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Added value tax on property transactions resurfaces in 2017 draft budget

By T. Tsiros

While insignificant amid the ongoing and continuing “tax tsunami” that menacingly unfolds in the draft 2017 budget, roughly 24 million euros is booked in the budget from a resurgent added value tax on real estate transactions — a surcharge that was first imposed in 2014 but completely flopped in the implementation phase and was later suspended.

The previous alternate finance minister, in fact, had insinuated that the tax would not be revived in 2017.

Nevertheless, the figure of 24 million euros was compiled on the draft budget, meaning that the finance ministry must either proceed with its implementation, which would add yet another tax to property transactions in market still frozen solid by the economic crisis, or proceed with the tabling of an amendment to again suspend the tax for another year.

As stipulated in the original legislation, the added value tax is paid by the seller, and is calculated with a 15-percent coefficient on the difference between the current sale price of the property minus the original acquisition price by current seller.

Implementation of the tax two years ago was a resounding failure. Beyond the fact that the unprecedented economic crisis had smashed real estate values, notaries, tax offices and real estate agents could not agree on how to calculate the tax.

Those same deficiencies remain in the current, albeit suspended, law.