As expected, the Greek government introduced legislation according to which the rates of taxes for Inheritance and Parental Donation to Children have been seriously modified. The changes take effect from 19 January 2010 for inheritance Taxes in Greece and from 8 January 2010 for Parental Donations.
Before we outline the basic new rates, it must be noted that for previous inheritance cases different legal regimes and rates apply, depending on the date of the passing of the deceased. One thing is for sure, however: inheritance taxes are paid only for properties of deceased persons who died from January 1st, 1990. If the deceased passed away before 1-1-1990, the heirs do not pay any inheritance tax at all, irrespective of the value of the inherited properties.
Attorney at the Supreme Court of Greece, LL.M.
Master Of Laws, International and European Law
Christos Iliopoulos, February 2010.
For inheritances after the 19th of January 2010, the surviving spouse, married to the deceased for at least five years, does not pay tax for inherited real estate property worth up to 400,000 euros tax value. This also applies to the minor children of the deceased (children below 18 years old). However, the surviving spouse and the children, irrespective of whether they are below or above 18 years old, do pay inheritance taxes at a rate of 10% for cash, which they inherit.
The adult children and the parents of the deceased do not pay tax for an inheritance share worth up to 150,000 euros of tax value. They pay inheritance tax only 1% for the next 150,000 euros of their share. This means that for an inherited share worth of 300,000 euros of real estate property, the parents and the adult children of the deceased will pay 1,500 euros of inheritance tax, for cases after the 19th of January 2010.
For the next 300,000 euros worth of real estate, the first category of heirs (children and parents of the deceased) must pay 5% inheritance tax. In other words, for a share of 600,000 euros of property, the inheritance tax for this category of heirs is 16,500 euros.
Finally, for an inherited share which is worth above 600,000 euros, each heir pays, for the value above the 600,000 euros, 10% inheritance tax. An example: if the category A heir of a deceased who died after the 19th of Jan. 2010, inherits real estate property worth of 800,000 euros, this heir will pay no tax for the first 150,000 euros, he/she will pay 1,500 euros tax for the next 150,000 euros, he/she will pay another 15,000 euros for the next 300,000 euros and, finally, he/she will pay another 20,000 euros for the final 200,000 euros of inherited property. Total inheritance tax for this heir and for property worth of 800,000 euros, is 1,500 + 15,000 + 20,000 = 36,500 euros, which is not bad for real estate with tax value 800,000 euros and market value significantly higher.
Of course, the same heir, if inherited someone who passed away before 19-1-2010, would pay only 1% above the first 95,000 euros, therefore only 1% on the 705,000 euros, which would be only 7,050 euros, significantly lower than the 36,500 euros.
The new law suggests that category A heirs who inherit after 19-1-2010 cash and not real estate, pay 10% inheritance tax from the first euro (ouch!).
Grandchildren, grandparents, brothers and sisters (category B heirs) do not have to pay inheritance tax for the first 30,000 euros of tax value of real estate property. For property above 30,000 euros, and up to 100,000 euros, the new inheritance tax is 5%, which means that for property up to 100,000 euros, a category B’ heir will pay 3,500 euros. From the 100,000 euros up to 300,000 euros, the tax rate is 10%, therefore for an amount of 300,000 euros, the category B’ heirs pay 23,500 euros. For the part of property which is above 300,000 euros, the rate is 20%.
It is worth mentioning that, according to the interpretation of the new law and without any clarifications from the government yet, it seems that the category B heirs who inherit after 19 Jan. 2010 cash and not real estate, will pay inheritance tax at a rate of 20% from the first euro (ouch!).
The regime for category C heirs remains the same. Other relatives, therefore, apart from categories A and B, and those heirs who have absolutely no relation to the deceased, do not pay tax for the first 5,000 euros of their share, while they have to pay 20% on the next 55,000 euros, 30% on the next 160,000 euros, and 40% on any amount exceeding the first 220,000 euros of their share.
We must point out that how much inheritance tax you pay does not depend on whether you have the Greek citizenship or not. For property located in Greece, the ownership and property rules apply the same to Greeks and non-Greeks. However, who inherits what share is determined by the citizenship of the deceased. If the deceased had the Greek citizenship (or dual citizenship – Greek and another), then, for property in Greece, it is Greek law which determines what are the inheritance shares. If the deceased was not Greek, then it is the law of his/her citizenship that will determine who inherits how much.
1. Impact of Nationality for an Inheritance Beneficiary:
Question: In the Greek calculation of how much inheritance tax has to be paid, what role does an individual's nationality play?
Answer: It does not matter what citizenship you have, whether UK, Irish, Greek or anything else. If you inherit property located in Greece (movable or immovable), you pay inheritance taxes according to the rates which are outlined in the article. These rates, therefore, apply to anyone, including foreign citizens, who inherit property in Greece.
The citizenship of the deceased plays a role only with regards to what share each heir gets. If the deceased was a British citizen, it's UK law which will determine how much his spouse, children friends etc. will get, according to the contents of the Will etc. But how much actual tax will be paid by the heirs, then it is Greek inheritance tax law which will determine the amount.
2. The Criteria Used by a Local Greek Tax office to Calculate and Assess a Property's Value for Inheritance Purposes.
Question: Regarding real estate value - is the calculation by the tax office based on "transacted" value or "objective" value of property?
Answer: The tax office in approximately 90 per cent of cases uses "objective" values for all real estate properties, based on mathematical factors. In about 10% of properties (mostly rural areas) the tax office uses comparative prices of neigbouring properties.
Christos ILIOPOULOS, Attorney at the Supreme Court of Greece, LL.M.