POWER: Tax Guide to Unspoiled Rents

The non-payment and practical inability to obtain them from insolvent tenants is a timeless problem of the tenants and one of the factors in reducing the supply of housing for rent. In view of the initiation of the procedure for submitting the income tax returns for the year 2023, AMID published today (10.3.2024) a useful guide with the applicable substantive provisions and procedural circulars, on which real estate tenants, when and by what procedure, are entitled to pursue the deferral of taxation of unspoiled rents. The driver was edited by the Royal Paradia, an unsub lawyer and deputy general secretary of POMIDA. Tax Guide POMIDA for unspoiled rents – Who, when and how they are entitled to tax deferment The non-payment of rents and the practical inability to obtain them from insolvent tenants is a timeless problem for tenants of real estate and one of the factors in reducing the offer of housing for rent. The non-taxation of non-taxable rents was a permanent request from POMIDA, which after the adventurous definitive abolition of their possibility of discharge due to their divestment to the State, came back claiming a definitive solution to the problem through a process of deferral of their taxation for as long as they have not been collected. In order to accept the deferral of taxing them without the risk of widespread circumvention, which would lead to a huge loss of tax revenue and thus to a reversal of any favourable regulation by the Ministry of Finance, it became clear that it would not be sufficient for a mere responsible statement from the taxpayer, but there should also be any kind of judicial decision or even appeal to justice, which would prove the truth of the statement of non-recovery of rents. With these facts, the solution proposed by POMIDA, which was accepted by the then responsible Deputy Finance Minister Mr. Tryphons Alexiadis, since it was the only practical one possible, today it has substantive and procedural as follows. 1.By article 11 of Law 4346/2015 it was defined that: ‘Receivables from the rental of immovable property, which have not been received by the beneficiary, shall not be taken into account in its total income , provided that by the time of submission of the annual income tax declaration, an order to pay or an order to pay rent has been issued against the paid order for payment or an order to pay rent or a court order for the deduction or payment of rent has been brought against the employed person. These income shall be taxed in the year and in the amount which has been proven to have been collected, by way of derogation from the provisions of Article 8. Unreceivable income shall be declared in a special code of unrequited income from renting real estate of the income tax declaration.’ 2. According to the later relevant PL circular. 1024.12.2.2016 and the instructions for submitting the 2017 tax declarations, column 16 of E2 shall be supplemented by the amounts of unsecured income from the rental of immovable property, provided that by the time of submission of the annual income tax declaration an order to pay or an order to pay a rent or a court order has been issued for the deduction or award of rent or an order for the deduction or payment of rent has been brought against the tenant. No. 4 of No. 39 n. 4172/2013). 3. The above supporting documents submitted to the DOU, should indicate the period for which rents are due. Excellent and in order to declare unspoiled income for the period between the adoption of the judgment on expulsion or the order for reimbursement of rent until its execution, which took place until the expiry of the deadline for the submission of the income tax declaration, is sufficient to submit to the competent DOU a declaration and a report on expulsion and installation prepared by the bailiff, that for the above period the leases have not been collected. 4. By POLI 1102/12.7.2016 it was further clarified that unspoiled income from renting immovable property can only be declared by natural persons who obtain income from leasing/subsiligation of immovable property in order not to account for such income in accordance with Article 39(4) of Law 4172/2013, whose provisions do not apply to legal persons and legal entities. 5.On the contrary, no unspoiled income can be declared from renting real estate by natural persons, when such income comes from property use compensation and from business activities (e.g. event events in rooms or estates, tourist exploitation etc.). The Administration, without this being provided for by law, and while the compensation for the use of property is tax-based, limited this possibility only to the unenforced leases of active leases, and does not accept it when they are of the type of use compensation, i.e. after the lease expires. A great injustice at the expense of many owners who, because their lease expired legally, are obliged to pay a tax on amounts that have never been collected! 6. However, neither the law nor the relevant circulars provides for an obligation to discuss the action being brought, as requested arbitrarily by some DOU, which would be irrelevant and simply an additional financial burden for the unfortunate tenant, since in most cases tenants having left the lease, refuse to pay any of the dues, nor does the lessee have the practical ability to collect anything. 7. In order to declare that the income from renting of real estate should be reported to the competent DOU, before the declaration is submitted, clear photocopies (photocopies), in accordance with Article 1 of Law 42500/2014 (Government Gazette A’74), orders, court decisions issued or lawsuits brought, up to the deadline for submitting the annual declaration. As a result, the unspoiled income will be reported in the ‘ANALYTICAL SITUATION FOR IMPORTS’ form. E2 and will be transferred to a special form code E1 when submitting the relevant income tax declaration. 8. Non-collection of rents is demonstrated only by the supporting documents referred to in Article 39(4) of Law 4172/2013 (a court order for the expulsion or award of rent, a payment order or a return order for the use of a rent, an action for the expulsion or award of rent) which must be presented in any case. Especially in case the lessee is bankrupt, it is sufficient to produce a copy of the debt notice table, in which the lessee / lessee claim appears. 9 10. The above documents submitted to the DOU in order to declare the unspoiled income will be accepted for the manifest. In the case of society, the relevant supporting documents will be accepted for all members, regardless of whether they are indicated in these elements of any other lessors, provided that the information on the lease, monthly lease and the lessee (the heir or guarantor) is identical to the corresponding data derived from the tax forms (E1, E2) or from the Real Property Rental Information Statement or from the rental agreement. In the event of a declaration of deferral of tax on unsecured rents without all the necessary supporting documents being submitted, the tax administration will proceed to new liquidations, not taking into account the amounts declared as unsecured income. Source: RES – ICM