The new landscape of short-term rental in Greece

Introduction

Law 5073/2023 and circular 2024/2024 introduced a structural change in the short-term rental activity in Greece, aiming to ensure fair market conditions between real estate owners and the tourism industry. This new framework that governs short-term leases is applicable for income earned from 1 January 2024.

Meaning of short-term lease

A short-term lease is defined as the lease or sublease of a property, listed on a digital platform (such as Airbnb) or not, featured by a specific duration of less than sixty days per year. In addition, under the short-term lease framework, no services other than accommodation and the provision of bed linens can be provided.

Tax obligations of individuals with two leased properties

Income earned by individuals from the short-term rental of up to two properties is considered as income from immovable property. This income is taxed according to the following brackets:

For example, if an individual earns €50.000 in 2024, he will pay €15.475 in taxes after deducting 5% for depreciation:

• 12.000*15%=€1.800
• 23.000*35%=€8.050
• 12.500*45%=€5.625

Tax obligations of individuals with three or more leased properties

Income earned by private individuals from short-term leases of three or more properties is hereinafter deemed income from business activity, rather than property income. Consequently, these individuals are now required to get registered as self-employed for tax and social security purposes.

In case the individual establishes a sole proprietorship, the income is subject to a progressive tax rate ranging from 9% to 44%, after deducting business expenses. If the individual decides to establish a legal entity, the income is subject to the general income tax, i.e. 22% on profits (plus 5% dividend tax in case of limited companies).

VAT on rentals

Rentals from short-term leases by individuals with three or more leased properties, as well as by legal entities, are subject to 13% VAT.

On the other hand, rental income earned by individuals who rent out up to two properties for short-term leases are out of the scope of VAT.

Other taxes – Stayover duty and resilience charge

Both taxes reflect the government’s efforts to regulate short-term rentals, generate revenue, and promote resilience against climate change. These taxes may be passed onto consumers through higher rental prices, potentially impacting demand and the overall competitiveness of short-term rental markets.

A stayover duty at a rate of 0.50% on the nightly rental applies to all short-term rentals, whereas until now only tourism businesses had such liability. The reporting deadline for businesses is the last working day of the following month (monthly or quarterly) and for individuals the last working day of the month following each calendar quarter (April, July, October, January).

The Resilience charge serves as a significant tax for property owners engaging in short-term rentals. Its implementation aims to address the climate crisis and ensure funding for resilience initiatives. This levy is payable by individuals and legal entities that lease properties through short-term scheme, regardless of the number of properties employed.

The calculation of the charge per night differs from low to high season, as follows:

Summing up, the landscape of short-term leases of Airbnb type has changed significantly in Greece since the 1^st of January 2024. Actually, the formation of a company that offers accommodation services seems to be the most efficient solution for individuals who own valuable properties and earn income from short-term leases.