Filenews 20 June 2025 - by Eleftheria Paizanou
The transitional provisions that the executive and legislative powers included in the law on the reduced VAT of 5% on the purchase or construction of a main residence have resulted in the state losing many millions in the last 19 months.
That is, in June 2023, a stricter legal framework was adopted, in line with the European directive, according to which 5% VAT should be imposed only for social purposes, but until June 2026 some will continue to build or buy villas of millions, benefiting from the lax legislation that has been in place since 2016 and on paper until 2023. Because it remains in force in the context of... transitional provisions adopted in '23.
In short, with these transitional provisions, the Republic has again circumvented, for a period of three years, its obligations towards the acquis and the warnings of the Commission.
According to the previous legislation, 5% VAT was imposed on the first 200 square meters (sq.m) of the property, regardless of the total area. The new legislation provides that 5% VAT will be imposed (after the end of the transitional period) on the first 130 sq.m. of a residence/apartment, with a value of up to €350,000.
At the same time, a staggered imposition of reduced VAT is also applied. Specifically for residences and apartments with an area from 131 sq.m. to 190 sq.m. and with a value of up to €475,000 19% VAT is imposed. That is, for the first 130 sq.m. and for a value of €350,000 the VAT is 5%, while for the remaining 60 sq.m., up to 190 sq.m., the VAT is increased to 19%.
For residences and apartments with an area of more than 190 sq.m. and with a value of more than €475,000 19% VAT will be imposed from the first square and the first cent.
The transitional provisions provide that those who had applied for a planning permit from the beginning of June 2023 to October 31 of the same year, regardless of when the construction of the property will be completed, continue to save thousands of euros due to the previous legislation. In November 2023, "F" in a report reported that there was panic in the Department of Urban Planning, with thousands of applications being submitted in order for applicants to benefit from the transitional provisions.
What did Minister of Finance answer
According to data from the Ministry of Finance, which are cited in a letter from the competent minister Makis Keravnos in response to a question by MP Alexandra Attalidou, since June 2023, 9 thousand euros have been approved. Applications for the imposition of 5% VAT on properties of 200 sq.m. It also states that the additional amount that the state would collect if 19% VAT were imposed on all these transactions, would be €360 million.
However, out of the total number of applications, 650 concerned residences with an area of up to 200 sq.m and had a value of more than €500,000. As pointed out by the ministry, if the state imposed 19% VAT on these transactions (which do not fall under the new law) it would receive revenues of €85 million.
In addition, 300 cases of properties worth €500,000 were identified, regardless of the area, where the owners paid 5% VAT. If in these specific cases the state had imposed the normal VAT rate, it would have had revenues of €47 million.
With its announcement yesterday, a new law will be proposed to end the transitional provisions, which it is claimed are unfair and unreasonable. A competent authority, speaking to "F", said that such a thing would be unconstitutional.
