5 billion euros from world-renowned institutional investors during the eight-year crisis, “which is many times above any other form of investment in the property market, as the international investment community considers this to be the preferred form of investment in the Greek real estate market.”
The increase in taxation, however, will drain the cash reserves of real estate investment companies, as the tax rate on assets (including cash reserves) has been raised from 0.105 percent to 0.75 percent. The biggest blow is expected to Greece’s two biggest real estate investment companies, which have made several investments in the local property market in recent years.