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Buy & Sell Real Estate Property in Greece
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GUIDE TO BUYING PROPERTY IN GREECE
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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 incomeOverall 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%0243,6000
    243,601-390,350 0.3% 440.25 390,350440.25
    390,351-537,100 0.4% 587.00537,1001,027.00
    537,101-683,850 0.5% 733.75683,8501,761.00
    683,851-977,350 0.6% 1,761.00977,3503,522.00
    977,351-1,270,8500.7% 2,054.501,270,8505,576.50
    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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