Buying Property Through a Company: Pros and Cons in Greece

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Table of Contents

• Introduction
• Understanding Property Ownership Structures in Greece
• Advantages of Buying Property Through a Company
• Disadvantages of Corporate Property Ownership
• Tax Implications for Corporate Property Ownership
• Legal Considerations and Regulatory Framework
• Impact on Foreign Investment in Greek Real Estate
• Case Studies: Successful Corporate Property Acquisitions
• Future Outlook for Corporate Property Ownership in Greece
• Conclusion
• FAQs

Introduction

As the Greek real estate market continues to evolve, investors are increasingly exploring alternative ownership structures to maximize their returns and minimize potential risks. One such strategy gaining traction is the acquisition of property through corporate entities. This comprehensive analysis delves into the intricacies of buying property through a company in Greece, examining both the advantages and potential pitfalls of this approach.

The Greek property market has shown remarkable resilience in recent years, with cities like athens property experiencing significant price appreciation and rental yield growth. This economic backdrop provides a fertile ground for both domestic and international investors seeking to capitalize on the country’s real estate opportunities. However, the decision to purchase property through a company rather than as an individual introduces a new layer of complexity that warrants careful consideration.

Understanding Property Ownership Structures in Greece

Before delving into the specifics of corporate property ownership, it’s crucial to understand the broader landscape of real estate ownership structures in Greece. Traditionally, individual ownership has been the predominant model, with buyers directly holding title to their properties. However, the legal framework in Greece also allows for various forms of corporate ownership, including limited liability companies (EPE) and sociétés anonymes (AE).

Traditional Individual Ownership

Individual ownership remains the most straightforward and common method of property acquisition in Greece. This structure offers direct control and simplicity but may lack some of the tax advantages and liability protections associated with corporate ownership.

Corporate Ownership Models

Corporate ownership in Greece typically takes one of two forms:

1. Limited Liability Company (EPE): This structure is similar to an LLC in other jurisdictions, offering personal asset protection and potential tax benefits.
2. Société Anonyme (AE): A more complex corporate structure, often used for larger investments or when seeking to raise capital through share issuance.

Advantages of Buying Property Through a Company

The decision to purchase property through a corporate entity in Greece can offer several significant advantages:

Asset Protection

One of the primary benefits of corporate property ownership is the separation of personal and business assets. This structure can provide a layer of protection for individual investors, shielding personal assets from potential liabilities associated with the property.

Tax Optimization

Corporate ownership can offer various tax advantages, including:

• Potential for lower corporate tax rates compared to individual income tax rates
• Ability to deduct certain expenses related to property management and maintenance
• Opportunities for strategic tax planning and income distribution

Simplified Ownership Transfer

Transferring ownership of a property held by a company can be more straightforward than individual property transfers. This can be particularly advantageous for estate planning or when structuring complex investment partnerships.

Enhanced Privacy

Corporate ownership structures can provide a degree of anonymity for investors who prefer to maintain privacy in their real estate holdings. While transparency requirements are increasing globally, corporate structures still offer more discretion than individual ownership in many cases.

Disadvantages of Corporate Property Ownership

Despite its advantages, buying property through a company in Greece also comes with potential drawbacks:

Increased Complexity and Costs

Establishing and maintaining a corporate entity involves additional administrative burdens and costs. These may include:

• Company formation fees
• Annual reporting and audit requirements
• Ongoing legal and accounting expenses

Potential for Double Taxation

Depending on the specific corporate structure and how profits are distributed, there is a risk of double taxation. This occurs when the company pays corporate tax on its profits, and then shareholders are taxed again on dividends or capital gains.

Limited Access to Certain Benefits

Some benefits available to individual property owners, such as primary residence tax exemptions or certain types of mortgages, may not be accessible to corporate entities.

Tax Implications for Corporate Property Ownership

The tax landscape for corporate property ownership in Greece is complex and subject to ongoing regulatory changes. Key considerations include:

Corporate Income Tax

As of 2023, the corporate income tax rate in Greece stands at 22%. This rate applies to the taxable profits of the company, which may include rental income and capital gains from property sales.

Value Added Tax (VAT)

The sale of new properties (first use within 5 years of completion) is subject to VAT at a rate of 24%. However, there are exemptions and reduced rates for certain types of properties and transactions.

Property Transfer Tax

For properties not subject to VAT, a transfer tax of 3% applies to the property’s value. This rate is consistent whether the buyer is an individual or a company.

Annual Property Tax

The Unified Property Tax (ENFIA) applies to all property owners, including companies. The tax is calculated based on various factors, including the property’s location, size, and usage.

