Are there any restrictions for
foreigners acquiring immovable
property in Greece?
In certain areas qualifying as frontier regions, which
are of huge importance from a military and security
policy point of view, purchasers may acquire
property only if they hold official permission.
Contracts possibly concluded without such
permission shall be treated as null and void.
Frontier areas qualify as among others - the
Prefectures of Lesbos (Mytilini), Chios, Samos and
the Dodecanese, as well as the islands of Skiros and
Thira (Santorini) and the Prefectures of Chania,
Rethymno and Lasithi in Crete. Since the designated
frontier areas may be changed by virtue of a
Presidential Decree at anytime, any interested
purchaser should be advised on the currently
applicable law from a lawyer specialized in real
estate law before engaging in negotiations.
Although the restrictions apply to Greeks and
foreigners alike, there is a different procedure for
lifting the restrictions:
A) Procedure to be followed by EU-
citizens (individuals and legal entities)
Application to the locally competent
Prefecture
Greece is a Member-State of the EU since 1981. All
EU-citizens have equal rights concerning the
purchase of property in Greece. Like Greek
nationals, they should apply for the lifting of
restrictions at the Prefecture in which the property
to be purchased is situated.
The application should contain:
a description of the item on sale,
the purpose of the acquisition,
information about the purchaser (e.g. profession,
previous penalties, etc).
The application should be submitted together with
the following documents:
the tide of ownership of the asset.
In the case of EU-based legal entities the following
further documents are required:
an officially certified copy of the Articles of
Association
the financial reports of last year
a Good-Standing Certificate
an attestation that the share capital has been
paid.
In the case of a Societe Anonym also:
a list of the main shareholders,
a list of the members of the Board of Directors.
Based on experience, the permission process lasts
one to three months and is free of charge.
B) Procedure to be followed by
third-country nationals
Application to the Greek Ministry of
Defence
Third-country nationals (e.g. Swiss citizens) should
address the permission application to the Greek
Ministry of Defence. The respective decision-making
Committee consists of delegates also from the
Ministries of Finance, Public Order and Agriculture.
Any awarded permission may be repealed by the
Minister of Defence.
Apart from the documentation filed by EU-citizens,
the Ministry of Defence additionally requires:
a topographic plan of the real estate asset and
the surrounding area.
By experience, this process is estimated to last three
to six months and is free of charge.
Are there any other general
purchase or building restrictions?
Apart from the procedure mentioned above, there
are numerous restrictions in the acquisition and use
of real estate property, which apply to both foreign
and Greek citizens. Since these restrictions, which
have been placed to serve the protection of common
wellbeing and the public interest, cannot normally
be derived from the Land Registry or the Registry of
Mortgages, it is advisable that those impediments be
clarified with a specialized lawyer prior to entering
into purchase negotiations.
Protection of nature and
monuments
Many acquisition restrictions can be derived from
the legislation on the protection of nature and
monuments. In this respect, for the purpose of
protecting forests, fragmentation thereof through the
division among co-owners or the disposal of parts to
third persons is forbidden. The locally competent
Forest Authorities provide, on request, a written
certificate evidencing whether the land in question
lies in a protected forest area. Similarly, the
acquisition of real estate assets in protected
archaeological sites is not allowed. Further, the
owners of certain houses placed under the regime of
monumental protection must undertake to finance
the refurbishments of those houses on their own.
The officials at the locally competent archaeological
authority clarify whether a certain piece of real
estate qualifies as a protected item. On the coastline
and foreshore, no private ownership right can be
acquired.
Building restrictions
Pieces of land located in forest or protected natural
areas or archaeological sites should by no means be
built on. As regards pieces of land adjacent to the
seashore, buildings should have a minimal distance
from the beach (currently 35 metres - "point up to
which the winter waves strike").
The Greek building law distinguishes between land
located within the area of city planning and land
outside that area. Real estate assets located within
the area of city planning shall normally have access
to a public street and offer connection with the
electricity, water and telephone network. Building
may in principle be allowed in plots outside city
planning where the latter contain a surface of over
4,000m . The various coefficients applying to
building and surface coverage shall determine the
maximum allowed number of storeys and covered
surface.
