ECONOMY

Burdensome property charges

burdensome-property-charges

Property taxes in Greece are too complicated and in urgent need of reform, an article published on the website of Washington, DC-based think tank the Tax Foundation says.

The author, Cristina Enache, currently secretary-general at the World Taxpayers Associations and general manager of the Spanish Taxpayers Union, says that Greece’s property tax system is extremely complex and multilayered and “creates a high burden on capital.”

Enache says that, rather than focusing on enticing foreigners to transfer their tax residence to Greece, the government “should carefully weigh the costs of the tax incentives against opportunities to implement broader tax reforms in Greece.”

“A more efficient property tax system in Greece is a better objective than just focusing on incentives for foreigners to change their tax residence.”

Explaining the complexity of the Greek property tax system, Enache says: “The tax has two layers: a principal tax and a supplementary tax. The principal tax on buildings and land is determined by multiplying the square meters by the principal tax and certain coefficients affecting the value of the property.

“On top of this principal tax, a supplementary tax applies. Companies will pay an additional 0.55 percent tax on the total value of the property. A reduced rate of 0.11 percent is applied if the property is used for the business’ activity. For individuals, the supplementary tax is a progressive tax that applies on top of the €200,000 established threshold, with a progressive tax rate ranging from 0.1 percent to 1.15 percent.”

Moreover, the author remarks, “the high burden, the complexity, the fact that the property tax is levied not only on the value of the land itself but also on the buildings constructed on it, and being a non-deductible tax, put Greece at a disadvantage when compared with other OECD countries. Greece ranks 33rd out of 36 countries in terms of the Real Property Taxes in our International Tax Competitiveness Index 2019. All this shows that property taxes in Greece should be a target for reform.”

“If Greek citizens do not also reap the benefits of reforms, the government risks attracting foreigners while not making Greece an attractive place for Greeks to work, raise families, invest, and build their own businesses,” the article concludes.