Knowing the turmoil caused throughout society by the sudden expansion of short-term rentals, the legislator decided to make changes to address several gaps in the law. At the same time, an effort is being made to align the tax treatment of Airbnb properties with that of hotel units, to prevent inequalities and to adequately protect tenants. In this text, we will discuss the 10 most important changes that will be observed in the Airbnb sector in the coming months.

1.There will be a maximum rental period for each property used as an Airbnb.

This change has been discussed for a long time and is certainly something that significantly alters the landscape of short-term rentals. Although the official details have not yet been released, it is said that the maximum short-term rental period per year will be limited to 90 days. If the property is located on an island with a population of fewer than 10,000 inhabitants, then the limit will be 60 days per year.

Of course, the above does not prevent the owner from renting out the property through long-term leases, as we have detailed in another article. What the law essentially prohibits is renting out a property for more than 60/90 days (depending on the property’s location, as mentioned) through the Airbnb platform.

It is important to know that the lease is registered on the property rented as Airbnb, meaning the owner cannot transfer it to another person for the purpose of continuing to rent it beyond the time limits set by the law. Such a move would also be easily detectable, especially if the new owner rented the property via the Airbnb platform, as platform data is now cross-checked with the income data of each Airbnb owner (as recently announced by the Independent Authority for Public Revenue).

2.Anyone who owns more than three properties operating as Airbnb is required to start a business.

This is a radical reform that ultimately equates Airbnb owners with business operators and treats short-term rentals as a business activity for tax purposes. However, this regulation applies only to short-term rentals, not to long-term ones (where no matter how many properties one rents, they will still be taxed progressively without being required to start a business).

Starting a business for those who rent at least three properties as Airbnb essentially means maintaining tax records (depending on the type of business they choose), paying social security contributions if they employ staff, especially for property cleaning, and subjecting every transaction with tenants to VAT. In addition to the commission charged by Airbnb for finding tenants and renting the property, the final rental price of the property will also include VAT, which is said to be set at 13% of the transaction value.

Furthermore, individuals can start a sole proprietorship for the rental of Airbnb accommodations (which is the simplest form of business), while if there are multiple property owners, they have the option to establish a company depending on their needs (e.g., for large turnovers of millions of euros per year, a corporation is usually recommended). All of the above also apply to legal entities/companies that were already involved in renting properties as Airbnb—they will have all the obligations we will discuss below.

 3.An owner will not be allowed to rent out more than two properties as Airbnb.

It was mentioned some time ago that each property owner would be able to rent out a maximum of two properties as Airbnb. Practically, this will be verified using the owner’s Tax Identification Number (TIN), which will be cross-referenced with the property ownership registered as Airbnb to ensure compliance with the law (which is relatively easy today due to the quick verification via the Land Registry).

This regulation, which we do not know whether it will be passed and implemented in practice, creates certain issues due to the monitoring of property rentals through the owner’s TIN. This could lead to the possibility of fictitious property transfers to relatives or friends of the owners (who obviously have different TINs), in order to avoid exceeding the legal limits on the number of properties that can be rented.

The same could naturally happen with legal entities/companies that have the capability to liquidate the entity and establish a new company with a different TIN, thus evading the law’s ‘radar.’ This is the main reason why many believe that this regulation will remain ‘on paper.’ Moreover, there could also be issues of unconstitutionality, as it somewhat limits the business freedom of Airbnb owners, as noted in recent court appeals.

4.A Registry of Short-Term Rental Properties will be kept in each Municipality.

