Greece Proposes 15% Property Tax for Non-EU Tax Residents
Greece's proposed tax hike to 15% on property purchases by foreign buyers applies based on tax residency rather than EU citizenship. Israelis with European passports residing in Israel will face the higher rate, significantly impacting real estate investments.
Greece is moving forward with a significant tax hike on property purchases by foreign investors, raising the rate from 3% to 15%. Many Israeli investors who secured European passports hoped this citizenship would exempt them from the heavy tax burden, but the Greek Ministry of Finance's newly published draft bill clarifies that tax residency, not citizenship, dictates the rate.
Tax Residency Dictates the Rate
Under Article 16 of the proposed legislation published on October 18, the 15% purchase tax applies to buyers who are tax residents of countries outside the European Union and the European Economic Area. Consequently, an Israeli holding a German or Portuguese passport who remains a tax resident in Israel will face the 15% rate. Conversely, a non-EU citizen who resides as a tax payer in Germany will be exempt from the hike.
Real estate expert and former Knesset member Ilan Leibovitz noted that while initial expectations pointed to an exemption for dual citizens, the text makes it clear. To qualify for standard rates within the EU, individuals must actually pay taxes within member states. Given escalating housing pressures across Europe and particularly in major Greek cities, the government aims to curb foreign speculation that prices out locals.
Substantial Financial Impact
For buyers, the financial implications are considerable. On an apartment in Athens valued at 150,000 euros for tax purposes, the purchase tax jumps from 4,500 euros to 22,500 euros. For a 300,000-euro property, the tax increases from 9,000 to 45,000 euros, adding 36,000 euros in costs. Additional local authority levies could push the total tax rate from 3.09% to 15.45%.
Pelleg Yariv, CEO of real estate investment firm Palmo, points out that transaction structures vary. Completed apartments differ from deals involving proportional rights in existing buildings combined with separate renovation agreements. Under Greek law, the base value for tax calculation may sometimes exclude specific renovation costs, altering the overall economic impact.
Broader Market Regulations
This tax proposal follows other restrictive measures implemented by Athens, including raising the minimum investment threshold for the Golden Visa program to 800,000 euros in high-demand areas and imposing short-term rental restrictions. Furthermore, Golden Visa holders do not automatically acquire Greek tax residency, meaning the permit will not shield them from the new purchase tax.
The proposed rules are slated to apply to final contracts signed from July 1, 2027. While the legislation awaits parliamentary debate ahead of scheduled Greek elections in the spring of 2027, investors are advised to carefully evaluate regulatory environments and transactional structures before committing capital.