Legal Considerations and Regulatory Framework

Navigating the legal landscape of corporate property ownership in Greece requires careful attention to several key areas:

Company Formation Requirements

Establishing a company for property ownership in Greece involves several steps:

• Choosing an appropriate corporate structure (EPE or AE)
• Registering with the General Commercial Registry (GEMI)
• Obtaining necessary tax registrations and licenses

Foreign Ownership Restrictions

While Greece generally welcomes foreign investment in real estate, there are some restrictions in border areas and islands. Corporate structures involving foreign shareholders may require additional approvals in these cases.

Anti-Money Laundering (AML) Regulations

Greece has implemented strict AML regulations in recent years, particularly in the real estate sector. Corporate property buyers must be prepared to demonstrate the source of funds and undergo enhanced due diligence processes.

Impact on Foreign Investment in Greek Real Estate

The option to purchase property through a company has significantly influenced foreign investment patterns in the Greek real estate market:

Golden Visa Program

Greece’s Golden Visa program, which offers residency permits to non-EU investors, has been a key driver of foreign real estate investment. Corporate ownership structures can provide additional flexibility and benefits for investors participating in this program.

Investment Trends

Data from the Bank of Greece indicates a steady increase in foreign direct investment in the real estate sector, with a significant portion of these investments structured through corporate entities. This trend reflects the growing sophistication of the Greek property market and its alignment with international investment practices.

Case Studies: Successful Corporate Property Acquisitions

To illustrate the practical applications and outcomes of corporate property ownership in Greece, consider the following case studies:

Luxury Villa Portfolio in the Cyclades

A group of international investors formed a Greek AE to acquire and manage a portfolio of luxury villas across several Cycladic islands. This structure allowed for efficient capital pooling, streamlined management, and optimized tax treatment of rental income.

Commercial Development in Athens

A major European real estate fund utilized an EPE structure to purchase and develop a mixed-use commercial property in central Athens. The corporate structure facilitated phased investment and provided flexibility for future exit strategies.

Future Outlook for Corporate Property Ownership in Greece

As Greece continues to attract international investment and modernize its real estate sector, the landscape for corporate property ownership is likely to evolve:

Regulatory Developments

Expect ongoing refinements to the legal and tax framework governing corporate property ownership, potentially including:

• Enhanced transparency requirements
• Simplified processes for smaller-scale corporate investors
• Potential tax incentives to encourage specific types of property development

Market Trends

The Greek property market is likely to see:

• Increased sophistication in investment structures
• Growing interest in corporate ownership for both residential and commercial properties
• Expansion of professional property management services catering to corporate owners

Conclusion

Buying property through a company in Greece offers a compelling set of advantages for certain investors, particularly those seeking asset protection, tax optimization, and investment flexibility. However, this approach also comes with increased complexity and potential drawbacks that must be carefully weighed.

As the Greek real estate market continues to mature and attract global capital, corporate ownership structures are likely to play an increasingly important role. Investors considering this approach should seek expert legal and financial advice to navigate the complexities of the Greek regulatory environment and maximize the benefits of corporate property ownership.

Ultimately, the decision to purchase property through a company in Greece should be based on a comprehensive analysis of individual investment goals, risk tolerance, and long-term strategic objectives. By carefully considering the pros and cons outlined in this analysis, investors can make informed decisions that align with their unique circumstances and aspirations in the dynamic Greek property market.

FAQs

1. Q: Can non-EU citizens form a company to buy property in Greece?

   A: Yes, non-EU citizens can establish a Greek company to purchase property. However, additional documentation and approvals may be required, particularly for properties in border areas or on certain islands.

2. Q: How does corporate property ownership affect eligibility for the Golden Visa program?

   A: Investments made through a Greek corporate entity can still qualify for the Golden Visa program, provided the individual investor meets the minimum investment threshold and other program requirements.

3. Q: Are there minimum capital requirements for forming a property-owning company in Greece?

   A: The minimum capital requirements vary depending on the type of company. For an EPE, the minimum capital is €1, while for an AE, it is €25,000. However, adequate capitalization is important for operational and tax purposes.

4. Q: How are rental income and capital gains taxed for corporate property owners in Greece?

   A: Rental income and capital gains are generally subject to the corporate income tax rate of 22%. However, specific tax treatment can vary based on the company’s structure and activities. Professional tax advice is recommended for detailed planning.

5. Q: Can a Greek property-owning company be managed remotely by foreign directors?

   A: While remote management is possible, Greek corporate law requires at least one director to be a tax resident of an EU country. Additionally, maintaining a local presence or professional management can be beneficial for operational and compliance purposes.

Article reviewed by Jasna Jovanovic, Real Estate Asset Manager | Bridging Profitability and Community in Mixed-Use Spaces, on March 14, 2025