New tax legislation likely to shake up short-term property lease market

eKathimerini — A new law passed by Parliament in late December requires that property owners who use short term rental digital platforms such as Airbnb, pay between 15 and 45 percent tax on their income. Analysts warn that the measure might result in deterring potential visitors to Greece and increase the appeal of rival destinations.

Finance Ministry regulations stipulate the categories of tax rates on earnings  property owners will have to pay.  For revenues up to 12,000 euros the tax payable is 15%, for  12,001-35,000 the tax rate goes up to 35 percent and for rental revenue of over 35 000 the top rate of 45% applies.

For the past two years, many online accommodation platforms have been accused by the European Union and particularly the French and German authorities  of exploiting loopholes  in the unregulated digitized tourism economy to avoid paying adequate taxes in the countries they operate.

But for years now large multinationals moved headquarters around europe to take advantage of the lower corporate taxes in Europe, that range from 10 to 33%, with Luxembourg being one of the favourite locations – though not the one with the lowest tax rates.

A recent  G20 initiative to clamp down on companies that shift their profits to low-tax locations where they have little or no economic activity is forcing businesses to decide how much of a presence they want in Luxembourg.

The European Commission is scrutinising the tax arrangements of several companies with Luxembourg operations, including French utility Engie, Italian carmaker Fiat and online retailer Amazon, as well as McDonald’s.