The Independent Authority for Public Revenue provides clarifications regarding the tax treatment of short-term property rentals starting from January 1, 2024, aiming to facilitate taxpayers in fulfilling their obligations correctly.
Through a Circular by the Governor of the Independent Authority for Public Revenue, Mr. Georgios Pitsilis, both general issues and specific cases of short-term leasing are clarified. Specifically:
I. Individuals
The income derived from short-term property rentals is considered income from:
• – Real estate and is exempt from VAT if the short-term lease concerns up to two (2) properties.
• – Business activity and is subject to a reduced VAT rate of 13% if the short-term lease concerns three (3) properties or more.
In order for individuals’ income to fall into the respective category, the following are taken into account:
• – The number of Property Registry Numbers (PRNs) registered, which may not necessarily correspond to the number of properties. In cases of discrete exploitation of rooms in the same property, multiple PRNs may correspond. For example, if three (3) separate rooms are leased in the same apartment with different PRNs, the respective incomes will be treated as income from a business activity and will be subject to 13% VAT.
• – The intention to exploit these properties, evidenced by their registration in the Short-Term Accommodation Property Registry, regardless of whether income is derived from their exploitation or not.
II. Legal Entities
The income derived from short-term property rentals is taxed as income from a business activity in every case, regardless of the number of properties, and is subject to a reduced VAT rate of 13%.
Furthermore, it is clarified that individuals appearing as income beneficiaries in the Short-Term Accommodation Property Registry, namely individuals exploiting more than two properties and legal entities regardless of the number of properties, are obliged to:
• – Submit a declaration of commencement or amendment of Economic Activity Code (KAD) within thirty (30) days from the issuance of the Circular. The declaration can also be submitted within the same deadline by individuals who were obliged to submit it at an earlier date, by retrospectively referring to the actual commencement/amendment date.
• – Pay the non-resident tax.
• – Include the climate resilience tax (TAKK) upon issuing special receipts/payment vouchers.
However, it is emphasized that individuals exploiting up to two (2) properties are also obliged to include TAKK upon issuing special receipts/payment vouchers.
It is noted that the above concerns leases considered short-term, according to Article 111 of Law 4446/2016, i.e., leases with a duration not exceeding 59 days.