ECONOMY

Revenue boost expected from objective rate system expansion

revenue-boost-expected-from-objective-rate-system-expansion

The Finance Ministry is expecting additional revenues of up to 500 million euros from next year through the inclusion of some 7,500 areas in the system that determines property values (known as objective values) for tax purposes.

Ministry officials say that by the end of the first quarter of 2020 the entire country will be included in the system, which besides reducing the fiscal gap – by increasing the Single Property Tax in those areas – will also change the landscape in the property market.

Officials add that the process for the inclusion in the system of the first 2,000 areas has already been completed, with another 5,500 left for the conclusion of the project.

Major notary offices and real estate agencies say that inclusion in the system of objective values will lead to a hike of 80 to 90 percent on average for the taxes owners will have to pay, while in a handful of areas the taxes will grow up to 10 times. This is because the calculation of property prices without objective values upon a transaction has been carried out until now using the prices of transactions in nearby areas as an indicator.

In the last decade thousands of citizens have resorted to administrative courts to challenge the amount of property tax they had to pay, while transactions under the table were quite common.

The bulk of the properties to enter the system are farmland that until today had been exempted from the supplementary property tax. After entering the system, the owners of those plots will have to pay a far higher property tax and quite likely a supplementary tax too, provided the sum of each owner’s assets exceeds 250,000 euros.

The disparity between market and objective values for such properties is often enormous. Therefore, numerous owners of luxurious properties are getting away with paying a negligible amount on tax because their property is built on farmland for which ENFIA amounts to just one euro per 1,000 square meters, while also being exempted from the supplementary tax.

The inclusion of those 7,500 areas in the system will also rationalize transactions. However, real estate agents stress that while small villages on the mainland will see a huge increase in tax, tourism destinations such as Mykonos, Santorini, Paros and Corfu are in for a reduction to taxation where the objective values have not applied yet.