Legal letting of a Villa
Posted on Jun 19, 2014 by subrion
Legal Letting of a Villa
- The following post is not a legal interpretation of the applicable law, and should not be used as such. This post is a layman’s guideline only. For valid legal advice, please contact a qualified lawyer. If you do not know a lawyer qualified to give you legal interpretation for your queries, please contact us and we will supply you with a list of qualified lawyers and accountants and their contact details.
We would like to inform you on the regulations of the new law that has been approved
So there is a soft procedure to obtain the EOT license that is called
E.S.L. (Eidiko Sima Litourgias)
There are two types of accommodation that the E.S.L. is applied:
a) Letting of furnished holiday homes.
The furnished holiday homes are categorized to two types:
a1) Homes of one main space: they must have minimum size of 40 sq.m.
a2) Homes of two main spaces 60 sq,m. for two rooms (at least one room must be used as a
bedroom). In both cases the owner must be registered as a rental business.
b) Letting a large/luxury villa (epavli)-(τουριστική έπαυλη) more than
A tourist villa or a large/luxury villa (epavli) is defined a detached house at least 100 sq. m. in one plot with independent access and entrance. In this case the owner has the option not to
register as a rental business providing the villa is rented out for up to 3 months. In this case he will be taxed as a civil rent income.
The owner of a villa that meets the specifications of epavli (case b above) must obtain an ESL license from the Hellenic Tourist Organization (EOT) according the new simplified regulations. Then he can rent the whole villa to individuals only, at least for one week (not per day), for up to 3 months per year, without registering as a business with the tax office. The 3 month annual limit cannot be exceeded. So, providing you register with EOT you don’t need to set up a rental business with the tax office, you don’t need to register for VAT, you don’t need to pay national security to OAEE (TEVE) or OGA, you don’t need to keep accounts, update the hotel registration etc.)
Each owner can rent out up to 2 villas. For letting an epavli of more than 100 sq.m., a private lease contract must be signed. This contract must contain a description of the villa, the EOT registered number, the address of the villa, the name of the owner, the owners tax number, the address of the regional tax office of the owner, the name and home address of the tenant, the letting period and the letting price. This private lease contact must be submitted to the tax office, through an accountant, within 15 days from the date that is signed and in any case before the arrival of the tenant. Later the tax office will describe the text of this lease contract. This will submitted to your accountant and he will submit it to the tax office. The gross income per year that an epavli produces, is considered civil rent income. It is taxed at an income tax rate of 11.5% for income up to 12,000€, and 34.5% for everything over 12,000€. In the case of co-ownership the income is split according their percentage of ownership, after which the appropriate tax rate is applied to each partner. If there are co-owners of the above epavlis, each owner will be taxed at the rate of 11.5% for an income up to 12,000€. So if a couple jointly owns a villa 50% each, that realises a rental income of 24,000€, each partner will be taxed for 12,000€ at the 11.5% tax rate.
The only expenses that can be offset against gross income are:
· 5% of the gross income as depreciation
· Insurance expenses up to 40% of the gross income
Once you have obtained the licence you must display the MHTE number (αριθμός μητρώου της επιχείρησης) on any website and print media advertising your property to let. (law 4070 ΦΕΚ 82Α 10-4-2012). Failure to do so can result in a 1000 euro fine. On newer EOT licences the MHTE number is written across the top of the licence, those with older licences need to contact their local EOT office or rent rooms association to obtain their MHTE umber
Any person who rents out a villa without an EOT license will face a fine of 50,000€ plus the tax implication and further EOT implications.
A furnished holiday home (case a1 and a2 above) that is rented out short term to holiday makers, and a home that it does not meet the above specifications for the epavli (case b), (for example: epavli that is less than 100 sq.m., or epavli that is rented per day or epavli that is rented per week or per day to holiday makers, but more than 3 months per year, or owners that have more than 2 epavlis or owners that let the epavli to tour operators ) must follow the old procedures (business registration in the tax office, VAT registration, national insurance, hotel registered book, issuing income invoices, collecting invoicing expenses, accounting
For those that have already registered in Rental business and they wish to be taxed as civil rent income, have to contact their engineer in order to find out if their villa meets the specifications of paragraph 5 article 46 of the law 4179/2013 (to rent their epavli per week up to 13 weeks per year). If the answer is positive they have the option to terminate the rental
business registration and obtain the ESL license and follow the private lease contract procedure.
If you wish we can assist you in obtaining the ESL license so you to be completely legal contact us email@example.com