Tax on AEEAP firms set to rise sevenfold

Despite the government’s pledges to try to attract investment to kick-start the economy, it has now decided to raise the tax on property investment companies (AEEAP) more than sevenfold.

The tax hike forms part of the new tax bill and provides for an increase in the tax AEEAP firms pay on their assets (properties and cash) to grow from 0.105 percent today to 0.75 percent.

According to calculations by the sector’s enterprises, this increase translates into an estimated extra 20 million euros for state coffers per annum.

However, at the same time the state is risking losing revenues from AEEAP firms, which will adjust their investment plans and adopt a definitely more conservative strategy than today. The losses the state could incur would outweigh the benefits of the tax hike, industry estimates suggest.

Notably, with the economic crisis raging over the last few years, property investment companies have invested capital adding up to 1.5 billion euros in the Greek property market, feeding property sellers with liquidity. The sellers which have received that liquidity have been the state, banks, corporations and private owners.