REAL ESTATE, INVESTMENTS & TAX TREATMENT

Thessaloniki as a pole of investment attraction

The demand on Real Estate in the city of Thessaloniki is concentrated mainly in the city center, in independent buildings aimed at the tourist exploitation from Venizelou Street to the Railway Station. Tourism has greatly benefited the Real Estate market with the result that old buildings in its center have been converted into tourist and residential accommodation. During 2020, the transfers of real estate in the Municipality of Thessaloniki with a price of up to € 100,000, constitute 91.13% of the total transactions, while the largest percentage of transfers in 2020 concerned properties up to 95sqm, which constitute 84.96% of total. In the first place of transfers in 2020 and with a percentage of 40.45% are the properties with a construction date in the decade 1961-1970.

During the memorandum years, property prices in Thessaloniki decreased by 45.1%. This fact in the following years created investment opportunities for both domestic and foreign investors, either individuals or through investment funds.

There were many investors targeted the promising Thessaloniki as an investment location. Demand in the center of Thessaloniki was constantly increasing, while prices in 2019, according to Bank of Greece data, recorded an increase of + 6.8% compared to the previous year.

At the same time, Thessaloniki in recent years had shown increased interest in residential units intended to be used through short-term rental platforms or long-term leases. This trend was created by the increased numbers of tourists in the city and their interest for the destination throughout the year.

The case of Israel citizens and investors

The choice of Thessaloniki for the Israelis is remarkable as they have emotional ties with the city, due to the former strong Jewish presence. It is a city they love, a city that thousands visit every year, a city in which they invest. Indicative is the interest recorded by Israeli funds, which are looking for the appropriate investment opportunity to penetrate the market of Thessaloniki.

The Holocaust Museum, which is estimated to receive 100,000 visitors a year, is expected to be a magnet for Israelis and beyond. With this museum, the city pays tribute to the Jewish population, highlighting the multiculturalism of Thessaloniki.

Government’s Reaction

For all the above, the government is trying to approach investors from several countries of the world by taking tax relief measures. With the reduction of the corporate tax rate to 24%, Greece will move a little higher than the average of the OECD member countries, while the ministry of finance promotes the scenario of reduction the tax rate for companies to 20% from 2022. All the data show that this is a scenario that will be promoted by the government and they intend to institutionalize. Another big step is the big reduction in dividend tax rate which has been reduced to 5%. The goal of the government also remains the permanent abolition of the solidarity levy for all taxpayers. As of January 1, 2021, the special solidarity levy has been abolished for one year.

The effects of covid-19 on corporate finances are leading the financial staff to reconsider repeating the measure.

Regarding the support of the construction and the real estate market, the measures including important interventions. It’s about:

• The suspension for three years, until the end of 2022, of VAT on the delivery of newly built properties. This measure is also one that is going to be extended by the government
• The suspension for three years, i.e. until the end of 2022, of the capital gains tax on real estate. The tax would be borne by the sellers and after multiple extensions it will not apply in the end. This measure is also promoted to be extended by the government.
• Providing a 40% deduction from income tax of individuals for the costs of energy, functional or aesthetic upgrade of properties. The tax exemption will be given only for the costs of receiving services for the energy, functional and aesthetic upgrade of real estate and not for the cost of materials. In order for an owner to reap the tax exemption, he must obtain a legal document, such as an invoice, but also pay the relevant expense by bank transaction, such as the credit of the bank account of the craftsman who has undertaken the relevant work.

As a firm that represents a lot of companies, funds and citizens from abroad, S.I.ROUSSOS & PARTNERS S.A. acts as a Tax, Accounting and Financial Consultant, for all our clients in order to support and guide them in their business and investment in Greece. We acknowledge the difficulties foreign investors face with from the moment starting their investment until the completion of their project. The way we act is investment friendly and always complying with the Greek provisions, while we guide you in a profitable result.