Short-term leases: new guidelines of the Greek tax administration on criteria, services and taxation.
Short-term rental agreements in Greece
Table of Contents
The duration of a rental is a critical factor in determining whether a lease is classified as short-term or long-term. This distinction affects how the rental is treated for tax purposes. Specifically, rentals that last up to 59 days are considered short-term and fall under the category associated with platforms like Airbnb. In contrast, rentals that exceed 60 days are classified as long-term and are treated differently in terms of regulations and taxation.
According to the latest guidelines issued by the Independent Authority for Public Revenue (IAPR), the classification of rental agreements depends heavily on both their duration and the nature of services provided. Here are the key points to consider:
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Classification by Duration: A rental is deemed short-term if it lasts no longer than 59 days. For this classification to apply, the property must be furnished and should not include any additional services beyond basic bedding supplies. This rule holds true regardless of whether the agreement is made through a digital platform or not. Conversely, if a rental agreement lasts for 60 days or longer, it will be categorised as long-term, requiring compliance with different regulations and tax obligations.
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Nature of Services: The type of services offered by the property owner is also fundamental. If the owner provides nothing more than bed linens, the property retains its status as a short-term rental. Should additional services like cleaning, meals, or other amenities be provided, the property is then classified as a tourist accommodation. In this scenario, the owner must initiate business activities and comply with various regulations that are imposed by the law, leading to further obligations.
Specific clarifications from IAPR indicate the following:
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Primary Criterion: Duration stands out as the main criterion in determining whether a rental is short-term or long-term. For short-term rentals, the maximum allowable duration is 59 days, provided the property is furnished and no additional services are offered. The same duration applies regardless of whether the leasing is arranged through online platforms or traditional methods.
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Impact of Early Termination: If a tenant vacates a property before the agreed-upon end of a long-term lease, this does not alter its classification. The initial classification remains long-term, as it is based on the agreed duration rather than on the actual length of stay.
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Restrictions on Short-term Rentals: To maintain a property’s classification as a short-term rental akin to those on Airbnb, it must not offer services beyond basic linens. Should services like breakfast, cleaning, or transfers be included, the property is reclassified as a tourist accommodation, which subjects it to different regulatory and tax requirements.
Additionally, there are various responsibilities that property owners must consider. These include:
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Tax Obligations: Property owners engaging in short-term rentals should be aware of their tax obligations, which can differ based on the rental type. Short-term rentals typically operate under a distinct tax regime that may not apply to long-term rentals.
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Registration Requirements: Under the current regulations, properties used for short-term rentals must be properly registered in a specialised database that keeps track of all such accommodations. This short-term accommodation registry is mandatory for compliance with regulatory standards.
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Maintenance of Standards: Property owners are responsible for meeting certain standards that can include ensuring that accommodations are clean and safe for tenants. For example, offering professional cleaning services may elevate a rental to a different classification that demands specific compliance measures.
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Additional Services: Providing additional services may also lead to further requirements. These could entail ensuring compliance with health and safety standards, especially if food services are involved.
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Business Licensing: Owners who provide substantial services or operate under the tourist accommodation classification may also need to apply for appropriate business licenses. This can include adhering to local business regulations and paying any related fees.
Registration and Compliance
To operate legally, properties used for short-term rentals must be registered within the relevant frameworks set by local authorities. The registration process usually involves:
- Submitting necessary documentation that showcases the property’s details.
- Obtaining a unique registration number that identifies the property within the short-term rental market.
- Ensuring that all local regulations are met, which can vary significantly from one location to another.
This registry not only facilitates compliance but also enhances consumer safety by ensuring that renters have access to properties that have been vetted and meet certain standards.
Responsibilities of Property Owners
Property owners play a vital role in maintaining the integrity of the short-term rental market. Their responsibilities can be extensive. Here are a few key areas where compliance is essential:
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Health and Safety Standards: Owners must ensure their properties meet health and safety regulations. This includes having working smoke detectors, fire extinguishers, and adequate exit routes.
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Insurance Coverage: Maintaining appropriate insurance coverage is essential to protect against potential liabilities. Owners might be required to have specific types of insurance depending on how the property is classified.
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Tenant Rights: Owners must be aware of tenant rights and the legal obligations that come with renting out a property. Misunderstanding these rights could lead to legal disputes and financial penalties.
Understanding the Tax Implications
The tax implications of short-term and long-term rentals can be significant. Short-term rentals typically face different tax rates that may include:
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Income Tax: Earnings from short-term rentals must be reported as income. The specific tax rates can vary based on local legislation.
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Value Added Tax (VAT): Depending on the services provided and the length of the stay, VAT may apply, particularly for properties classified as tourist accommodations.
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Local Taxes: Many jurisdictions implement local taxes specifically on short-term rentals, which may be charged on a per-night basis or as a fixed fee.
Familiarity with these tax implications is essential for property owners to avoid costly surprises during tax season.
The Influence of Digital Platforms
Digital platforms such as Airbnb have revolutionised the rental market, allowing property owners to reach a global audience. These platforms provide facilities for listing properties, managing bookings, and collecting payments, all of which streamline the rental process. However, operating through such platforms also comes with a unique set of responsibilities, including:
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Adherence to Platform Policies: Owners must be aware of and comply with the platform’s rules and regulations, which can include posting accurate property descriptions and ensuring that the property meets the platform’s standards.
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Reputation Management: Customer reviews and ratings can significantly impact a property’s success on these platforms. Owners are encouraged to maintain high-quality service to generate positive feedback and attract more guests.
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Fees and Commissions: It is essential for owners to understand the fee structures that platforms impose, as these can affect overall profitability.
Frequently Asked Questions
What are the recent regulations laid out by AADE for short-term property rentals?
The AADE has released updated rules regarding short-term rentals. These guidelines aim to clarify the legal framework for property owners wishing to offer their properties for short stays. Key points include limitations on rental duration and compliance with local regulations.
What requirements must properties satisfy to align with the new short-term rental laws?
To be compliant with the latest rental standards, properties must meet specific criteria. This includes maintaining safety standards, having appropriate insurance coverage, and adhering to zoning regulations. Properties must also register with the appropriate authorities to ensure they are recognised for short-term leasing.
What offerings are encompassed within the short-term rental regulations enforced by AADE?
The services included under the new AADE framework cover a range of aspects. This encompasses the rental of fully furnished homes, apartments, and rooms. Additionally, it also involves administrative support for hosts, such as guidance on local taxes and necessary permits.
How will short-term rental earnings be taxed as per the new AADE regulations?
Income generated from short-term rentals will fall under specific tax regulations established by the AADE. Property owners are required to declare this income and will be subject to applicable tax rates. The AADE provides detailed guidance on how to calculate taxes owed based on rental earnings.
Are there particular administrative steps property owners must take for compliance in short-term leasing?
Property owners must follow certain administrative protocols to remain compliant with short-term rental laws. This includes registering their property with local authorities, obtaining necessary permits, and filling out periodic declarations regarding their rental activities.
What are the obligations for reporting rental income as specified by AADE?
AADE has outlined clear expectations for reporting rental income. Owners must document all income derived from short-term rentals and submit this information in their annual tax filings. Accurate record-keeping is essential to ensure compliance and to fulfil any audit requirements that may arise.
