Airbnb Greece – Initial CoS Ruling Deems Tax Circular Unlawful

A plenary session of Greece’s Council of State (CoS), the country’s highest administrative court, is set to deliver a final ruling on a significant case with potentially huge economic implications for the tourism sector, one that concerns the tax regime of property owners in Greece offering short-term rentals via platforms like Airbnb.

Recently, a seven-member panel of the high court – and specifically the CoS 2nd department – declared a circular issued by the Independent Authority for Public Revenue (AADE) unlawful and invalid regarding the imposition of a standalone business fee on Airbnb rentals. However, due to the case’s significance, the matter was referred to the court’s plenary session for a definitive judgment.

The court’s Second Section noted in its ruling that the challenged circular, which “has a regulatory nature,” was not published in the Government Gazette but was only uploaded online (via DIAVGEIA) and put into effect. Consequently, the court deemed it “unlawful, invalid, and subject to annulment on grounds of legal certainty,” as rightly argued by the petitioners.

Based on this reasoning, the judges concluded that the annulment applications should be upheld and the circular should be struck down.

The case reached the Council of State following annulment applications filed by the Panhellenic Federation of Property Owners (POMIDA), the Association of Short-Term Rental Companies, and five short-term rental companies. The goal of the interested parties was the suspension of a circular by AADE that provided clarifications on the tax treatment of short-term rentals, including income tax, VAT, and other indirect taxes and fees.

The petitioners argued, among other points, that the circular’s implementation directly or indirectly harms property owners or usufructuaries managing short-term rentals, as it obliges them to pay a separate business fee for each property.

The contested circular states that properties leased or subleased by legal entities or persons without providing services beyond bedding are considered professional premises (headquarters or branches) of those entities, subjecting them to the business fee provisions of a specific law of 2011. The same applies to individuals leasing or subleasing three or more properties and earning income from business activities.

The Airbnb rental platform in Greece has been a significant source of revenue for many property owners and has contributed to an explosion of short-term stay-overs by visitors from all over the world. However, the downside is the negative impact on the costs of rent in the property market, putting pressure on many Greeks in search of apartments.

Source: Tovima.com