Should you register a business for your short term rental?
Greece has – or had – a rather relaxed legislation when it comes to short term rentals.
You register your house with the tax authorities, get a license number called AMA and you are ready to go.
You pay 15% taxes on rental income up to 12.000, from 12.001 to 35.000 EUR it is 35% and above that it’s 45%. There was no limit on the number of places you could rent out. Each house had a limit of 90 days but that was hardly ever checked.
The government now was in a conflict:
On one hand, AirBnB / short term rentals are needed to accommodate the growing number of tourists coming to the country. On the other hand, certain regions suffer from overtourism and especially shortage of living space for the local population. Also, the powerful hotel owners association complained about unfair competition. After all, they have to pay VAT, tourism fees and are overall more strictly regulated.
The result of this is the new law 5073/2023 that regulates the definition of “short term rentals” and redefines rules for the rental of your house or apartment.
Many say the whole law is far too strict, while some find it not strict enough. But what does it all mean to you?
Let’s see what has actually changed from 2024 on and how you are affected by these changes.
1. There is now a limit of 2 on the number of rentals that you can have as a private person. If you rent 3 or more separate places you need to register a business.
2. The maximum period to rent out an AirBnB rental is still 90 days (60 on islands with < 10.000 inhabitants) but can be extended as long as the income from it remains under 12.000 EUR. If you rent out for longer and exceed the 12.000 EUR income you must register a business.
3. Each owner is required to submit details of guests to the tax authorities. This must happen until the 20th of each consecutive month and include name, natinality and passport number of the person who booked (not all guests!)
So, at first this sounds really strict. On a second glance though you might think “Why don’t I register a business for my AirBnB then?”
Indeed, some of our clients would benefit from this,
Let’s look at the pros and cons of running your AirBnb as a business:
+ You can deduct all expenses related to the place. This can be a huge benefit because as a private person you can actually deduct absolutely nothing.
+ you are not bound to the 2 property limit. You can run as many AirBnBs as you like
– You need to pay VAT on your rent. Consequently, you either raise your nightly rate, becoming less competitive, or, more likely, have less income
– your tax consultant has to register your business and do some bookkeeping for you. More red tape and higher costs…
– your tax will be a bit higher (depending on the rent income of course)
So, if it is worthwhile registering as a business depends on your situation.
If you have high expenses, if you want and can rent out your place for more than 90 days, then this can be a really interesting option.
We cannot offer fiscal or legal advice here, so we stringly encourage you to consult your tax accountant to discuss the risks and chances of the changes that the new law brings!
UPDATE
In their ongoing effort to milk the online promising cow in the Greek industrial landscape the government now implemented yet another additional tax.
It is called “resilience fee”.
For short term rentals it is € 1.50 per day for houses or apartments with less than 80 sq.m. and € 10 for houses that exceed this limit.
The fee is to be paid by the client but collected by the owner.
The owner is obligated to issue a receipt to the guest.
We take care of this extra obstacle for our clients. We add the fee to the rent, issue the receipt for the guest and pass the data on to our clients’ tax consultant who then pays the accumulated fees to the IRS.
