Filenews 11 May 2023 - by Eleftheria Paizanou
According to Phileleftheros, a consensus formula for reduced VAT on the purchase or construction of a house seems to have been reached yesterday by the Ministry of Finance and co-governing parties.
In an effort to avoid tabling many amendments and to present the coalition government as a common front, it was decided to increase the values of houses and apartments subject to 5% VAT, to benefit more, compared to the existing bill. In addition, new arrangements for transitional provisions were decided.
According to F's information, yesterday the leaders or parliamentary representatives of DIKO, EDEK and DIPA had a meeting with Finance Minister Makis Keravnos, the ministry's director general George Pantelis, as well as other technocrats, in an effort to break the deadlock in Parliament. Specifically, it was decided that the three parties inoculate the bill with an amendment, which will provide that 5% VAT will be imposed for the first 200 sq.m. of the buildable area of residences, with a total area of up to 220 sq.m. and with a transaction value of up to €400,000. (The government's revised bill provides for a value of up to €385,000).
Also, reduced VAT will be imposed for the first 90 sq.m. apartments, with a total area of up to 110 sq.m. and with a total value of up to €270,000. (The bill provides for a value of €220,000). Essentially, the values of eligible homes increase by €15,000 and apartments by €50,000.
As we have been told, special emphasis was placed on apartments, since, due to the increase in building costs, many young couples are turning to buying apartments. In addition, the amendment provides that applications submitted within three months of the entry into force of the law by interested parties for obtaining planning permission will be exempted from the new regulations (and the current looser regulations will apply to them). The government bill provides that the new regulations will not apply to buildings for which a building permit has been obtained from the competent authority, even to those that will obtain a building permit within four months of the implementation of the law.
With this amendment of the co-rulers, as "F" is informed, the Ministry of Finance also consents, which will proceed to an informal briefing of the Commission. However, it has often been said by the government that it is possible for Brussels to consent to the increase in the values of eligible units, due to the increase in costs due to the war in Ukraine.
Only with the votes of the 16 deputies of the co-governing parties the amendment cannot be approved, so overtures will be made to AKEL to co-sign it. Many times party members of AKEL had referred to the need to increase the values of real estate that will benefit from reduced VAT. Appeals will also be made to ELAM and the ecologists, so that the amendment can be tabled jointly.
It will be difficult to persuade DISY to back down
Opposition parties will also approach DISY, which has tabled its own amendment, whereby the reduced VAT will be based only on property values. Specifically, 5% VAT will be imposed on properties worth up to €350,000. For properties from €350,000 to €500,000 will be charged VAT 19% for the amount exceeding €350.000. For houses worth more than €500,000, VAT will be 19% on the entire amount.
DISY believes that this proposal is much fairer for stakeholders. The government disagrees with this proposal and believes that it will not be accepted by Brussels. DISY is already developing its own arguments towards the other parties in order to persuade them to go along.
Monday developments in Parliament
On Monday, he is expected to clear the scene in the House Finance Committee. In the presence of representatives of the Ministry of Finance, the Department of Taxation, the Legal Service, the Land Registry, the Town Planning and ETEK, the two amendments (co-governing and DISY) will be discussed. At the same time, if a consensus proposal is found, an effort will be made to support it from all parties. In this way, as we have been told, strong messages will be given to the European Commission on behalf of the State. As soon as the regulation is passed, it will immediately be sent to the Commission for a position.
