The 15% Special Real Estate Tax (SRET) in Greece and how companies qualify for an exemption

The 15% Special Real Estate Tax (SRET) in Greece and how companies qualify for an exemption

Quick answer

The Special Real Estate Tax (SRET) is an annual 15% tax on the value of Greek real estate owned by legal entities that do not meet transparency requirements regarding their ultimate beneficial owners. It functions as an anti-avoidance rule against the use of opaque companies, typically offshore, to hold high-value Greek property. Companies established in Greece or another EU state are exempt if their shares are registered down to the ultimate individual owners, or those individuals are disclosed, and each individual holds a Greek tax number (AFM). Properly structured holding companies therefore do not pay SRET, but the exemption conditions must be satisfied every year.

What SRET is and why it exists

SRET is imposed on legal entities holding, on 1 January each year, a right of full ownership, bare ownership or usufruct over real estate in Greece. The rate is 15% of the property’s value as at 1 January. The tax was introduced to discourage the holding of Greek property through anonymous structures with the aim of avoiding property-related taxes, and it is best understood as a Specific Anti-Avoidance Rule rather than a general property tax.

Individuals who own property directly are never subject to SRET. The tax is relevant only when a company, foundation, trust or other legal entity holds Greek real estate.

The main exemptions

Exemption	Who qualifies	Key condition
Disclosure exemption	Companies established in Greece or another EU state	Shares registered, or individual owners declared, down to the ultimate individual shareholder; each individual holds a Greek AFM (foreign tax residents included)
Business income exemption	Companies of any jurisdiction with commercial, manufacturing, industrial, craft or service activities in Greece	Gross income from those activities exceeds gross income from real estate in the year; income from property used exclusively for the business is disregarded
Real estate business exemption	Companies whose business is the purchase, management, investment and exploitation of real estate	Activity-based; conditions assessed on the facts
Regulated investment vehicles	Mutual funds, alternative investment funds and other vehicles managed by regulated managers	Regulatory status

The disclosure exemption is not available to companies established in non-cooperative jurisdictions. These are non-EU states that the OECD has not found largely compliant on transparency and exchange of information, that have no administrative assistance convention with Greece or have not signed the Council of Europe–OECD multilateral convention, and that did not commit to automatic exchange of financial information by 2018.

Applying the disclosure exemption to a holding structure

A common structure for a foreign investor is a Greek property company owned by an EU holding company, for example in Cyprus, which is in turn owned by the individual investor. Each Greek property company can rely on the disclosure exemption provided that:

• the ownership chain is fully transparent from the Greek company through the EU holding company up to the ultimate individual shareholder;
• that individual holds a Greek AFM, even as a non-resident; and
• the required disclosures are filed and kept current.

The interposition of an EU holding company does not, by itself, prejudice the exemption. What matters is that the chain ends in identified individuals with Greek tax numbers.

Ongoing monitoring

Because SRET is assessed on the position at 1 January each year, the exemption must be satisfied continuously, not only at the time of acquisition. Any change in the ownership of the holding company, the admission of a new investor or the transfer of shares to a vehicle that is not transparent can trigger the 15% charge for the following year. Structures should therefore be reviewed annually, and any change at shareholder level checked against the exemption conditions before it is implemented.

Frequently asked questions

Does an individual owner pay SRET? No. SRET applies only to legal entities holding Greek real estate.

Can a Cyprus holding company own Greek property without paying SRET? Yes, through a Greek property company or directly, provided the ownership is disclosed down to the individual shareholders and each holds a Greek AFM.

Does the individual shareholder need to be Greek tax resident? No. A Greek AFM is required, but it can be issued to a foreign tax resident.

What happens if the exemption conditions stop being met? The 15% tax applies on the property value as at the next 1 January. The structure should be corrected before the year end to preserve the exemption.

 

* The information is accurate to the best of our knowledge as at the time of writing. We have no obligation to update it. We accept no responsibility against any third party who is not a client of the firm and has not signed the terms of our engagement.