Following the decision of the Second Chamber of the Council of State, which ruled that the circular of the AADE (E.2024/2024) on the business tax on short-term leases is invalid and void, the government is returning to the issue through legislation. With a provision included in the bill under consultation “National Customs Code and other provisions“, it is now explicitly stated that any property leased or subleased for short-term use is considered a branch and is subject to a separate business tax.
The contested circular, which imposed the relevant charges, had been challenged before the Council of State by STAMA Greece and five of its member management companies. The court held that it was an act of a regulatory nature which had not been published in the Government Gazette but had merely been posted on the internet, thus infringing the principle of legal certainty.
Despite the pendency of the case in the Plenary Session of the Council of State, the Ministry of Finance chooses to proceed immediately with a legislative regulation, which, if finally passed, will apply retroactively from the 2024 tax year. This is a development with significant financial and practical consequences for the short-term rental sector, as it paves the way for the imposition of a per-property tax , which translates into multiple burdens for owners and managers.
The article as it is published in Taxheaven.gr:
Article 248
Business tax – Amendment of par. 1 Article 31 of Law No. 3986/2011
In par. 1 of Article 31 of Law No. 3986/2011 (A’ 152), on the imposition of business tax, the second subparagraph shall be replaced and par. 1 is amended as follows:
“1. Legal persons and legal entities are obliged to pay an annual business tax as follows:
(a) legal persons and legal entities, of a profit-making nature, having their registered office in tourist resorts and in towns or villages with a population of up to two hundred thousand (200,000) inhabitants, to eight hundred (800) euros per year,
b) civil non-profit companies of paragraph e) of Article 45 of the Income Tax Code (C.F.E., Law 4172/2013, A’ 167) that have their headquarters in tourist resorts and in cities or villages with a population of up to two hundred thousand (200,000) inhabitants, to four hundred (400) euros per year,
c) legal persons and legal entities, of a profit-making nature, having their headquarters in towns with a population of more than two hundred thousand (200,000) inhabitants, to one thousand (1,000) euros per year,
d) civil non-profit companies of paragraph e) of Article 45 of the Tax Code that have their headquarters in cities with a population of more than two hundred thousand (200,000) inhabitants, to five hundred (500) euros per year,
e) for each branch established by a legal person or legal entity referred to in points a) and c) to six hundred (600) euros per year and for each branch established by a civil non-profit company referred to in points b) and d) to three hundred (300) euros per year.
For the purposes of this Regulation, a branch in the territory of the country other than the head office of the undertaking shall mean any:
(a) a business establishment of the legal person or legal entity in which a productive or commercial activity is carried out,
(b) real estate, leased or subleased for short-term leasing, as defined in Article 111 of Law No. 4446/2016 (Α’ 240).
Not counted as branches, for the imposition of the business tax, are temporary showrooms and temporary business premises, operating for a period of up to thirty (30) days, business premises housed on different floors, continuous or not, of the same building complex, tourist accommodation facilities within traditional buildings, according to p.d. 33/1979 (A’ 10), operating in separate buildings, but with a single operating licence, which is included as a single establishment in the same tourist unit, as well as agricultural holdings referred to in paragraph d) of par. 1 of Article 2 of Law No. 3874/2010 (Α’ 151).”.
According to Article 269 of the bill: Para. 1 of article 248, on the Business Tax, applies from the tax year 2024 onwards.
