Tuesday, 3 February 2015

Property tax (Φόρος Ακίνητης Περιουσίας)

ENFIA (Unified Property Tax) was very badly received by all Greeks, few of whom could even conceive the notion of paying annual property taxes on the value/location of their properties. They argue that they have 'already' paid tax when they bought/built the property, and they claim that they pay taxes to the local council on their property through the electricity bills, which is of course highly misleading: if you don't use your property yourself but rent it out, then it's the TENANTS who pay the electricity bill in its entirety, except when the crisis broke out and an 'emergency' property tax was clamped onto it (the infamous 'haratsi', which was named for its historical significance).

The new Syriza government says that they will replace this tax with something called Φόρος Μεγάλης Ακίνητης Περιουσίας = Large Property Portfolio Tax, which I understand will apply for people whose property portfolio is worth more than 200,000 euro.

Source: POMIDA, the website of 
the Hellenic Property Federation.
The figure on the left details the history of property tax in Greece, which is not just messy: it also shows how easily old laws are repealed and new laws are introduced at the whim of a new governing party, to satisfy the people, not the nation. It also shows how LITTLE Greek property owners have had to pay in the form of taxes on their real estate. Here is a selective translation of the text:

1975: First property tax law passed, applied only for urban properties.
1980: Law was annulled due to intense protests (!), deemed unconstitutional, and replaced by 2-4% rises in income tax (!!) and inheritance tax by 2%
1982: Law reinstated (!) at 2%, then annulled again after massive protests (!!) and re-added to income tax at 2% (!!!)
1993: Law repealed unconditionally and a "Property Fee" was introduced
1997: Tax re-introduced (!) as "Large Property Portfolio Tax" at 03.-08% (!!)
2007: Law repealed (!) for the third time (!!) and replaced by the "Unified Property Fee" at 1% (!!!)
2010: Property Tax clamped onto electricity bills (at the start of the crisis)
2013: Property tax which was not credited to owners between 2011-2013 (due to the confused and chaotic conditions prevailing in the Greek state during the crisis) is billed all at once to property-owning tax-payers
2014: ENFIA is introduced by the Samaras government
2015 (pending - not shown in photo): ENFIA will be annulled, and a new property tax called something like "Large Property Portfolio Tax" will be introduced

It's hard not to miss the degree of lawlessness inherent in the Greek tax-payers liable to pay this tax. It's also the reason why, in the past, having a large property portfolio in Greece was very common among Greeks.

Doctor, my parents never loved me!
Why do you say that?
They left me five urban properties and a rural residence!
Source: Cartoon by Nikandrou, Imerisia

I won't call it 'investing' in property, because very few Greeks were in fact using their properties as investments - it was so 'cheap' to own property that they were 'collecting' properties to pass on to their children, for their children to live in, use in another way, or rent out. It's fair to say that Greek social class was never really based on property ownership. Greek social class - food for thought for another post that I'm working on.

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