Greece freezes VAT property tax on new homes until 2025
Greece will extend the freeze of VAT tax on newly built properties until 2025 in a move seen providing the sector with a major boost as the country’s economy rebounds, according to government sources.
The decision was made after a draft directive adopted at Tuesday’s council of European Union economy and finance ministers (ECOFIN) allows member states to apply specially reduced tax rates, if the fiscal conditions allow for it.
The country will be able to reduce VAT rates whenever it deems fit as part of a move by Brussels to provide members with more flexibility in determining tax policies in crucial parts of the economy, such as agricultural equipment and green energy. As of 2025, Greece now will be able to slash the VAT tax rate on property from 24 percent to 13 percent, or even bring it down to zero, if it has the budgetary capacity to do so.
The President of the Federation of Greek Builders, Dimitris Kapsimalis, said that this opens the way for the government to make the lower tax permanent.
“It is certain that this move creates the conditions for the construction of new buildings, as through the construction activity, the national economy receives a boost. At the same time, it helps to continue and increase the employment of hundreds of thousands of workers," he said.
The latest extension to VAT payments on newly built properties comes after Greece had already suspended the levy until the end of 2022. The reduction was initially introduced to help clear a large stock of unsold homes arising from the country’s ten-year economic crisis, which saw real estate prices plummet by more than 40 percent.
Since 2018, housing has been recovering, on the back of improved economic conditions in the country, with the sector now being among the best performers.
Meanwhile, Finance Ministry officials also said that the implementation of new land tax values, scheduled to start as of January 1, is likely to be pushed back two weeks to help clear with a huge backlog of deals being rushed through at the low rates,
The softer deadline is likely to provide taxpayers with the possibility of signing transfer contracts until January 15, 2022, provided that the declarations of transfer tax, parental benefits, and donations have been submitted to the tax office by the end of the year.