No VAT and goodwill for another two years for real estate

The application of the 15% capital gains tax on transfers of real estate is suspended for two more years, as is the imposition of VAT on real estate, while the regime of reduced and over-reduced VAT rates on certain goods and services, such as gyms, tourist packages, theatre tickets, etc. will continue to apply.

Also begins the process of changing - reducing property values in areas where municipalities will submit objections.

These are among other things provided for in the bill that was recently submitted to the Parliament by the Minister of Finance, Mr Christos Staikouras, and is entitled: «Incorporation into Greek legislation of Directive (EU) 2019/2235 - Ratification of the Additional Act to the New Agreement between the Greek State and the Shipping Community and tax arrangements for shipping, Urgent tax and customs arrangements - Institutional framework for the operation of the Central State Aid Unit and the State Aid Network - Salary arrangements and other provisions».

With the proposed provisions of Part A of the bill, the harmonization of our national legislation with EU law is sought, in order to provide for the granting of exemptions from value added tax (VAT) and excise duty (E.F.T.) to the Greek Armed Forces or to the Armed Forces of other Member States of the European Union, as the case may be, when they participate in a defence effort for the implementation of an EU activity in the framework of the Common Security and Defence Policy (CSDP) of the EU.These exemptions are aligned with similar exemptions of the North Atlantic Treaty Organisation (NATO), do not concern other actions which do not serve common defence purposes (e.g. humanitarian missions) and are extended to accompanying civilian personnel.

Part B of the bill includes provisions concerning the ratification of the Additional Act to the existing new Memorandum of Understanding between the Greek State and the Maritime Community.

The said Additional Act was signed by Prime Minister Kyriakos Mitsotakis, Finance Minister Christos Staikouras and the President of the Union of Greek Shipowners (UGC) Ms Melina Traylos, who represented the shipping community on the basis of a special proxy granted to her by the vast majority of the 91.56% of the total capacity of the tonnage managed by companies under article 25 of Law No. 27/1975 of ships flying the Greek or foreign flag.

The Additional Act to the new Pact increases to €60 million per year - including the year 2022 - the guaranteed public revenue from the voluntary contribution of the members of the Maritime Community. The voluntary provision, based on the current Pact signed in February 2019, amounted to EUR 40 million per year.

Part C of the bill introduces urgent tax provisions - amendments to the VAT Code, the Income Tax Code and the Code of Provisions on Taxation, Inheritances, Gifts, Parental Benefits and Gambling Winnings. These regulations implement development measures and measures to support society.

Specifically:

1. The reduced and super-reduced VAT rates on certain goods and services are extended until 30.6.2023, including transport services for persons and their luggage, catering services, non-alcoholic beverages, gym and dance school services, tourist packages, theatre tickets, goods used in dialysis and defibrillators, etc. In addition, it is provided that from 1.1.2023 to 30.6.2023, cinema tickets are subject to the over-reduced rate of VAT 6%.

2. The possibility of being subject to the VAT suspension regime on real estate is extended until the end of 2024. Thus, the delivery of properties is not subject to VAT until 31.12.2024.

3. The suspension of the 15% capital gains tax on real estate transfers is extended until 31.12.2024.

4. The 40% personal income tax deduction is extended, until 31.12.2024, for expenses paid by citizens for the energy, functional and aesthetic upgrading of their buildings.

5. In order to further facilitate the transfer of tax residence in Greece, the legislative framework of alternative taxation under article 5A of the Income Tax Code is supplemented. In addition, it is provided that especially for the tax year 2022, the deadline for submitting the application for the alternative taxation is extended until 15.12.2022.

6. For the convenience of taxpayers and to reduce the burden on the tax authorities, the procedure for the electronic submission of capital tax returns is specified, with the issuance of a tax determination act in each case of submission of an amended capital tax return by abolishing the control by the Tax Administration in each case of submission of an amended real estate transfer tax return or an amended inheritance, gift and parental benefit tax return resulting in a tax reduction of more than.

7. The reduced circulation fees for tourist buses are extended to the year 2023, corresponding to the fees paid by intercity buses.

8. The conditions and procedure for immobilising vehicles placed under the customs procedure for temporary admission are simplified.

9. The transfer tax regime for public use vehicles under article 10 of Law No. 2579/1998, which expires on 1.12.2022. This results in simplification of tax procedures when transferring public use vehicles from an incriminating cause. The favourable regulation concerns taxis, tourist buses, buses integrated in KTELs.

10. Natural and legal persons and legal entities are facilitated to subject their debts confirmed to the Tax Administration to the instalment scheme of Law No. 4152/2013, through the continuation of the suspension from 28.10.2022 to 27.10.2023 of the provision concerning the certification requirements of an independent appraiser and the provision of a guarantee or security or collateral security.

11. With a view to financial support for sports teams, which is necessary for their viability after the period of the pandemic COVID-19, the effects of which have been limited but not eliminated, the provision that was in force for the year 2021 and provides that the funding received by sports teams as a percentage of tax revenues from gambling is unconfiscated against any creditors of the beneficiaries, is not subject to any reservation, fee or contribution, is not bound and is not offset against debts of the beneficiaries, is not subject to any deduction, fee or contribution, is not bound and is not offset against debts of the beneficiaries.

In addition, Part C of the bill contains provisions aimed at reforming the institutional framework and the operation of the state aid network, through the clarification of the role and responsibilities of the Central State Aid Unit (CSE) and the Decentralised State Aid Units (DSE) and the definition of the procedure for the recovery of illegal and incompatible state aid. Furthermore, it is foreseen that the Central State Aid Information System (CSIS) is developed and operated for the electronic registration, processing and monitoring of State aid granted in the Greek territory, with the main objective of the overall management and monitoring of State aid through interoperability. The incorporation of the provisions on State aid into a single legislative text has led to a more effective and correct implementation of the procedure for the control of illegal and incompatible State aid.

The bill also includes, in Part C, regulations of a wage nature, such as the repeal of provisions that contradict the existing legal framework of Laws No. 4354/2015 and Law No. 4336/2015 on the single payroll, the increase in the number of travel days allowed per year for elected bodies of local government, in order to address the relevant needs arising in the context of their responsibilities, the increase in overnight accommodation expenses for the island country, for the period from 1 May to 30 September of each year, as well as the modification of the maximum subsidy limit of the local authorities, in order to enable them to cope with the constantly changing conditions at global and national level, due to the energy crisis and inflationary pressures on the market.

Other provisions of a developmental and economic nature regulate organisational and operational issues of the Ministry of Finance and propose regulations for the interoperability of the Integrated State Aid Information System (ISIS), the terms of special blocked trust accounts and the amendment of Law No. 4307/2014 on special management, with regard to the issues of extension and the determination of suspended individual prosecution measures.

Finally, the possibility is given to resume the process of determining the starting prices of the areas included in the system of objective determination of the taxable value of real estate, after submission of the required opinion of the municipal councils of the municipalities concerned, from 10/12/2022 to 20/1/2023.