Tax-i 184: Significant changes on the tax regime of gifts and parent-to-child donations, on capital accumulation tax and VAT

The recent Law 4839/2021 (Government Gazette A '181 / 02-10-2021) brought significant changes on the tax regime of gifts and parent-to-child donations as well as capital accumulation tax and VAT.

The most important innovations introduced by the above Law are the following:

1) Increase of the tax-free amount for gifts and parent-to-child donations

The tax-free amount for gifts and donations a) between spouses and persons who have entered into a cohabitation agreement, b) towards children, c) towards grandchildren and d) towards parents, increases from the amount of 150,000 to 800,000 euros.

What assets it concerns
The relevant provisions concern gifts and parent-to-child donations that take place as of October 1, 2021, of all assets, including indicatively real estate property, shares and capital parts, as well as amounts of money transferred through financial institutions. Gifts and parent-to-child donations that took place before October 1, 2021, are not included in the tax-free amount of 800,000 euros.

Acquisition of assets upon death
The above gifts and parent-to-child donations are not included in the cause of acquisition of assets by the same persons upon death.

Taxation of gifts and parent-to-child donations beyond the amount of 800,000 euros

Any gifts and parent-to-child donations between these persons of sums exceeding 800,000 euros, will be subject to tax, at a rate of ten percent (10%).

2) Reduction of the Capital Accumulation Tax rate

The rate of capital accumulation tax is reduced to 0.5% of the taxable value, instead of the existing rate of 1%. The said reduction of tax rate applies to actions, for which the tax liability arises as of 01.10.2021. It is noted that capital accumulation tax is no longer due for capital paid upon the establishment of a company, but upon share capital increase etc.

3) Reduction of VAT rates for specific products

Reduced VAT rates are provided, inter alia, for specific agricultural and livestock goods, industrial foodstuffs and gym and dance school services. The application of the reduced VAT rates in tourism, dining etc is extended until 30/06/2022.

Download the Tax-i in pdf file here.