Question: What should I expect regarding commission in Greece when purchasing a property or plot?
Answer: As the Estate Agent’s customer, he* is providing you with a service and you have to expect the logically:
1. He is going to charge you for his work via a commission fee.
2. You will have to pay the 19 % VAT on a receipt for this.
3. You will see this Agent’s name mentioned at the appropriate place on the purchase contract, which means that he is legally taking responsibility for matters related to the purchase.
Nothing changes if the Agent is also giving his services to the vendor of the property, for which he will be paid with a receipt for VAT also issued.
If you have been told by Agents through which you are making a purchase that you have to pay no commission, this may not be legally correct or be strictly true. Either this Agent is evading taxes and avoiding legal responsibility. If no receipt has been issued and his services towards you are not proven in any way, you are obliged to admit that he has no liability to you. If an Agent informs you that they will charge you no commission since this is taken from vendor’s side, this can also mean that you have anyway been charged this commission but not been informed.
It is evident that an Agent acting this way:
1) Is misleading potential customers making them believe they are cheaper than other Agents.
2) Is practicing illicit competition.
3) Is not assuming responsibility since their name is not mentioned on any contract or receipt.
4) Is evading taxes by not issuing a receipt for the services offered.
In conclusion, in Greece the Agent is paid for his services by both parties. As a result the Agent is called upon to protect the interests of both parties. Regarding the commission percentage, there are no statutory restrictions regarding remuneration provided taxes are paid upon this remuneration. According to the Greek law payment is made upon the signing of the final contract.
One additional point to mention, is that because as a non-Greek purchaser, you may not be able to fathom many of the procedures involved in purchasing a property, the Agent may request an additional charge (on top of commission) for extra services not usually included in the normal purchase/sales procedure.
* For the purpose of this article we are calling the Agent “he”. Of course, there are many excellent female Estate Agents operating throughout Greece.
Question: VAT is to be imposed on Greek property from Jan1, 2006. Will it replace, or be in addition to existing taxes paid on purchase of Greek property?
Answer: It is not law yet, but it is proposed that from 1/1/06 VAT of 19% will be imposed on newly built houses. This will replace the purchase tax on new buildings.
Question: We are in the process of buying a property in the Peloponnesus and have read and also been told that as first time buyers we do not have to pay property/purchase tax. Could you tell us whether this is true or not as it is quite an expense if you do not have to pay it?
Answer: Sorry to disappoint you Alan, but his law applies under certain circumstances only to Greek citizens who are buying their first house. Otherwise every purchaser has to pay a purchase tax. This is based on the tax office assessed price of the property, or the selling price shown on the contract of purchase. We advise people to estimate 10-15% of the purchase price to cover purchase tax, lawyer and notary fees and land registry fee. However, especially with the smaller properties, the percentage is nearer the 10% mark and in some cases, lower. Your estate agent or lawyer should be able to give you an estimate of what your costs will be on the purchase.