As of March 1st, 2007, the Ministry of Finance implemented an increase in tax values for all real property located in Greece. Prior to March 1st, 2007 tax values for real-estate in Greece did not reflect market/sales values. The differential between tax values and market/sales values ranged from an astonishing 10 % to 1,000 +%, depending upon

i) a property’s location and

ii) whether a property is located within or outside of the planning zone.

This discrepancy in tax values and market values was predominantly the result of a significant increase in real estate values in the last 8 years.

The Greek Government’s plan to equalize tax and market values for real estate is a two year plan. According to official Ministry of Finance announcements, in 2007 and as of March 1st, 2007 the lower-upper tax values for the country as a whole will increase an average 16% for real estate within planning zones while real estate outside of planning zones will increase on average 36% for land and 37% for developed land respectively.

The Ministry’s tax value adjustment plan will have a far reaching impact. More specifically, it will affect the following:

• Real-Estate Transfer Tax (which will be calculated based upon the adjusted tax value)
• Inheritance Tax (which will be calculated based upon the adjusted tax value)
• Property Endowment/Gift Tax (which will be calculated based upon the adjusted tax value)
• Rental Income Tax (as of 2008)
• Legal Expenses for Real Estate Transactions (which is designated as 0.9% of the property tax value for sales and 1.025% for property transfers)
• Notary Fees (which range from 0.45%-0.75% of tax values)
• Increased Expenditures for Owner Occupied and Renter Occupied Households (the Electrical Company –DEH will be recalculating charges for all households based on the new tax values)
• Capital Gains Tax- will apply for the first time in Greece :
  • For Sellers: All property acquired after Jan 1st, 2006 (whether by inheritance, endowment-gift or purchase) if sold within a 3.5 - 5 year time frame will be taxed 20% upon the difference between the property’s tax value from acquisition date to selling date.
  • For Buyers: In transactions where capital gains tax applies the property transfer tax for buyers will be eliminated (which was 9-11% of the property’s tax value), and instead an “exchange fee” will be implemented. This fee will be only 1% of the property’s tax value.
• First-Time Buyers Tax- in order to assist first time buyers the deductible will be increased to 20% as of March 1st.