The Greek Government recently ratified Law 4839/2021 introducing a favorable amendment to the tax provisions of Law 2961/2001 regarding parental gifts and gifts between close relatives. As the beneficial tax measure had already been announced by the Prime Minister in the opening of Thessaloniki International Exhibition, the new provisions stipulate a tax exemption for the concession of assets and real estate up to 800,000 euros. Any transaction above the said threshold will incur a 10% tax only for the value of the asset exceeding the tax-exempt section of 800,000 euros.
Effective as of October 1st 2021, each taxpayer will be able to transfer to their close relatives, including their spouse or civil partner, parents, children and grandchildren, assets worth up to 800,000 euros without paying any tax. The same exemption now applies for gifts in cash that had previously been subject to a uniform 10% tax rate regardless of the amount of the gift, provided, of course, they can prove the legitimate source of the money.
In particular, it is possible to transfer their assets, including vehicles, bonds and other financial products. Moreover, they can gift not only real-estate property, including land, parcels etc, through that route, but also companies with a value of €800,000 maximum. Consequently, investments in all sectors are expected to receive a boost, with younger generations taking charge of the family assets.
It is noted that, according to the recently-introduced law, the value of gifts having taken place before the above date is disregarded when calculating the 800,000 euros tax-exempt bracket. As a result, it is possible to fall within the favourable tax regime for concessions made from October onwards even if there had been previous parental gifts and gifts to close relatives in the past. The measure is meant to facilitate the transfer of assets mainly by living parents and grandparents, so that the next generation can undertake the management of those assets and the responsibilities entailed.
Considering that the threshold of 800,000 euros applies for each donor and each grantee, in practice this can lead to concessions of assets and real estate of notably higher value. For instance, two parents may transfer an asset worth 1.6 million euros to their child without paying any tax. If the grandparents decide to transfer assets with a value of 800,000 euros each, this can lead to tax-free transfers of assets of a total worth of 3.2 million euros to the same grantee.
The new rules introduce a significantly favorable tax regime, compared to the previous tax provisions, applicable until September 30, which provided for a progressive tax rate for any transfer that exceeded 150,000 euros. More specifically, for any conceded asset from 150,000 up to 300,0000 euros, a tax rate of 1% on the value of the asset was applied. For assets that fell under the next bracket of 300,000 to 600,000 euros the tax rate amounted to 5%, and the transfers exceeding 600,000 were burdened with a 10% tax rate.
The same tax brackets, which were applicable for inheritance taxation as well, remain unchanged for the time being. Nevertheless, according to the new provisions, any gifts up to 800,000 euros are not taken into account, when applying inheritance tax brackets for the remaining estate between the same donor and grantee.
For assets of more than €800,000 the 10% tax still applies. This means that for a transfer of a property of €900,000 as a parental gift, the 10% will be calculated on the amount of €100,000, i.e. the amount exceeding the exempt sum. As a result, the tax owed for such transaction would amount to €10,000 as of October 1st.
It is worth mentioning that as of 2022 objective values of properties are expected to be altered. This means that there are areas that will note a significant increase in the objective values, while others will experience a decrease. This is particularly relevant taking into consideration that, even though tax on the transaction is exempt, there are still transfer costs that are related to the property’s objective values.
The newly adopted tax measures, in conjunction with the anticipated increase of real estate objective values as from 1.1.2022 in certain areas, are expected to bring about a considerable increase of parental gift transactions of real-estate property over the next months in those areas, especially with regards to real estate in Greece owned by non-Greek tax residents. Of course, depending on the amended scale of prices in each area, it might be recommended to delay such transactions given the imminent reduction of values in the respective areas.
At Amoiridis Law Services® we are dedicated at assisting our well-respected clients successfully complete any of their property transaction projects in Greece. Thanks to our longstanding experience, we are able to provide a full package of consultancy services to our almost exclusively international clientele, customized to their specific needs.
As a result, we have represented clients from all around the globe regarding their projects in Greece. Our network of associate experts, composed by both in-house and external solicitors, notaries, accountants, tax experts, currency exchange experts, realtors etc., enables us to provide an all-in-one package of consultancy services, guiding you through the ways to properly protect your investments.
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Athens, October 2021