High property taxation is hampering the recovery not only of the real estate market but also that of the economy in general. After successive property tax hikes in recent years Greece has one of the European Union’s highest property tax burdens as a ratio to gross domestic product.
European Commission statistics show that Greece is behind only France and Britain in terms of property tax as a percentage of 2015 GDP. Greek owners have to pay what amounts to 2.5 percent of this country’s GDP, while in Germany the amount does not exceed 0.5 percent. The rate is even lower for neighboring countries such as Italy, Cyprus, Bulgaria and Turkey.
In its latest economic bulletin Alpha Bank argued the Single Property Tax (ENFIA) continues to put people off investing in the real estate market, where transactions have all but dried up, while obstructing the rebound of construction activity in the country. “It is also a considerable obstacle to any increase in residential property prices, along with the expected recovery of GDP,” Alpha analysts stress. On the other hand, it is remarkable that despite the burden on households from ENFIA, the tax continues to fetch revenues, as property levies of various forms showed an increase for the fifth consecutive year since 2011, when ENFIA was first introduced (as EETIDE).
However, the issue now is the discrepancy seen between the increased rates and citizens’ diminishing taxpaying capacity, as the gap has broadened, according to Alpha’s report. The Bank of Greece agrees, saying in a recent report that the high taxation deters investors, with a clear impact on the market and the entire economy.
The federation of property owners (POMIDA) has warned that the tax burden many owners face grows every year, while it is actually the number of those who pay that should increase.