Based on the Proposal for a Directive on VAT rates of the EU Council of Finance Ministers, adopted on 7 December 2021, the Greek Ministry of Finance may extend the VAT “freeze” on supplies of real estate until at least 2025. Alternatively, it will be able to impose the reduced rate rather than the maximum rate.
The current VAT suspension regime
From 2006 until today, the legislation provides for the imposition of the high VAT rate (18% then and 24% now) on newly built properties. From the beginning, an exemption was set for the first residence.
Since 12/12/2019 there is a suspension of VAT in newly built properties (Law 4649/2019). It is an optional scheme and therefore requires the taxable builder of properties for sale to apply to the tax office of his/her domicile in order to be granted a suspension.
Once the suspension decision is issued, it is valid until 31/12/2022.
The new ECOFIN Proposal for a Directive
Under the new Directive, which will enter into force upon its incorporation into Greek law, the Ministry of Finance may extend the measure of suspension of 24% VAT on real estate for another two years with the prospect of reduction or even abolition from the year 2025.
Thanks to these measures, the construction activity and the market, in general, are stimulated since buyers will be able to purchase tax-free properties that do not enjoy the exemption for the first residence. Of course, builders are also favoured, as even in the case of consideration, they will be able to build new buildings fully exempt from this charge.