The government appears to be focusing on providing tax incentives with the aim of increasing the supply of properties for long-term rentals rather than short-term rentals.
While relevant decisions are expected to be taken in September, one proposal on the table that seems most likely is to reduce tax rates on long-term rental income and increase corresponding rates on short-term rental income.
Tax rates
Today, a scale applies to all property income. More specifically, for income up to 12,000 euros the rate is 15%, for income from 12,001 to 35,000 euros the tax rate is 35% and for income above 35,001 euros the rate is 45%.
It is typical for several owners on the three largest short-term rental platforms to make sure to declare annual rental income of less than €12,000 so that their income is not taxed at a rate higher than 15%.
The study is considering increasing the minimum rate to 22% for short-term leases and maintaining or reducing the rate to 15% for long-term leases. Another scenario under consideration is to deduct part of the rent received from a long-term lease from income tax.
The table also includes interventions such as:
- Do not allow short-term rentals in more than 2 properties per VAT number.
- The rental period for each property must not exceed 90 days and for islands with less than 10,000 inhabitants, 60 days per calendar year. The duration of the previous number may be exceeded provided that the total income of the lessor or sublessor from all the properties he or she owns does not exceed 12,000 euros in the fiscal year.
- Set a maximum number of properties for short-term rental per Municipality. Each Municipality, by decision of the Municipal Council, will decide the maximum number of properties that can be registered in the Short-Term Rental Property Register per municipal apartment.
What is true in Europe?
The problem of overdevelopment of short-term rentals, resulting in a reduced supply of homes for long-term rentals, is not just a Greek problem. In fact, several European countries have already taken steps to address the problem.
Berlin has some of the strictest regulations in Europe. Homeowners can only rent out their main residence for 90 days a year without a permit, while other properties require a special permit.
New regulations in Paris limit the number of days a property can be rented through a short-term rental platform to 120 days per year. In addition, owners are required to register with a special register and include the registration number in their advertisements.
In Barcelona, strict checks are carried out and fines are imposed on illegal listings. The city has introduced a licensing system for property owners, requiring them to have a license in order to rent out their properties through platforms.