Real estate investment companies
Real Estate Investment companies are limited by shares companies (i.e. S.A companies), established with the sole aim to acquire and manage real estate property. Their minimum share capital is twenty nine million three hundred and fifty thousand euros (€29.350.000) at a minimum, fully payable upon establishment of the company. Prior to the issuance of permission for establishing a Real Estate Investment Company, permission by the Stock Market Commission is required. A similar permission is required in case an existing company is converted into a Real Estate Investment Company. For granting the establishment permission, the Stock Market Committee evaluates the investment plan, the organization, the company’s technical and financial assets, the reliability and experience of the individuals that are going to manage it and the suitability of the people establishing it, in order to ensure the good management of the company. The company has the obligation to invest its funds only in:
a) Real estate, at least 80% of its assets.
b) Stock market instruments, according to article 3 of Law 3283/2004.
c) Other movables required for the company’s operational needs that, in addition to the real estate acquired by the company to service such needs, must not exceed ten percent (10%) of the asset value, at the time of acquisition.
The company must apply before the Athens Stock Market or other organized market for the listing of its shares within one (1) year of its establishment. In case of a conversion of an existing company into a real estate investment company, the obligatory filing of an application for listing the stock in an organized market must be effectuated within one (1) year from the end of the conversion procedure. The listing of the company’s shares is effectuated according to the provisions in force, regulating the listing of stock in Athens Stock Market S.A. or other organized market.
The company must pay annual dividends to its shareholders of at least thirty five percent (35%) of its annual net profits. A lower percentage, or no percentage, may be distributed, following a decision by the general meeting, under the condition the company statutes include such a provision, either for the creation of an extraordinary non-taxable reserve fund made up of other earnings besides capital profit or for distributing free shares to the shareholders by increasing the share capital, according to the provisions of Codified Law 2190/1920.
It is prohibited to transfer company real estate property to company founders, shareholders, members of the board of directors, general managers or managers, their wives or blood and affinity relations up to the third degree of kinship. A real estate investment company may be converted into a real estate mutual fund, under certain conditions.
The stock issued by real estate investment companies, as well as the transfer of real estate to this company are exempt from any kind of tax, duty, stamp duty, contribution, right or any other charge in favor of the State, public legal entities or, in general, third parties. The exemption does not apply to the capital gain realized by the seller at the time of the sale of real estate to the R.E.I.C. The subsequent transfers of real estate by real estate investment companies are subject to the ordinary tax provisions (not exempt).
Real estate investment companies are exempt from income tax for the income created by securities in general, whether in Greece or abroad, acquired by parties not subjected to tax deduction. Especially regarding the interest of bond loans, the exemption applies under the condition the titles that grant the interest in question were acquired at least thirty (30) days prior to the date set for cashing the interest.
Real estate investment companies must pay tax with a coefficient set at ten percent (10%) of the valid European Central Bank intervention rate (Interest Reference Rate) plus one (1) point, and is calculated on the average of the investments, plus the available funds, in current prices. In case of a change of the Interest Reference Rate, the new calculation value is valid as of the first day of the month following the change. The tax is payable to the competent Tax Authority within the first fifteen days of the month following the period recorded in the bi-annual investment tables. Upon payment of the aforementioned tax, the company’s and shareholders’ tax obligations are exhausted.
The provisions of the beneficial Law 2166/1993 regarding the conversion of enterprises are also applicable for real estate investment companies, which: a) are established either by the merger of two or more companies that own real estate, or by the splitting-off or dilution of a company sector owning real estate, or b) acquire real estate, whether through merger by absorbing another company owning real estate or due to the splitting-off or dilution of a company sector owning real estate.