Is there a Land Registry system in
Greece?
The Land Registry system has only recently been
launched in Greece. Law 2308/1995 (last amended
by Law 3212/2003) introduced the National Land
Registry (Cadastre), which gradually replaces the
system of Registries of Mortgages. The new system
is structured in such a way that it is object- instead
of person-related. In the context of the Land
Registry system each real estate asset occupies a
particular place in the National Cadastre. Each real
estate asset can be specifically identified through the
allocation of a unique 12-digit number (a 16-digit
one for horizontal properties). From a property law
point of view the legal status of real estate assets
included in the Land Registry system is clarified and
undoubted as regards the substantive legitimacy and
validity of the registrations made. It should be
mentioned that for the islands of Rhodes and Kos
there is an operative Land Registry system, which
dates back to the period of the Italian occupation.
How does the system of the
Registry of Mortgages work?
The Registry of Mortgages, which still applies to
most parts of the country, does not contain
information about transactions that have taken place
in connection with a specific real estate asset. One
can draw conclusions only about the legal relation
between a specific person and a specific immovable
asset. Thus, the Registry of Mortgages in Greece is
actually a Registry of Persons consisting of four
books, namely the General Registry of Documents,
the General Registry of Persons, the Share Registry
and the Registration Book. The picture of the legal
status of a real estate asset is completed through the
books of mortgages, distraint (liens) and actions of
revendication.
Is it possible that despite validly
notarized purchase deed and proper
registration thereof, no ownership
over the property has been
acquired?
Contrary to the Land Registry system, registrations
with the Registries of Mortgages enjoy no public
faith in Greece. The person in charge of the Registry
of Mortgages examines only the typical compliance
with the law and not the substantive legitimacy and
validity of the registrations made. Registrations are
not subjected to a legality test.
Therefore, the purchaser may register a purchase
deed also in those cases that the seller does not
appear in the Registry of Mortgages as owner.
In Greek law, it is not possible that a purchaser
buying in good faith acquires immovable property
from a person that is not the owner. In addition to
that, an invalid property transfer contract cannot be
remedied through registration with the Registry of
Mortgages. It therefore follows that despite the
existence of validly nonotarizedurchase and transfer
deeds and proper registration thereof, no ownership
over the property has been acquired, if the seller
was not the owner or was legally hindered upon
transfer. For this reason, the potential purchaser
should make sure, through the assistance of a
lawyer, that the asset to be purchased is owned by
the seller.
Which real estate value serves as
the basis for the calculation of real
estate taxes and fees in Greece?
The values of real estate which constitute the basis
for calculation of all kinds of real estate taxes, dudes
and fees (for registration, lawyer, public notary) are
computed in Greece according to two different
systems. In areas within city planning, the system of
the so-called "objective values" is applicable. The
objective value of the asset in question is calculated
by the Tax Office pursuant to a standard method set
by the State. The objective values are a system of
unified values which are calculated based on
objective criteria such as the location and
construction of the specific real estate assets. These
values are, based on experience, by 20 to 50
lower than the normal market values of the assets.
That leads to the parties' often stating, for fiscal
purposes, the objective value as purchase price in
the transfer contract. This discrepancy between the
contractually agreed price and the true sale value
may give rise to legal risks for the purchaser. This is
the case especially upon a subsequent reversion of
sale for legitimate reasons.
It should be noted however, that the government has
signalled its intentions to increase the objective
values. The rise in the objective prices that in some
areas may reach 200 is supposed to take effect on
1.1.2006. Since this will lead to a significant
increase of purchase costs (transfer tax, fees etc.),
prospective buyers are recommended to finish their
transactions before this date.
In the Greek countryside, where there is no city
planning, there is, in principle, no system of
objective values set by the State. The system
applicable to these cases is the so-called system of
"comparative values": according to this system, the
competent local tax authorities estimate the value of
a real estate asset taking account of the values
employed in past contracts on similar assets located
in the same or a close-by area.
