The circular No. E2024/9.4.2024 issued by the Independent Authority for Public Revenue (AADE) was designed to clarify the tax treatment of short-term rentals following the amendments introduced by Law 5073/2023. In its decision, the seven-member panel of the Second Section of the Council of State, chaired by Vice-President Konstantinos Kousoulis, noted that while the circular had been implemented, it had not been published in the Government Gazette, rendering it legally void due to concerns regarding legal certainty. As a result, the applicants' request for annulment was accepted, and the matter was referred to the Plenary Session of the Council of State for a final ruling.
The circular, which carries a regulatory nature, outlines the tax treatment of short-term rentals in relation to income tax, VAT, and other indirect taxes and fees. The applicants argued that the imposition of a separate professional tax for each property directly affects property owners who rent out three or more properties, burdening them with additional costs.
The Controversial Provision of the Circular:
The circular addresses the tax treatment of short-term rentals in the context of the “sharing economy” and outlines the obligations of individuals and legal entities engaged in the operation of properties for short-term rentals.
Properties are considered professional establishments (headquarters and branches) of the aforementioned persons, and the provisions of Article 31 of Law 3986/2011 concerning the imposition of professional taxes on each property individually are applied.
Reactions and the Ruling of the Council of State:
The decision was challenged by POMIDA (the Greek Federation of Real Estate Owners), the “Association of Short-Term Property Rental Companies,” and five industry companies. The applicants expressed concern that the implementation of this circular would have serious consequences for property owners involved in short-term rentals, as it would require them to pay a separate professional tax for each property.
The decision of the Council of State comes at a critical time, as the short-term rental market is rapidly expanding, with hundreds of thousands of properties being rented out through platforms like Airbnb. The Plenary Session of the Council of State is now tasked with determining the final outcome of the circular, which could significantly impact thousands of property owners and companies in Greece’s tourism sector.