To understand this matter in a simple way and to avoid any doubts, it’s important to note the following:

• Property owners who rent out their properties as Airbnb must submit a declaration for the registration of the property on the relevant platform, indicating that it is intended for short-term rental.
• The same applies to co-owners of the property as well as to usufructuaries of the property.
• Heirs of the owners of these properties will be required to make the relevant declaration after the four-month period for accepting the inheritance has passed or once they explicitly accept the inheritance (whichever occurs first).
• If the property is not registered on the relevant platform, a fine will be imposed on the owner, which is at least 5,000 euros.
• Additionally, the fine will be at least half of the income the owner earned from the short-term rental of the property, before taxes and other expenses are deducted (i.e., on the gross income).
• If another person (e.g., the usufructuary) had undertaken the rental of the property as Airbnb but had not made the relevant declaration, then the fine will be imposed on them and not necessarily on the owner, provided the owner can prove they were not exploiting the property.
• The same fine can be imposed if the property’s registration on the relevant platform is inaccurate, contains false information, or fails to clearly describe the property to the extent that it can be individually identified.

5.Airbnb properties will now be taxed similarly to hotels.

Given the turmoil that had arisen between hotel owners and those renting out properties for short-term rentals, the legislator proceeded to establish and impose taxes on properties rented as Airbnb. More specifically, two types of taxes will now be imposed on these properties, which the property owners, as well as anyone exploiting the properties, are obliged to pay.

• The first tax is the ‘climate crisis resilience fee,’ which is calculated per rented property, with each day the property is rented considered as the basis for calculation. The rate of this fee is set at 0.50 euros per rental day for the months of November to February each year, while for the remaining months (March to October), the fee will be 1.50 euros per rental day. If the rented property is a single-family house with an area of more than 80 square meters, the resilience fee will be set at 10 euros per rental day for the months from March to October. Similarly, for rented single-family houses from November to February, the resilience fee will be 4 euros.
• The second tax that will now be imposed is the so-called ‘tourist fee,’ which amounts to 0.50% of the income earned by the owner of the property from its rental as Airbnb. The law here refers to the gross income, i.e., before taxes are deducted from the earnings of the person exploiting the property. It’s important to note that this tax does not apply to everyone but only affects those private individuals who rent out more than three properties as Airbnb and any legal entities/companies engaged in the same business activity.

6.What will happen with the taxation of short-term rentals?

To have a clearer picture of how income from renting a property as Airbnb will be (or is being) taxed, we should highlight some key points. Specifically, the law states that:

• From now on, every rental of a property as Airbnb is subject to VAT at a rate of 13% on the transaction amount.
• Additionally, the Airbnb platform fee, which many are familiar with, continues to apply and is entirely independent of the VAT.
• If a company manages properties for short-term rentals, its income is taxed at a rate of 22% on its gross earnings, while VAT is also applied to each transaction, as mentioned.
• The VAT will also apply to individuals who exploit at least three properties as Airbnb, and these individuals will henceforth be required to establish a company or start a business.
• The above owners of at least three Airbnb properties will be taxed according to the standard income tax scale, meaning a rate of 9% on income up to 10,000 euros, 22% on income up to 20,000 euros, and so on.
• Those who rent out up to two properties as Airbnb do not need to establish a company or keep accounting books as they would if they were involved in a business.
• These owners (up to two Airbnb properties) will continue to be taxed in the same way as long-term rentals.
• Specifically, this means a tax rate of 15% on income up to 12,000 euros, a rate of 35% on income up to 35,000 euros, and so forth.
• There has also been a discussion about reducing the tax rate for long-term rentals (not for Airbnb) to encourage owners to rent out their properties in the real estate market.

7. Municipalities will determine how many properties can be rented as Airbnb.

It might not have been widely known that this particular change was proposed for a vote in Parliament with the new law, and it’s even more interesting to see how the whole matter will be implemented in practice. Practically speaking, the Municipalities will now be the ones to determine how many properties can be rented in a given area as Airbnb for that specific year, and they will also set the conditions under which a property can be rented short-term in that Municipality as Airbnb.

Based on what has been said so far, the entire above process will take place after the Municipalities draft detailed studies. These studies will assess the housing needs of the area, the cost of living, and the very important factor of rental prices in the area. If the indicators in each study are positive, permission can be granted for properties to be rented as Airbnb, and naturally, the better the indicators, the more properties will be able to obtain permission for short-term rentals.

