Greece
Abolishes the Inheritance tax!
11 Feb. 2008
The government of Greece has taken a very bold step forward by abolishing
(in effect) the tax which the vast majority of heirs have to pay in order
to obtain ownership over the assets of a deceased person. The new law is
effective from 1-1-2008, (in some cases from 13 December 2007), and
results in a maximum rate of inheritance tax of 1% for relatives of the
deceased who inherit properties (real estate) located in the territory of
Greece.
All heirs are divided by the
new law in three categories, A, B and C. The first category (Category A)
includes a) the surviving spouse of the deceased, b) the children of the
deceased c) the grandchildren, and d) the parents of the deceased.
The second category (Category
B) includes the a) the children of the grandchildren, b) the grandparents,
c) the out of wedlock children, which have been recognized by the father
either voluntarily of by a court ruling, as far as the parents of the
father who has recognized them are concerned, d) the children of the
recognized child as far as the father who recognized them is concerned, e)
the siblings, f) the nephews and nieces g) the persons who have
subsequently married the father or the mother of the deceased, h) the
children from previous marriages of the spouse, i) the spouses of the
children of the deceased and j) the father and mother in law.
The third category (Category
C) covers any other relative of the deceased, apart from those listed in
the first two categories, as well as the heirs who are not related to the
deceased.
In a summary, the first two
categories (Categories A and B) include all relatives up to nephew and
niece of the deceased, which means they do not include the cousins.
The almost non existent
inheritance tax for the first two categories (A and B) of heirs is
calculated according to the following rules:
Heirs of Category A: They do
not pay inheritance tax at all for the first 95,000 euros worth of assets
they inherit. For the value of the real estate properties above the first
95,000 euros, they pay 1% inheritance tax. Example: A child inherits the
1/2 of his mother’s house located in the island of Andros. The house
(and its lot) has a tax value of 150,000 euros, (while its market value is
in most cases much higher). The child’s share is worth €75,000. This
means that the child will pay zero inheritance tax, since the value of the
child’s share is lower than the threshold of the inheritance tax free
€95,000 of the estate, according to the new law in Greece.
Another example: A
granddaughter inherits the 100% of her grandfather’s apartment in
Athens, which has a tax value of €200,000. The heir (granddaughter) will
pay 1% inheritance over the amount of (200,000 – 95,000 =) €105,000,
which is €105,000 X 1% = €1,050 inheritance tax for an asset which is
probably worth in the market more than €300,000!
It is noteworthy that the
surviving spouse, who had been married to the deceased for at least five
years, is entitled to an inheritance tax exemption up to 300,000 euros.
So, the surviving spouse gets a tax exemption of €300,000, despite the
fact that the spouse is included in the Category A of the heirs, who
normally get a tax exemption up to only €95,000.
Heirs of Category B: They do
not pay inheritance tax at all for the first 20,000 euros worth of assets
they inherit. For the value of the properties above the first 20,000
euros, they have to pay 1% inheritance tax. Example: Suppose that the heir
(sister) inherits 1/4 of her brother’s property located in Tripoli,
Arcadia. The property is evaluated by the tax authority at €100,000. Her
share therefore is worth €25,000. She will not pay inheritance tax for
the first €20,000, and her inheritance tax will in the end be 1% of the
remaining €5,000, which is €50.
If the inherited property is
shares of companies listed in the stock exchange market, the inheritance
tax for the Category A heirs is 0.6% and for the Category B heirs is 1.2%,
always after we have deducted the first €95.000 or €20.000 worth of
shares. If someone inherits shares of companies which are not listed in
the stock exchange, (after the tax free amounts are deducted) the
inheritance tax for the Category A heirs is 1.2% and for the Category B
heirs is 2.4%.
For other assets apart from
real estate property and company shares, (cash in a deposit bank account
etc.), the inheritance tax is 10%, after the tax free amounts are
deducted.
If the heir has a 67%
disability, he/she gets to pay €2,000 less from the calculated
inheritance tax.
It must be noted that if the
value of the inherited real estate property does not reach the thresholds
for which the heirs do not pay tax at all (€95,000 for Category A heirs
and €20,000 for Category B heirs), we can add the value of other assets
(cash in the bank, company shares etc.), in order to reach the maximum tax
cut. Example: A Category A heir (surviving spouse, child, grandchild,
parent) inherits a house with a tax value of €75,000 and shares worth of
€20,000. The total value of the inherited share is €95,000 and this
heir will pay zero inheritance tax.
The inherited property must be
declared to the tax authority in Greece within six months from the date of
the death of the person who is inherited or six months from the day that
the deceased’s Will was probated. However, those who reside outside of
Greece have a time limit of one year (from the death or from the probation
of the Will) to declare their inheritance. These time limits can be
extended by three months, if an application is submitted on time at the
Greek tax authority.
A very important parameter is
that there is no inheritance tax at all, (irrespective of the value of the
inherited property), for the heir who inherits assets of a person who died
prior to 1-1-1990.
Christos
Iliopoulos is an attorney at law, LL.M., in Athens, Greece, specializing
in International and European Business Law. For more information about
him, see his brief biographical sketch under the HCS section for
Contributing Authors at http://www.helleniccomserve.com/christosiliopoulosbio.html.
He has submitted many articles to HCS; readers can browse these in the
archives section bearing his name at the URL http://www.helleniccomserve.com/archiveiliopoulos.html.
He can be contacted by e-mail at bm-bioxoi@otenet.gr
or by phone (from the US) 011-30-210-6400282; mobile 011-30-693-2775920,
fax 011-30-210-6400282, or by postal mail at the address: 105 Alexandras
Ave., Athens, 11475, HELLAS
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