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Over five billion euro from taxation of property

05 July 2013 / 15:07:07  GRReporter
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The inability of the Greek government to tackle tax evasion has turned the revenues from taxation of property into a major source of funds for the state treasury. The recent data suggest that the inhabited house duty and similar fees and charges should bring 5.4 billion euro to the budget.

Flat owners in Greece are paying at present four different taxes that are related to real estate. The government has pledged to integrate them into a single fee next year but state experts are worried that the total amount will become so huge that no one will be able to pay it.

Under the plan for 2014, property owners will have to pay the state another 3.2 billion euro in 2014. Naftemporiki reports that 1.7 billion euro will come from regulated buildings and parcels of land, 500 million euro from legal entities that own buildings and another 800 million euro from property that is not regulated.

Meanwhile, poll results show that more than half of the property owners are unable to meet their tax obligations because, after the cuts, their household income cannot cover basic expenses. The only solution is for Greece to revise the tax law. According to the Organization for Economic Cooperation and Development, the cost of property transfer in Greece is the highest in comparison with the same cost for the other members of the organization.

According to the Bank of Greece, the recovery of the real estate market will stimulate the economic recovery of the country. Therefore, it is necessary to create a new tax framework to reduce the cost of property transfer and to expand the tax base by allowing a large number of taxpayers to pay lower taxes in order for the revenue to the treasury to not decline while at the same time not overburdening the ordinary citizens with excessive taxes. The central bank suggests that a scale should be introduced which will determine the property tax rates and which will not be changed over the next five to ten years.

The first step to creating a fairer tax system is the introduction of a personal record of the assets and income of every taxpayer. With it the government cancels the system of presumed income taxation which has been in force since 2009 thus making a clear distinction between the taxation of various incomes such as incomes from wage labour, private business, shares and others.
The Ministry of Finance states that the new version of the tax code will not allow interpretations or evasion of payments. It clearly defines the tax-exempt income for the first time, eliminates the tax breaks that have been recently applied and makes the taxation of individuals dependant on the category of their income. The code introduces the concept of fiscal year in compliance with the European standards which has not hitherto been in force as well as unified inventory rules that meet the tax and accounting requirements. It also establishes simple and effective rules for calculating the depreciation of fixed assets and simplifies the rules for intercompany transactions.

Tags: EconomyMarketsTaxesCrisisGreece
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