In changing the operating model of short-term rental property management companiesbut also of individual ownersis expected to lead the imposition of pretense fee to each property separately, as it emerged based on its recent clarifying circular AADE for the industry. Based on this, those owners or managers who have three or more properties in their portfolio, and therefore have set up or are about to set up a company (based on recent changes to short-term letting legislation), will now have to declare each property as ” tax branch”. In practice this means that each individual property will be subject to end vocationwhich is set at 600 euros per year.
So if a company controls e.g. 10 properties, which is also the average, will be asked to pay an additional 6,000 euros on an annual basis, in the form of the pretension fee. Independent buildings are exempt from this obligation. That is, if in a building they have been created, e.g. 10 short-term rental accommodation and operate as such, then the resort fee is paid once.
Market executives report that if there are no changes and the relevant provision remains as it is, it is obvious that those who own 3-4 properties and are slightly above the relevant limit will make sure to transfer one of them to a relative or friend, so that continue to operate as natural and not legal entities. In this way they will not have any related obligations based on the recent changes introduced and of course they will not be subject to VAT, as it is not imposed if someone has up to two properties. Essentially, they will be forced to act as natural persons, with the result that the opposite result from the intended one, which was to increase tax revenues through the obligation of the specific owners to set up companies, will eventually occur.
The transformation of the industry, according to market executives, will not lead to an increase in short-term rental income.
Even more important, however, is the impending change in the operating model of accommodation management companies, which are estimated to control approximately 50,000 properties nationwide, or approximately 35%-40% of the total. Until now these companies have proceeded to lease the properties directly from the owners and then return a percentage of the additional profits arising from the exploitation through short-term leasing. The administrators reaped the rest. As industry bodies explain, if there is no withdrawal of the relevant provision, the lease contracts will be terminated, the accommodations will be under the management of their owners and, of course, they will not pay VAT, nor will they pay a business tax. Thus, the recent intervention will have the opposite effect, as the resources that were estimated to be saved by the imposition of VAT and trade tax will be lost.
If the above is transformed into practice, it will be a transformation of the sector of accommodation management companies, as the operating model will essentially be about the provision of services and not about subletting and profit sharing with the owners. At the same time, it will lead to the opposite effect of what the government probably expects, namely increasing short-term rental income and creating incentives for a portion of owners to transfer their properties to long-term rentals.
As market executives emphasize, a property located in an area of high tourist demand, such as the commercial triangle, it is very difficult to return to long-term leasing, as the revenue generated from short-term leasing is multiple. However, some properties which are currently more affordable for visitors precisely because of their location (e.g. in Attica Square or Agios Konstantinos, Kypseli or Ampelokipi) are likely to return to long-term leases.
Meanwhile, it is likely that the government’s initiatives on the short-term rental operating framework will not stop here. As the prime minister himself has announced, further interventions are expected, probably from the autumn onwards, with all possibilities open. One of them concerns the imposition of restrictions on the time of exploitation on an annual basis (e.g. 90 or even 60 days a year), as well as additional obligations regarding the way of operation and the specifications that the properties should have based on a plan that processes the Department of Tourism.
