Ten “secrets” for completing the E2, for rental income

By Prokopis Hadjinikolou

Taxpayers who own real estate and earn income from Airbnb-type short-term rentals will be in a tax bind again this year. The income received in 2023 will have to be shown in this year’s tax return to be taxed from the first euro at rates that reach up to 45% after previously deducting from them a percentage of 5% recognized as an expense for repair, maintenance, renovation and other operational needs of the leased properties. Income from Airbnb properties will first be itemized on the E2 form and then automatically transferred to the E1 form. This year, for the first time, income from short-term rentals will be pre-populated by the tax administration

The coefficients

Income from real estate acquired in 2021 through short-term rental is taxed as follows:

– 15% on the first 12,000 euros of net income

– 35% on the next 23,000 euros, i.e. on the part of the net income from 12,001 to 35,000 euros

– 45% in the over 35,000 euro part of the net income

For example, a taxpayer who obtained during 2021 a total income of 20,000 euros from rentals will be required to pay income tax on an amount of 19,000 euros (reduced by 5% due to an automatic presumptive deduction for repair, maintenance and other operational needs of the rented properties). The tax will be calculated as follows:

– 12,000 euros x 15% = 1,800 euros

– 7,000 euros x 35% = 2,450 euros

– 1,800 euros + 2,450 euros = 4,250 euros.

Therefore, the taxpayer will pay an income tax of 4,250 euros.

The pitfalls and secrets of E2

1. Spouses. In the case of married couples and since the Spouse/Cohabitant has income from immovable property that belongs to her own property, she is required to submit the E2 form either using her personal passwords or that of the debtor/spouse, with the option “E2 Spouse/MSS”.

2. Type of lease. Column 17 (TYPE OF LEASE-USE OF PROPERTY) must be filled in with the type of lease and the use of the lease, such as residential, office lease, free housing, vacancy, uncollected income from real estate lease, etc. Also in column 19, fill in the number of the Property Lease Information Statement.

3. Short-term rental (Airbnb type properties). The income from the short-term rental or subletting of real estate (codes 60 and 61 of column 17) will be pre-populated based on the data available to AADE from the platforms (Airbnb, Booking.com, etc.) with the possibility of change by the taxpayer.

4. Uncollected rents. They are declared in column 16 of E2 after the supporting documents have been submitted to the Tax Office. In order not to be taxed, by the deadline for submitting the tax return, a payment order or an order for the return of rent or a court decision to dismiss or award rents must have been issued against the tenant, or an action to dismiss or award rents has been brought against the tenant accompanied by a proof of performance her.

5. Minor child. Property and income from it owned by a minor dependent child will be entered in the custodial parent’s E2.

6. Co-Ownership. Both spouses are required to submit a separate E2 form for the properties they own, even if there is joint ownership of some or all of the properties.

7. Auxiliary spaces. For auxiliary spaces (warehouse, parking space) which are supplied with electricity from the shared electricity consumption meter, enter the nine-digit number 999999999 in the supply number.

8. Vacant property. For a property that is declared vacant and the electricity has been cut off, the supply number is indicated. In the event that the property is vacant for the whole year or for a specific period, it is included in the form with the indication EMPTY and the period for which it was vacant is also filled in.

9. Errors. Once the E2 form is finally submitted, the amounts in columns 13, 14, 15, 16 are transferred to the corresponding codes of E1 and the correctness of the amounts entered in E2 should be checked. If you find a mistake you should first correct the E2 form and then finalize it again.

10. Transfers of real estate. Properties acquired or transferred in 2023 or incomplete until December 31, 2023 are declared in table II of the supplementary real estate data of form E2.