Investing in the hospitality industry in Greece

Key tax points

The hospitality industry in Greece is attracting a considerable number of international investors in the past couple of years, resulting to a rapid growth in the industry. COVID-19 has significantly affected the hospitality industry but Greece is included in the countries which are expected to be the first to welcome tourists again.

What are the key tax points an investor should consider prior to the acquisition, holding and divestment of a hotel business?  

Acquisition of a hotel business

  • Upon acquisition of an operating hotel, including the legal title over the respective real estate, a 3,09% real estate transfer tax is due by the buyer. In very limited circumstances involving the sale of new hotel buildings prior to their use, such tax is replaced by 24% VAT. However, a VAT suspension option is provided until 31.12.2022, subject to submission of a relevant application.
  • The transfer of business as a going concern triggers a 2,4% stamp duty imposed on the net asset value of the business being transferred.

Holding of a hotel business 

  • Any business income realised by the operation of the hotel is subject to the currently applicable corporate income tax rate of 24%.
  • The annual deductible depreciation rate for buildings is 4%. For equipment (other than PC & software and means of transportation) and other fixed assets of the business, the depreciation rate is 10%.
  • Foreign or domestic entities holding a hotel in Greece are exempt from the 15% annual special real estate tax provided that the hotel is fully operating.
  • The hotelier services are subject to VAT at a reduced rate of 13%. Moreover, F&B and other services sold to clients separately, also fall in principle in the reduced VAT rate of 13%. Especially for all-inclusive services, 20% of the total price is subject to 24% VAT, while 13% VAT is imposed on any outstanding amount.
  • Construction and refurbishment works are subject to  24% VAT.
  • Real estate property in Greece is subject to the annual Uniform Real Estate Property Tax consisting of a principal and a supplementary tax. The principal tax on buildings is calculated by multiplying the square meters of the building by the principal tax ranging from EUR 2-13/sqm and other coefficients affecting the value of the property (e.g., location, use, flour of the property, etc.). The property self-used by the hotel is subject to a 0,1% supplementary tax.
  • A duty for the use of hotel rooms and touristic residences applies on a daily basis as per the table below:

Rating

Duty (EUR)

1-2 stars

0,50/per room

3 stars

1,50/per room

4 stars

3,00/per room

5 stars 

4,00/per room

  • Net interest expenses are deductible up to 30% of the EBITDA after tax adjustments unless these do not exceed EUR 3m.

Disposal of a hotel business

  • Any gain realised by the transfer of the touristic business will be subject to the CIT rate of 24%.
  • In case the disposal of the touristic business is structured as a share deal, no Greek direct or indirect taxation (e.g. capital gains tax, RETT, stamp duty, etc) would  be due for the foreign investor.

Contact us

Mary Psylla

Partner, Tax & Legal Leader, PwC Greece

Tel: +30 210 6874543

Vassilis Vizas

Partner, Head of Legal, PwC Greece

Tel: +30 210 6874019

Aikaterini Grivaki

Director, PwC Greece

Tel: +302106874560

Antonia Zahaki

Tax Manager , PwC Greece

Tel: +302106874749

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