In case the contractually agreed price is higher than
the "objective" or "comparative" value of the asset,
only the former is used as the calculation basis for
taxes and fees.
How do I choose the right Real
Estate Agent?
In the quest for a proper real estate asset in Greece,
a real estate agent is often engaged by the
prospective buyer. This is almost always the case
with foreign investors who, not being familiar with
the Greek real estate market and, in principle,
having only restricted time and accessibility to the
real estate, largely depend on professional advice.
A. General information on Greek
Real Estate Agents' Law
The Greek real estate agents law is regulated by
Presidential Decree No 248/1993 regarding real
estate agents. Article 1 defines real estate agents as
natural or legal persons (corporations), who mediate
for the conclusion of real estate purchase, exchange
or lease contracts. The agent commits, through the
agency contract, to draw the attention of the other
party - the principal - to opportunities that arise in
exchange for a commission. The role of the agent
must be distinguished from that of a representative
by virtue of proxy. The agents' commission is only
payable when the contract is concluded as a result
of the agent's activity, except if the parties have
agreed otherwise. The agreed commission, in
principle, amounts to 2-4 of the amount actually
paid plus VAT at 19. The agent's commission is
normally borne by the purchaser; in practice, it is
not rare that the seller also pays agency fees, if
he/she had also engaged the agent. Under such
circumstances, the agent earns agency fees for the
same item twice. Other arising expenses are paid to
the agent only on the basis of a corresponding
agreement.
B. Doing business only with licensed
real estate agents
Any person performing real estate agency activities
in Greece must hold a valid real estate license. This
applies particularly to non-resident real estate
agents, i.e. realtors who are licensed to practice in a
foreign state often the state of origin of the principal
and who don't maintain a place of business in
Greece but only periodically come to Greece to
operate and perform real estate activities. The
obligation to hold a real estate license also applies to
persons of another profession, who see the real
estate agency as a secondary source of income and
only occasionally engage in real estate activities.
Real estate licenses are issued by the Athens
Vocational Chamber, which keeps a Real Estate
Agents' Register. In order to be registered with the
Real Estate Agents' Register, the prospective
licensee must submit an application in accordance
with the requirements of Presidential Decree No
248/1993. Despite the aims to
reduce barriers to the movement of services, there is
still no provision for the mutual recognition of
licenses issued by EU-member states so that non-
resident European real estate agents are not
exempted from the Greek licensing procedure.
Prospective licensees are strongly recommended to
consult a lawyer specialized in Real Estate Agents
Law before starting the licensing procedure. The
applicant may give representation power to his
attorney for the submission of the application and
the supporting documentation.
C. Liability of unlicensed real estate
agents and customers' claims
Contracts possibly concluded with unlicensed real
estate agents shall be treated as null and void. For
the unlicensed real estate agent this means that he
has no substantiated claims for the amount of the
agreed commission. He may however claim
compensation for expenses he made. On the other
hand, customers who have already paid an unlawful
commission may put forward claims of unjust
enrichment of the unlicensed agent requesting
refund of the unduly paid fees.
Apart from the enforcement of the agent's fees, the
unlicensed agent may be held criminally liable for
fraudulent misrepresentation of facts and
professional qualifications. Criminal liability may
also occur with view to tax offences (tax evasion
etc.), since real estate agents, irrespective of their
nationality or permanent residence, are liable to
Greek income tax and are under a Greek
bookkeeping obligation.
6 steps for the safe
acquisition of property in
Greece
1. APPOINT A LAWYER
Do I need a lawyer?
The presence of a lawyer during the conclusion of a
real estate transfer through signing of the contract
deed is for both purchaser and vendor obligatory if
the value of the transaction amounts to
approximately €29,137 for assets located in the area
of Athens/Piraeus, and €11,739 for all other parts
of Greece. The obligation applies to all contracting
parties.
What does the lawyer do?
