ECONOMY

Is VAT on property a problem?

The introduction of value-added tax (VAT) on new buildings from January 1 is a positive measure but the draft bill on property taxation leaves much to be desired, the president of the Technical Chamber of Greece (TEE), Yiannis Alavanos, told the parliamentary committee debating the document yesterday. «Contrary to what was expected, the bill in general brings no unification or simplification of taxes. It goes entirely in the opposite direction, making the system especially complex and beyond the capacity of the responsible department to process it,» he said. «Why should this difficult, improperly prepared application of VAT have been burdened with this labyrinth of new taxes and arrangements?» he asked. Alavanos said the government’s handling of the matter has been inappropriate. «The prospect of homebuyers having to pay eight percentage points of additional tax in relation to that currently in force is no longer an issue since the way the introduction of VAT was announced has already pushed up prices by 20-30 percent in just six months,» he added. Alavanos predicted that the exemption of first-time homebuyers from VAT will exacerbate problems, as construction invoices concerning first homes are not tax deductible and will be added to costs. «Therefore, the apartment seller subject to VAT will not find it in his interest to sell it as a first home and will either ask for a higher price or refuse to sell it,» he warned. Other arrangements will have an adverse impact on small construction companies which will limit competition and drive prices further up, he added.