Tax Updates: June 26th 2023

The recently issued Decision Α.1089/2023 of the Independent Authority for Public Revenues (AADE) amends the currently applicable Decision A.1206/2020, which introduces the procedure and documentation required in order for legal entities owning Greek real estate to be exempt from the Special Real Estate Tax (SRET). One of the most significant amendments introduced by the new Decision refers to the already applicable “disclosure” exemption, namely the exemption from SRET of Greek or EU legal entities owning Greek real estate, when they disclose the individuals who are their ultimate beneficial owners by having such individuals obtaining a Greek tax registration number.

We remind you that when real estate property investments were made through trusts or other similar vehicles, there was a grey area as to how such an exemption method could apply. On this basis, the new Decision is determining, amongst other, the documentation that should be submitted by the relevant taxpayers in order for the above “disclosure” exemption method to apply even in the case where a foreign trust (or other similar form of entity) exists in their shareholding structure.

Taking into consideration that SRET is a particularly heavy tax burdening the holding of Greek real estate (imposed annually at the rate of 15% on the objective tax value of real estate owned on the 1 January of each year), which aims to create disincentives for the holding of real estate by legal entities that wish to hide their ownership structure, it is extremely significant that the abovementioned exemption from SRET has now been extended to legal entities held by foreign trusts, since there are a lot of cases where Greek or foreign individuals hold or wish to hold Greek real estate through foreign trusts and until now application of the above exemption from SRET was ambiguous.

By virtue of the new Decision A.1089/2023, in order for a legal entity holding a Greek real estate to be eligible for the exemption from SRET when a foreign trust in involved in their shareholding structure, the following requirements should be met:

• The trust should not be established in a non-cooperative state.
• The trustee should not be established in a non-cooperative state.
• The following documents should be submitted: (1) copy of the trust deed and of any annexes thereto which depict the ultimate (actual) beneficiaries, and (2) certificate issued by any public authority or registry of the state where the trust is established, which depicts the ultimate (actual) beneficiaries on the 1 January of the taxable year (or any other document, verification, print-out from the official website of the authority/registry etc. with similar content). If there is no such authority nor registry, or in case the existing authority does not issue such verifications, a sworn declaration of the trustee can be submitted having the above content or declaring that during the previous 12 months (i.e. since 1 January of the previous year until 1 January of the taxable year) the ultimate (actual) beneficiaries have not been changed (or declare the change, if there has been any) and confirm that issuance of a verification by some public authority is not possible. Obviously, the ultimate (actual) beneficiaries should hold a Greek tax registration number. 

We note that apart from this significant change, the new Decision Α.1089/2023 has introduced some more amendments, for example on what concerns the procedure to be followed for the granting of certain types of exemptions (e.g. for shipping companies, Greek charitable legal entities, Greek or EU legal entities held by Greek or foreign charitable institutions etc.), which can now be performed also via the application “My requests” of AADE.