Upcoming compensations and rent decreases
Real Estate | June 2021
Upcoming compensations and rent decreases

Prokopis Chatzinikolaou

Thousands of property owners who have not received a compensation by the State since March 2020 are awaiting for the amendments by the Independent Authority of Public Revenues (in Greek: AADE) upon the vital matter of sub-rental agreements. As revealed by sources inside the Tax Administration, amendments by AADE will automatically occur where possible and the correspondent amounts will be credited to the interested parties (either as amounts to be offset, or as deposits in their bank accounts). In the remaining cases, AADE will digitally message property owners requesting additional information, while others will be required to submit Covid declarations. 

Meanwhile, even though the market has reached an initial agreement with property owners for optional decreases, both sides are expecting the governmental intents for July. However, as announced by the Minister of Finance, Chr. Staikouras, June was the last month with decreased or zero rent payments, excluding businesses which can not operate pursuant to governmental order. The market is pressuring for an additional month of decreased rents which, however, does not seem to be addressed.

Based on the above, within early July, when the government is anticipated to clarify its intentions and announce the few businesses which will deposit a decreased or zero rent, both the market and property owners are expected to reach an agreement as long as there is a governmental cover. The government Financial Staff, however, remains rather unoptimistic towards these agreements and a potential support, by granting compensation to the owners, is yet undetermined.

The former legislation, which was implicated last October, indicated a minimum 30% decrease in 83 fields of Greek economy as long as both parties (owner and tenant) were in agreement.  The state would compensate the owners with a tax deduction of 2% on the initial rent (through tax off-sets). A necessary condition for the accurate implication of this measure is to deposit the remaining rent payment to the owner, strictly within the agreed deadline and not further than within the related month. This means that for a rent of ex. 1,000 euro, with a deduction of 300 euro, the governmental support reaches 120 euro or otherwise the coverage percentage reaches 40% of the losses. As the rent reduction percentage increases, the benefit is limited. For example, on a rent of 1,000 euro and reduction of 50% (viz. losses of 500 euro), the cover from the state remains at 120 euro, which corresponds to 24% of the losses. Both parties (tenants and owners) shall agree that the arrangement will be submitted in the AADE application for the rental declaration and the deposit of the remaining amount to the owner will strictly occur within the granted deadline and no further than within the related month. 

Source: https://www.capital.gr/

 

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