Income from leasing of real estate property
According to article 39 of the Income Tax Code L. 4172/2013 (hereafter I.T.C.):
«1. The term «income from real estate property» means the income, in money or in kind resulting from the letting or the own-use or the free concession of land and real estate property. In particular, this income is derived, inter alia, from:
a) Leasing or subleasing, or concession of land or real estate property including buildings, structures and all kinds of facilities and equipment”.
More, according to Circular 1069/2015 the following apply:
– This income is acquired by any person to whom it has been legally transferred under a permanent contract or obtained by court order or via adverse possession, the right of full ownership or occupancy or usufruct or dwelling, as appropriate, as well as from the sub-lessor in case of subleasing.
– This income is acquired from individuals or single-person enterprises, regardless whether it is collected or not, since the right to collect this income was obtained, provided that the lessor is estranged from the use of the property without at the same time providing other services to the lessee (e.g. cleaning, security etc.), because in such scenario his income would be totally determined as an income from business activity.
The income from the real estate property is included to the broader concept of capital income and under article 40 par. 4 of I.T.C. is taxed separately according to the following scale:
| Income from real estate property (€) | Tax rate (%) |
| 0 – 12.000 | 15% |
| 12.001 – 35.000 | 35% |
| 35.001 – …… | 45% |
Briefly, the obligations of the taxpayer (individual or legal persons) vis-à-vis the Tax Authorities in respect of his/her real estate property are the following:
– Composition of private lease agreement and online submission of a Real Estate Rental Information Statement at taxisnet or on the online platform on the website of the Independent Public Revenue Authority where appropriate.
– Electronic submission of the analytical status of real estate rentals (form E2) by the taxpayer, through his personal account at taxisnet, before submitting the annual income tax return statement (form E1), and until the 30th of June of the relevant year [Article 67 of the I.T.C.], unless a time extension is granted by a special Decision of the Ministry of Finance.
1. The rental of real estate property may be long-term or short-term. Regarding the tax treatment of long-term rentals, as above, the provisions of article 39 of the I.T.C. are applied.
Regarding the short-term rentals, the following categories should be noted:
1. Short-term tourist rental property.
It is when a tourist accommodation (such as hotels, camping sites, independent accommodation – tourist furnished dwellings, furnished rooms – apartments to let etc.), which has received for its operation the Special Operation Accreditation from the competent department of the Ministry of Tourism according to the provisions of L. 4276/2014, provides a real estate property to a lessee for his/her temporary stay i.e. less than thirty (30) days. However, given that this rental provides to the lessee “hotel services”, such as cleaning services, waste collection, replacement of linen and other household goods, auxiliary staff
and other care services, the short-term rental provided by these tourist accommodation is not exempt from VAT, but it is subject to the reduced VAT rate (13%), as is any other provision of temporary accommodation that is proportionate and competitive with the hotel accommodation services provided and the resulting income is taxed as income from a business activity under Article 47 of the I.T.C.
2. Short-term lease in the context of the sharing economy i.e. a model where «digital platforms create an open market for the temporary use of goods or services that are often provided by individuals» [article 111 L.4446/2016] and is defined as the lease of property agreed through a digital platform [=electronic, bilateral or multilateral market, where two or more groups of users communicate through the internet with the mediation of the platform’s administrator in order to facilitate the transaction between them], for a given period but in every case for less than a year, is a new category of leasing.
It is noted that prior to the enforcement of the aforementioned law on the sharing economy, there was already the possibility for individuals to submit on taxisnet a short-term lease agreement lasting up to three (3) months (without using the digital platform). The income from this three-month rental was taxed as property income as described in Article 39 of the I.T.C. However, the Administration has not yet clarified whether the short-term leasing of the sharing economy will replace the three-month short-term leasing or it will simply be added as a new process and category of short-term leasing.
Furthermore, according to article 39A, which was recently added to the I.T.C., the income earned from the 1st of January 2017 and onwards by individuals or legal persons through the short-term lease of property as described above [under no. 2], shall be considered as an income from real estate property under Article 39 of the I.T.C., provided that the properties are rented furnished, but without the provision of any service other than the provision of bed linen.
However, if any other services are provided, such as cleaning, kitchen services, service, etc., this income constitutes an income from business activity under article 21 of the I.T.C.
In summary, according to article 111 of L.4446/2016 and Circular 1187/2018 for short-term lease agreements contracted from the 1st of January 2018 and onwards through the digital platform, the following applies:
– The short-term lease agreement must have a specific duration, which must not exceed one year period, namely the lease of each property must not exceed ninety (90) days per calendar year and sixty (60) days for property leased on islands with less than 10.000 inhabitants. An overrun is conceivable if the lessor receives from the total of the properties he leases, less than twelve thousand euros (€12.000) per tax year.
– In order for a person to lease a property, it is not required for him to have a special type of profession, as the platform is available to any individual or legal person or legal entity.
– «Operator» of the property is the individual or legal person or any legal entity that undertakes the process of uploading the property on digital platforms for the purpose of short-term lease and generally arranges for the property’s short-term lease.
– As the operator can be the owner of the property, the occupant, the one who has the usufruct, the sub lessor or a third party. The only «third persons» that can be administrators are exclusively:
a) The legal guardian of a vacant heritage.
b) The liquidator of the heritage.
c) The executor of a will.
d) The bankruptcy operator.
e) The temporary operator.
f) The interlocutor.
g) The guardian or caregiver or curator or parent who exercises parental responsibility on a case-by-case basis.