The Greek lawyer does not only accompany each
contracting party but also drafts the contract deeds
and provides all necessary legal advice. However,
most importantly, in the most likely case of an asset
not yet included in the Land Registry system, the
buyer's lawyer must conduct a factual search at the
Registry of Mortgages and ensure first, that the
seller holds a sound tide to the property. The
uncertainty of the Greek law and of the system of
the Registry of Mortgages, as described above, is
resolved in practice through the examination of the
legal relationships in connection with the specific
asset over a period of 20 years. If the seller
possessed the asset in good faith for over 20 years,
he has namely automatically gained original
ownership.
The lawyer must also make sure that the property is
unencumbered (free of burdens like mortgages or
prenotations of mortgage) and free of claims (no
injunctions and enforcement measures or actions
pending). Further, the lawyer has to examine if
possible construction works are based on lawful
building permission and all real estate taxes
burdening the seller have been paid. Finally yet
importantly, the lawyer often plays a significant role
in successfully negotiating the transfer.
What are the lawyers' fees?
The Greek Lawyers' Code (Legislative Decree
3026/1954) provides for the minimum
remuneration of lawyers. The lawyers' fees shall
freely be agreed to the extent those are not lower
than this minimum remuneration. Up to a real estate
transfer value of €44,000, the minimum fees are set
at 1; for a value between €44,021 and
€1,467,000 the fees are 0,5; for any excess,
0,4 shall be due. The lawyers' fees shall be paid
prior to the procedure before the notary public and
35 of the overall amount retained by the
competent Bar Association. It must be mentioned
that the above fees cover only the drafting of the
i contract deed and the obligatory presence of a
i; lawyer during the signing of the contract and not the
1 factual and legal search that every case depending
on its peculiarity or complexity requires. We suggest
that foreign investors always appoint a reputable
lawyer, who specializes in real estate law and is
fluent in the mother tongue of the client.
2. APPLY FOR A TAX REGISTRATION
NUMBER
In order to deal with the Greek Fiscal Authorities, it
is necessary to have acquired a Tax Registration
Number (AFI). Foreign buyers should apply for the
acquisition of a Tax Registration Number issued
specifically for taxpayers incurring a limited tax
liability at the competent Tax Office (Tax Office for
Foreigners - DOY Katoikon Exoterikou).
3. PAY TRANSFER TAX
The real estate transfer tax is borne by the
purchaser. The rate is currently set at 9% for real
estate values up to €15,000 and 11% for any excess
thereof. In areas with no fire brigade service, the
above rates are 7% and 9 %respectively. Further, a
surtax amounting to 3 of the tax due as above shall
also be levied.
Purchase of the first-ever principal residence shall in
principle remain tax-free where it is effected by
Greek or EU-citizens that maintain their usual
residence in Greece. The exemption also applies to
Greek persons living abroad who have worked
outside Greece at least six years and remain
registered with whichever Greek Community
Registry, even where they maintain no usual
residence in Greece at the time of purchase. In the
case of non-married persons, the exemption from tax
goes up to €65,000 for a flat and €30,000 for a
piece of land. Any excess shall be taxed at the
standard rate. Further, a release from tax of up to
€100,000 applies to each married, non-married,
divorced, or widowed parent to whom parental care
has been entrusted. The above amount shall be
increased by €20,000 for each of the first two
children and €30,000 for each child in excess of the
above.
4. APPOINT A PUBLIC NOTARY
The public notary's function and duties are very
limited in Greece. The notary's duty to explain to
the contracting parties their obligations and rights
that arise from the respective transaction and make
sure they are aware of the implications of their
commitments is fulfilled in practice through the
reading of the contract deed before signature. The
instructed lawyer usually suggests a notary of his
preference and trust.
What are the notary's fees?
The nonotarizationosts for a typical real estate
purchase deed depend on the respective transaction
value. The notary's fees are currently fixed at 1.2%
of the total transaction value. 9% of the overall
amount due is paid to the Jurists' Fund and 6% to
the Notaries' Social Security Fund. In addition to
the fee fixed on the value, another fee related to the
size of documents is also payable.
Example
(amounts are in EURO):
| Purchase Value | Notarial Fees |
| 100,000 | 1,235.64 |
| 500,000 | 6,035.64 |
| 1,000,000 | 12,035.64 |
| 5,000,000 | 60,035.64 |
5. SIGN THE PURCHASE AND
TRANSFER DEED BEFORE A NOTARY
Both the purchase and transfer contracts require
nonotarizationContracts, not concluded in the
required form, shall be null without possibility of
remedy.