What raises quite a few questions is whether the Municipalities will be able to handle the implementation of such a crucial task that significantly affects even the entire economy of certain communities. It’s important to know that these studies must be up-to-date and continuously renewed with the latest data—they need to be conducted frequently to align with reality and current property prices. It would be beneficial if there were no disagreements between the State and the Municipalities, as happened with the clearing of plots for wildfire prevention.

8.Stricter checks on transactions through the Airbnb platform are being implemented.

Having realized that many property owners who rent out their properties as Airbnb are hiding income, the Independent Authority for Public Revenue (AADE) decided this year to take stricter measures. The main problem was the tactic used by Airbnb property owners who, when transacting with the platform, would cancel the reservation at the last moment to collect the rent in cash, avoiding the platform’s commission.

For this reason, and considering the taxes already imposed on properties rented as Airbnb, AADE decided to cross-check financial data with the tax returns of those exploiting properties as Airbnb, as well as with the platform itself and the income reported by the hosts through the reservations they make each year.

At the same time, the same method of checks will also be applied to hotels and other tourist accommodations using similar platforms. If there is a discrepancy between the amount reported on the taxpayer’s return and the income earned from the Airbnb platform, the relevant fine will be imposed by AADE. For those who are required to start a business based on the rules mentioned earlier, the income they receive must also be reported in the ‘My Data’ section of AADE to facilitate easier monitoring.

9.The legal framework for urban leases is changing to protect tenants.

The law also had to address this issue: Airbnb property owners who rented their properties long-term to tenants until the beginning of the summer season would suddenly notify them that they had to find a new residence because the property would soon be used for short-term rental. Therefore, serious consideration is being given to better legal protection for tenants against the unpredictable decisions of landlords, which force them to move without prior notice.

As already mentioned, the law clearly states that an urban lease is valid for at least three years, regardless of the duration agreed upon by the parties. This provision aims to protect tenants from sudden evictions by the landlord. However, if the parties have indeed agreed on a shorter rental duration (e.g., if the tenant plans to rent the property for one year and the landlord has agreed), this shorter term will apply.

For the shorter lease duration to be valid, the parties must have genuinely agreed to it and not merely listed it in a fabricated manner in the lease agreement uploaded to the ‘myAADE’ platform. It is also crucial to note that the immediate need to rent the property as Airbnb does not constitute a sufficient reason to terminate a fixed-term lease, as many landlords misleadingly claim to convince former tenants that they were evicted legally before the contract expired and without any warning.

10.Higher ENFIA tax will be imposed on properties not in the market (including Airbnb properties).

To address the housing crisis in Greece due to the lack of available properties in the market, lawmakers introduced a new reform that is expected to take effect next month. Specifically:

• An increased ENFIA tax will be imposed on ‘closed’ properties, meaning those whose owners do not offer them for sale/rental in the real estate market and do not exploit them in any other way.
• The regulation applies to properties that are not used for self-occupation by their owners (this also applies to usufructuaries, co-owners, heirs, etc.).
• The increased ENFIA tax will apply for as long as the property remains ‘closed.’ If these properties are rented out within the same tax year, the ENFIA will be reduced, provided that the owners declare the rental to AADE.
• This change does not apply to newly constructed properties, illegal properties that need to be demolished, or public properties that are not subject to ENFIA tax.
• For monitoring purposes, the owner’s declaration to AADE regarding the property’s use (rental/self-occupation) will be considered, along with electricity and water consumption based on relevant measurements.
• Practically, even if someone rents their property as Airbnb (even for just 60 days a year), it is considered to be in use, and therefore, they should not be subject to the increased ENFIA tax, even if the property remains unoccupied for the rest of the year.
• The goal of this regulation is to encourage owners of ‘closed’ properties to offer them in the market for rent/sale, ultimately aiming to address the housing crisis that has emerged.

Next to the client and his needs.

Athina Kontogianni-Lawyer

The above does not constitute legal advice, and no responsibility is assumed for it. For more information, please contact us.