Risk of purchasing and redistribute

The majority of taxpayers ignore the risk of being heavily taxed on profits arising from transactions that may be considered as business.

Such transactions are usually the sale of real estate (plots, dwellings, etc.) . Allthough the taxation of gains (goodwill) from real estate transfers of 15% (article 41 of Law 4172/13) is suspended until 31 December 2019, however the provisions of paragraph 3 of Article 21 of Law 4172/13, provides that:

“… as a business transaction shall be considered as any individual or incidental transaction in which a transaction is carried out and / or systematically carried out on the financial market for the purpose of achieving profit. Every three similar transactions taking place within one semester are considered to be systematic transactions “.

In the case of real estate transactions, the period of the “second” paragraph is two years “.

It should be noted that the profit from a business transaction is taxed on the basis of the scale of Article 15 of Law 4172/13, ie 45% if the profit is more than EUR 40 000, and it is subject to an extraordinary solidarity levy and the corresponding increments if it is established after a future tax audit .

Both provisions are incomplete and unclear, since they do not specify what property transactions they refer to and allow the audit authorities to consider even one single or incidental transaction as ‘business’ if they consider it to be ‘in order to achieve profit’.

More than two real estate transactions may be considered as business if they occur within two years. As regards the classification as a “single” or “incidental” transaction (eg parcel purchase and sale), the most important criterion is whether it is the exploitation of property or that the transaction was intended to achieve profit.

Factors to be taken into consideration are the time between acquisition and sale, the sale price in relation to the cost of the purchase, the speculative intent that is inferred from the facts, etc. It seems that the way the owner acquires the property is not taken into account. purchase, inheritance or parental benefit.

Typical examples are cases where a taxpayer sells properties, he or she had inherited from his parents. The audit authority, but also some courts, considered it to be a “business transaction” and not to use property because the apartments were sold shortly after the contractor’s pension and the price received was high.