Now after the above has been obtained and registered it is compulsory for both EU and non-EU citizens to go to the local tax office to receive a ‘tax registry’ or ‘tax file number’ referred to as the Arithmo Forologiko Mitro (AFM). The application for this can take a few days to process, and you can acquire this either on your own or on behalf of a lawyer representing you.
Non-EU citizens are required to show their passports and residence permit in order to receive this tax file number which is free (EU citizens need only an ID to receive an AFM).
Also remember that you have one year after initial purchase of your property to file income tax, however, to avoid paying unnecessary income tax in Greece you need to correctly declare the purchase price of the bought property and the source of those funds (origin of wealth). Otherwise the risk of having to pay income tax can follow. To secure you against this it is recommended to first have opened a Greek bank account assuring the funds have been transferred from abroad, which is what the next section explicitly describes.
Greek Property Taxation
When speaking of property taxes in Greece, they are indeed very ambiguous in nature and very difficult to evaluate. But to the relief of many, Greek property taxes are one of the lowest among the developed countries.
- The Greek Purchase Tax
The purchase tax for properties in Greece is between 7% and 11% of the value of the property. The actual taxation percentage is set according to the location and the value of the property. The property purchase tax in Chalkidiki is 9%.
- The Municipal-government’s tax
There is a 3% additional tax on the purchase tax (above) which is paid to the local municipal authorities where the property is situated.
- V.A.T on Greek properties
For all constructions in Greece whose manufacturing license has been issued from the 1st January 2006, 19% V.A.T. on the value of the property is charged. For real estate with construction licenses obtained prior to 2006 no V.A.T is applied in Greece.
Once the above issues have been sorted the next step a foreign buyer can do (in some cases it is not needed) is to create a bank account in Greece. This is a safe and a good way to keep track of your expenses in the local currency and fund transfers from abroad.
When the fund transfers from abroad are done they are recorded and the bank will distribute a pink-slip confirming the transfer of funds from your host country – in that way accurate tracking representation of funds is observed and proof of origin of wealth can be determined for dealing with filing a tax income correctly. Going about with this method substantiates certainty of a fund transfer from the host country to Greece, verifying that it is free of tax.
Usually after that follows a pre-contractual deal by both parties (buyer and seller), determining the terms of payment and a security deposit on the property of 10% withholding the property off the market. The buyer can lose the deposit if s/he decides to abandon the purchase only after the pre-contract is signed, while if the seller opts to drop out of the sale s/he must double the deposit to the buyer after signing the pre-contract.
The prices of permanent residences in Greece tend to vary experiencing a surge by one-digit percentage figures over the mid-to-late 1990s only to recently drop, and show signs of a persistent but gentle slump in the mid-2000s. Relative to other countries the price is faintly less expensive, however, due to growing demand and the relatively infant Greek property prices could see a firm pick up regaining their strength experienced a decade ago.
The average Greek property prices are as follows:
- Apartment 1 Bedroom - € 50 000 to € 150 000
- Apartment 2 Bedrooms - € 100 000 to € 300 000
- Older renovated residences can range anywhere from € 50 000 to € 300 000
- New and modern properties € 180 000 – € 450 000
- Luxury (exclusive) properties € 350 000 - € 1 500 000
It should be observed that the interplay of several factors will eventually determine the final price of the property. Among them is the location (positioned next to the sea or centre) which will render the Greek property price higher, or the different locations in Greece, where for example a property on a beautiful Greek island can drive up the prices.
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Written by Darko Perunicic © 2007 Greek Homes