Formal requirements of nonotarization
For the notarization of a purchase deed, a number
of formal requirements shall be fulfilled.
For the seller, the following documents and
declarations should be filed with, and made
before, the Authorities respectively:
Certificate from the competent Tax Office that
the seller incurs no fiscal debts.
Statutory declaration that in the last two fiscal
years, the seller has derived no profits from the item
of sale.
Statutory declaration that the seller properly
declared the item of sale in his tax return.
Certification by the Tax Office that Property Tax
has been paid. In practice, evidence will be shown
upon demonstration of the relevant receipt for the
payment of tax.
Certification by the Tax Office that Inheritance
and Gift Taxes have been paid, when the seller has
come into ownership of property through inheritance
or gift.
Certificate by the Community of the asset's
location giving evidence that there are no debts to
the Community.
Planning permission where the asset has been
built.
In areas in which the Land Registry system
applies, certificate by the Land Registry regarding
the status of the item.
For the purchaser, the following documents
should be filed:
Certificate by the Tax Office that the purchaser
incurs no fiscal debts and
Evidence by the Tax Office of payment of the
real estate transfer tax.
Do I have to be in Greece to complete
the transaction?
Procedure at the Consulate
The existence of a Greek Consulate is of huge
practical importance for foreign purchasers, as the
Consulate can carry out legal actions which, in
Greece, fall within the scope of a notary's
competence. That means that the purchase and
transfer contract can be signed abroad before a
Greek consular official. It should also be pointed out
that no fees are chargeable for the conclusion of
contracts by the Consulate.
Representation through proxy
Each contracting party can give authority of
representation to another person by signing a Power
of Attorney. The proxy can also be given to the
lawyer of the contracting party.
Content of proxy
Proxies concerning real estate transactions must be
specific. That means that the precise conditions of
the contract (purchase price, etc) as well as the
specific object thereof must be clear and specifically
set out. Where one or more of the real estate assets
in question are not mentioned explicitly in the proxy,
nor are they precisely described therein, the
auauthorizationiven by virtue of the proxy shall be
treated as ineffective.
Form of proxy
Proxies by the real estate seller and purchaser must
take the form of a nonotarizedocument. A proxy may
be granted before a Greek notary or when abroad, a
I. Greek consular official. Further, proxies nonotarizedy
I foreign notaries shall be rerecognizedn Greece insofar
as they have been vested with the "Apostille" form.
6. REGISTRATION WITH THE
REGISTRY OF MORTGAGES
The nonotarizedontract for the transfer of property
can be effective only if combined with a registration
of the transfer with the Regisrty of Mortgages or the
Land Registry. The registration is constitutive of a
transfer.
What are the costs of registration?
The current registration costs are set at 0,475% of
the asset value. The registration costs are borne by
the purchaser. However, another agreement of the
parties is possible.
OTHER ISSUE
When a region is taken out of the system of
Registries of Mortgages and into the Land Registry
system, existing property owners are required to
declare their property rights on real estate within a
specific deadline. When declaring a right, the
acquisition tide should be attached. The declaration
costs amount to €20 per property right entitled to
registration. The rights declared shall then be tested
for legality. The declaration and filing of property
rights on real estate assets in the new Land Registry
system is a prerequisite for the completion of
property transactions and granting of planning
permissions.
Real Estate Tax Issues
Each individual or legal entity owning
real estate in Greece is under the
obligation to file an income tax return
with the competent Greek Tax Office
annually. Foreign resident individuals or
entities that have their corporate
residence abroad also incur the same
compliance obligations.
Owners of real estate resident abroad shall
II appoint a proxy holder in Greece; the
proxy holder shall receive the annual form
of tax return and arrange to have it filled in
and filed with the Tax Office, in the name
and on behalf of the respective taxpayer.
In practice, a lawyer acts as proxy holder
in such cases.
