When the Greek government announced its intention to hike the purchase tax on apartments bought by foreign investors from 3% to 15%, Israelis planning to buy an apartment there began recalculating how much the transaction would cost them. But anyone holding a European passport breathed a sigh of relief. At least he, so he hoped, would be able to evade the high tax. After all, if you have Portuguese, Polish, or German citizenship, why should you pay a tax intended for buyers from outside the European Union?
However, that joy was premature. The new version published by the Greek Finance Ministry clarifies that it does not matter which passport you have in your pocket, but rather where you are considered a tax resident. And anyone who resides in Israel and holds additional European citizenship will have to pay just like everyone else.
Tax residency, not citizenship, determines the rate
On October 18, the Greek Finance Ministry published the draft bill for public comment, and Article 16 stipulates that the tax on the purchase of residential apartments will rise to 15% for anyone who is a tax resident of a country outside the European Union and the European Economic Area. What determines the tax is the buyer’s tax residency, not their citizenship. The implication is simple: An Israeli who holds a German passport but is considered a tax resident in Israel will, according to the proposal, pay the high tax. Conversely, someone who does not have European citizenship but is a tax resident in Germany will not have to pay it.
In early September, Greek Prime Minister Kyriakos Mitsotakis announced the intention to raise the tax fivefold. As Walla reported, the government wanted to reduce the demand for apartments by foreign investors, who contributed to rising real estate prices and made it difficult for Greeks to buy their own apartments. Among the buyers mentioned were Israelis, alongside Chinese and Turkish nationals.
At that time, the details of the law had not yet been published, and the assessment was that holders of European passports would not have to pay the high tax. Adv. Ilan Leibovitz, an expert on global real estate investments, a former Knesset member, and a former member of the Finance Committee, estimated in a conversation with Walla that an Israeli with European citizenship would pay a 3% purchase tax, while someone without additional citizenship would pay 15% on the exact same apartment. Now it turns out that is not what is written in the proposal.
A fivefold tax increase could dramatically raise costs
Yet the fact that tax residency is what determines who will pay a heavy tax on purchasing an apartment in Greece is still not the end of the story.
“It’s not over until the fat lady sings, as they say,” Leibovitz explains. “The law stipulates that even someone who has a Portuguese passport, say, is not considered a tax resident of Portugal unless they pay tax there. The payment of tax is what determines this. Since Greece belongs to the European Union, it could not exclude people who pay tax within the union.
“One must take into account that there is agitation throughout Europe regarding economic issues, and specifically housing, as we see in the major protests. And specifically in Greece, foreign investors have mainly harmed the major cities. We will be wiser when the parliamentary debates conclude, and perhaps there will be some chance to overturn the decision or at least mitigate it.”
And the price differences are substantial. On an apartment in Athens whose value for tax purposes is 150,000 euros, the buyer will pay 22,500 euros instead of 4,500 euros. On an apartment worth 300,000 euros, the tax will jump from 9,000 to 45,000 euros, an addition of 36,000 euros. To this must be added the tax for the benefit of local authorities, so that the total payment may rise from 3.09% to 15.45%. Such an addition can turn an investment that looked worthwhile into a much less favorable deal.
Peleg Yariv, CEO of the real estate investment and development company Palmo, says that “when examining the potential impact of raising the purchase tax in Greece, it is important to understand that not every real estate transaction is structured the same way. There is a significant difference between purchasing a finished apartment and investment frameworks where one acquires relative rights in an existing building and contracts separately to receive construction and improvement services. In appropriate cases, and subject to the provisions of Greek law, the value upon which the purchase tax is calculated may be lower than the full total cost of the investment, which also includes the improvement works. Therefore, even if the tax rate rises, the economic impact on the investor is not necessarily identical in every transaction, and the differences may be significant.”
Regarding the draft bill itself, the novelty is that the determining criterion for the increased purchase tax is tax residency rather than citizenship. This means that Israelis holding a European passport, but defined as tax residents in Israel, may be included within the scope of the proposed 15% tax instead of 3% when purchasing an apartment privately. However, it is important to put things into perspective. At this stage, this is a draft bill that has not yet been approved, and it cannot be determined with certainty whether it will be approved and in what wording. In addition, it should be remembered that parliamentary elections are expected in Greece in the spring of 2027, so there is also political uncertainty surrounding the continued implementation of the policy.
These developments highlight the importance of examining each transaction on its own merits, and especially the value of purchasing real estate through an experienced developer who deeply understands the local market, the regulatory environment, and the various investment structures. It is not enough to locate a property at an attractive price; it is important to understand what is being purchased, how the agreement is structured, and what the tax implications are for the total cost. An experienced developer, operating with the guidance of legal and tax professionals, can assist in properly planning the transaction, managing the improvement process, and identifying risks and opportunities. Precisely during a period of potential regulatory changes, experience and the ability to structure and execute a transaction professionally may be no less significant than the purchase price itself.
In recent years, Greece has become one of the favorite destinations for Israeli real estate investors. Apartment prices, which are relatively low compared to Israel, the opportunity to profit from rent, and the hope that property values will rise have attracted many buyers. But heavy demand from foreigners has also contributed to rising prices, and the Greek government has begun making things difficult for those wishing to invest in the country.
First, it raised the investment amount required to obtain a golden visa, which grants residency permits to those purchasing real estate for a specific sum. In Athens and other sought-after areas, it rose to 800,000 euros. Afterward, restrictions were imposed on registering new apartments for short-term rentals in certain areas of Athens and Thessaloniki. Now the new purchase tax is arriving as well. Even someone holding a golden visa does not automatically become a tax resident in Greece, and therefore this permit will not protect them from the high payment.
New restrictions add to the challenges facing foreign investors
According to the draft bill, the new tax will apply to final purchase contracts signed starting July 1, 2027. Anyone who agrees to the purchase of an apartment before that date, but signs the final contract after it, may find themselves paying thousands of euros more.
The public consultation in Greece concluded on Saturday, November 1, and the government plans to bring the law for parliamentary approval during the month. Changes may still occur, but if Article 16 remains as it is, the European passport that many Israelis invested time and money to obtain will not save them from the tax.