– The real estate property may be an apartment, a detached house (exempt from detached houses, which have been characterized as such due to the abolition of the horizontal ownership) any other form of building with structural and functional autonomy, rooms of apartments and of detached houses. Also, the real estate property may be a single space, or may be rented in part.
– Regarding the possibility of limiting the number of real estate per T.I.N., in certain geographical areas, for the time being, no such provision exists via a relevant Joint Ministerial Decision, thus every taxpayer can have as many real estate properties as he wishes in his personal T.I.N. This status may change after the issuance of the relevant Joint Ministerial Decision which may possibly determine that it is prohibited to have more than two real estate properties in a single V.I.T.
– The operator is obliged to take the following actions before the tax administration:
a) Registration in the «Short Term Real Estate Residence Registry».
It is noted that this Registry has not yet been implemented but is expected to be activated in August.
b) Τhe uploading of the short-term rental property on the digital platforms of the sharing economy and on any viewing medium with obligatory indication of his registration number of the “Short Term Real Estate Residence Registry”.
c) The submission of the “Short Term Real Estate Residence Statement” per lessee,
d) The registration in the “Short Term Real Estate Residence Registry” of all necessary data for determining the annual income (joint proprietors of income, percentages etc.).
– In order to register in the “Short Term Real Estate Residence Registry”, the operator must enter the Independent Public Revenue Authority website (www.aade.gr) with his personal passwords at Taxisnet and enroll in the “Short Term Real Estate Residence Registry” maintained in the Independent Public Revenue Authority, so he can receive a registration number per leased «Real estate property». This number is obtained through a computer sheet after the registration of the property’s number, i.e. a special number acquired only after the Statement of the property on form E9 (see answer of question 1).
– The information that the operator states on this (for example income co-beneficiaries, percentages etc.) are taken into account for the annual income calculation that is gained by the short term lease. If, on the day of the finalization of the “Short Term Real Estate Residence Registry”, the Operator hasn’t state the income co-beneficiaries’ percentages and/or non-identified owners’ percentages, so that the 100% of the operator’s percentage is complete, the amount that attributes to the remaining percentage, is taxed to him.
– In case the short term «Rental property» lease co-beneficiaries are foreign individual or legal persons that do not have a postal address in Greece, they will need to appoint a tax representative with Greek tax residence, in order to register at the Tax Registry (T.I.N. issuance).
– In case that the property’s full owner assigns to a third party the property’s managing for short – term lease, the third party is obligated to file the operator’s data, through the Real Estate Rental Information Statement, otherwise he will be considered as the property’s operator.
– For each property, only one operator is appointed. In case of property co-ownership, when operator is one of the owners, the other co-owners are not obliged to file the abovementioned the Real Estate Rental Information Statement.
– In cases that the operator has an G.N.T.O. Special Operation Accreditation (L.O.A.), according to the above provisions of Articles 1-4, Law 4276/2014 and par. 5, article 46, Law 4179/2013, he is not obliged to register at the “Short Term Real Estate Residence Registry”, but he has the obligation to display, in a visible place, the number of the Special Operation Accreditation (L.O.A.) during its promotion on digital platforms, as well as to any means of promotion.
– The «Short-Term Residence Statement» (original, amended) can be submitted until 12.00 a.m. at night of the following day of the tenants’ departure from the “Property”. In case of alteration of the duration of the stay or the agreed total rent value or cancellation of the stay or filling of false information or any other cause, an amended “Short-Term Residence Statement” has to be filed. In the event of lease cancellation and based on the cancellation policy, an amount must be deposited by the lessee; an original Short-Term Residence Statement must be filed until 12.00 a.m. of the next working day of the cancellation.
– The process is monitored by special competent bodies of the Ministry of Finance, the Independent Public Revenue Authority and/or the Ministry of Tourism and the following penalties are imposed:
– In case of late Short-Term Residence Statement a fine of one hundred euro (100€) is imposed.
– In case of not con-compliance with the conditions, a five thousand euro (5.000€) administrative fine is imposed to the properties operators.
– In case of non-filing or false filing of the Short-Term Residence Statement a fine of double the rent amount is imposed to the Operator, as it is stated on the digital platform on the same day of the check.
– The income that arises by such lease is V.A.T. excluded. This exclusion is based on the provisions of article 22, par. 1 of the VAT Code (L.2859/2000), as applies, according to which the property lease is V.A.T. excluded. It is a passive activity, during which the lessor grants the lessee, for a certain time period and in exchange of money, the right to use the property as it was his own and to exclude any other person from having this right.
Especially for year 2017, that is also a transition for the short-term leases through digital platforms, an electronic submission of the Real Estate Rental Information Statement at taxisnet is not provided, while the total income resulting from these short-term leases, will be declared separately and aggregated on the analytical statement that regards the leases of the real estate properties (form E2) of the year concerned. Specifically, according to Circular 1068/2018, by choosing code 60 of column 17 (where the lease type and the property’s use are stated) the total amount of the short term property lease income resulting by digital platforms (Booking, Airbnb etc.) must be declared for each separate property, while selecting code 61 of column 17 the total amount of the short term property subleasing income resulting by digital platforms (Booking, Airbnb etc.) must be declared for each separate property, during tax year 2017 and according to article 39 of the I.T.C., as applies.