1. VALUE ADDED TAX
The acquisition of real estate was until now exempt
from VAT. As regards the acquisition of new
buildings, the planning permission of which is issued
after 1.1.2006, this will be subject to VAT at 19%.
It remains unclear exactly what the tax will be paid
on land, bricks and concrete or installations.
Because of this additional cost prospective buyers
are strongly recommended to conclude transactions
before the end of 2005.
2. INCOME TAX
| Brackets of income | Tax rates | Taxes per bracket of income | Overall income | Overall tax liability |
|---|
| 1- 9.500 | 0% | 0 | 9.500 | 0 |
| 9.501-13.000 | 15% | 525 | 13.000 | 525 |
| 13.001-23.000 | 30% | 3.000 | 23.000 | 3.525 |
| Over 23.001 | 40% | - | - | - |
As regards legal entities, the tax rates are being
gradually reduced. Legal entities shall be taxed on
their net income at the following flat rates:
| General and Limited
Partnerships | Societes Anonymes
and Limited
Liability Partnerships |
|---|
| 1.1.- 31.12.2005 | 24 | 32 |
| 1.1.-31.12.2006 | 22 | 29 |
| After 1.1.2007 | 20 | 25 |
Further, surtax (symbliromatikos foros) of 1.5% in
the case of individuals and 3% in the case of
partnerships and corporations shall additionally
burden income from real estate. Finally, Stamp Tax
at 3.6% shall be due if rental payments were
actually made.
3. LARGE REAL ESTATE PROPERTY
TAX (foros megalis akinitis
periousias)
Both individuals and legal entities that own
immovable property in Greece, irrespective of
nationality, residence or seat, are subject annually to
this tax. There is provision for a tax relief up to a
value of €243,600, which applies to both
individuals and legal entities. Further, couples are
entitled to twice the amount of tax relief, namely
€487,200. This amount is increased by €61,650 for
each of the first two children and €73,400 for each
additional child.
Currently, the tax liability of individuals in
connection with Large Real Estate Property Tax is
as follows (amounts are in EURO):
| Brackets of value | Tax rates | Taxes per value | Overall value of Property | Overall taxes |
|---|
| 1-243,600 | 0% | 0 | 243,600 | 0 |
| 243,601-390,350 | 0.3% | 440.25 | 390,350 | 440.25 |
| 390,351-537,100 | 0.4% | 587.00 | 537,100 | 1,027.00 |
| 537,101-683,850 | 0.5% | 733.75 | 683,850 | 1,761.00 |
| 683,851-977,350 | 0.6% | 1,761.00 | 977,350 | 3,522.00 |
| 977,351-1,270,850 | 0.7% | 2,054.50 | 1,270,850 | 5,576.50 |
| Over 1,270,851 | 0.8% | - | - | - |
4. MUNICIPAL DUTY
In addition to the above taxes, there is a municipal
duty (telos akinitis perioussias) which is levied by
municipalities and communities annually. The tax
rate ranges from 0.25 to 0.35 of the real estate
value, pursuant to the decision of the locally
competent Municipal Council.
SUBMISSION OF THE PROPERTY
DECLARATION FORM E9
All tax payers, private persons, or legal entities, who
hold a property right (full or bare ownership,
servitude etc.) on a real estate asset in Greece as of
01.01.2005, irrespective of their nationality or
residence, should file together with their tax return
for the fiscal year 2005 the special property
declaration form E9 with the local Tax Authority. The
E9 statement can also be submitted through the
electronic services of Taxis (www.taxisnet.gr), which
is offered by the Secretariat-General for Information
Systems of the Ministry of Economic Affairs and
Finance.
The information, which is going to be used for the
creation of an electronic Property Registry, includes:
the location of the asset whether the property is
agricultural land a plot whether it is within or
outside the local survey plans an apartment a
maisonette a villa a shop an office a hotel a
factory etc, the covered area of the building the
share in the case of joint ownership whether this
property has been acquired through a will or parental ;
donation etc.
Since filling the E9 form can prove a tricky and
complicated procedure for foreign owners, we suggest
that you instruct a real estate lawyer or an accountant
respectively.
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