VAT on newly built properties to be introduced in 2006

Economy and Finance Minister Giorgos Alogoskoufis announced yesterday that he will submit in March a draft law imposing value-added tax (VAT) on new construction and radically reforming the property taxation system. Alogoskoufis said that the imposition of VAT, from January 1, 2006, means that the so-called «objective value» of properties must be readjusted upward, to reflect values closer to the real market values. Economy Ministry officials have suggested a rise of 30 percent in the objective value of properties, for the purposes of transfer, and a wholly new system for the calculation of objective value for new buildings. Property owners have agreed with the ministry’s suggestion for objective price rises, after objecting to an earlier proposal to double objective values. Alogoskoufis added that the VAT rate will be 18 percent. Market experts expected yesterday’s announcement to boost demand for properties.