A. Introduction

Up until 2016, Greek legislation did not regulate short term leases of residential properties that were booked through online platforms (e.g. Airbnb, Home-away etc.), despite the fact that this type of leases had already become quite popular within the Greek tourist market several years back.

As a result of the absence of specific provisions applicable to these short term leases, the income derived remained untaxed for several years, depriving the Greek State of a considerable amount of taxes. At the same time, hotels and other tourist facilities were subject to essential revenue reduction, due to the low prices offered by the online lessors and due to unfair competition, since their revenues were fully taxed.

It thus became apparent that the introduction of a legal framework regulating all aspects of this type of leases was necessitated.

B. Current Legal Framework

Α regulative framework regarding short term leases through online platforms was introduced by virtue of article 111 of Law 4446/2016 (Government Gazette Bulletin A’ 240/22.12.2016). Τhe entry into force of these rules was set for 01.02.2017.

Nevertheless, the necessary implementation acts had not been enacted by 01.02.2017 and the abovementioned provisions were amended and enhanced recently by virtue of articles 83 and 84 of Law 4472/2017 (Government Gazette Bulletin A’ 74/19.05.2017). The principal objective of the abovementioned framework is to ensure that the income derived from this activity will be taxed. Summarizing the main provisions, the following should be noted:

1.             Definitions: Short term leases are defined as the property leases (i.e. leases of apartments or houses, rooms in apartments or houses etc.) which are entered into with the use of online platforms and are agreed for a specified term not exceeding one (1) year.

Property manager is defined as the property owner, the holder of the usufruct right of the property, the sublessor or any third party which has undertaken the short term lease of the property.

2.         Requirements: Short term leases can be entered into under the following conditions:

(a)          The property manager must be registered (per each property managed) in the “Registry of Short Term Residence Properties” that is held by the Independent Authority of Public Revenues (hereinafter referred to as the “IAPR”).

(b)          The number of registration of each such property to the above mentioned registry must be clearly indicated every time the property is offered to be leased through an online platform, as well as in every marketing action and material.

The property manager is also obliged to submit a so-called “Statement of Short Term Residence”, through a digital application to be created by IAPR [1].

Additional requirements may apply depending on the specific circumstances of each property.

3.            Inspections and Fines: Article 111 of Law 4446/2016, as in force, provides for the conduct of inspections on behalf of the public authorities, in order to confirm compliance with its provisions. Furthermore, IAPR may request from the respective online platforms all necessary information regarding the property managers and the properties offered for leasing.

In case of infringement of the provisions of Article 111 of Law 4446/2016, fines may be imposed, which vary depending on the circumstances. Indicatively, the following fines are stipulated:

(a)          In case of short term leases which either do not meet the aforementioned conditions (e.g. registration at the “Registry of Short Term Residence Properties”, indication of the property’s registration number) or violate the restrictions to be introduced by a ministerial decision, a fine of Euro five thousand (€5,000) may be imposed on the property manager. In case of subsequent infringements the amount of the fine may be multiplied.

(b)          In case of non-submission or inaccurate submission of a “Statement of Short Term Residence”, a fine on the property manager is imposed, amounting to the double of the rent which has been registered in the digital platform, as of the date of the audit. In case of an overdue submission of said Statement, a fine of €100 is provided.

(c)       In case the online platform denies to provide IAPR with the required information, a fine of 250 or 500 € is imposed, depending on the tax category of the online platform.

4.            Taxation: Pursuant to article 39A of Law 4172/2013 (which was introduced by virtue of article 83 of law 4472/2017), the income of an individual which derives from this type of short term property leases, is treated as real estate property income (i.e. taxed pursuant to articles 39 and 40 of law 4172/2013), provided that the properties are equipped with furniture etc. and, with the exception of bedding, no other services are provided to tenants[2]. On the contrary, if more services are provided, the said income is treated as income from business activity, i.e. taxed pursuant to article 21 of law 4172/2013.

As far as the legal entities are concerned, their income derived from this type of leases is subject to a tax rate of 29%[3].

C. Enactment of the legal framework - Conclusion

Although the legal framework seems to be comprehensive, its enactment is still pending. More specifically, the details regarding the launch and operation of the Registry of Short Term Residence Properties as well as regarding the submission and the content of the Statement of Short Term Residence are to be defined by means of a decision issued by the Director of IAPR, which has yet to be issued[4].

Thus, almost one year after the introduction of the first law on short term leases, the relevant activities still remain unregulated in practice. This lack of regulation further aggravates all the problems that these unregistered leases cause in the Greek tourist market.