The new tax law in Greece │ Greece has recently implemented a series of significant tax reforms, with one of the most notable being the use of cash in real estate and commercial transactions. Effective december 2023, this legislation prohibits the purchase and sale of real estate in cash, while imposing strict restrictions on cash transactions exceeding 500 euros. This measure aims to curb tax evasion and money laundering, issues that the Greek government is addressing with determination.
Enhanced fines to deter cash usage
While restrictions on cash use have existed for several years in Greece, the new law goes further by doubling fines for non-compliance. Now, any transaction exceeding 500 euros in cash will be subject to a considerable fine, a deterrent aimed at discouraging any attempt to circumvent the existing legislation.
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In the case of sales exceeding 500 euros in cash conducted by commercial establishments, fines have been increased to match the transaction value. Previously set at 100 euros, the fine will now be calculated based on the total transaction amount, thereby increasing the severity of financial penalties for offenders.
ECB opposes further reduction of cash transactions
Initially, the Greek government attempted to reduce the maximum amount of cash transactions to 300 euros. However, the European Central Bank (ECB) rejected this proposal, emphasizing that lowering the threshold to 500 euros did not achieve the objectives of combating tax evasion. Additionally, the ECB expressed reservations about the prohibition of cash usage in real estate transactions, arguing that the reliance on bank payments was not adequately supported to ensure the effectiveness of this measure.
Controversy surrounding the cash ban in Real Estate transactions
One of the most debated provisions of this new legislation concerns the ban on using cash in the purchase and sale of real estate. The ECB criticizes the Greek government for not providing adequate justification for the effectiveness of bank payments in this context. It points out that some real estate transactions are not fully recorded in notarial deeds, thus facilitating tax evasion and money laundering.
Although notaries only accept preliminary agreements in the real estate transaction process, the law now mandates that payment be made exclusively through bank means when establishing notarial deeds for property transfers. Any failure to meet this requirement renders the deed null and void, without legal effect, and cannot be transcribed into official records.
Severe sanctions for offenders
Offenders of this new legislation face substantial financial penalties. Fines for cash transactions exceeding 500 euros range from 10% of the cash-paid price, with a minimum of 10,000 euros, up to a maximum of 500,000 euros for each violation. For example, in the case of a real estate transaction worth 100,000 euros, offenders could face a fine of 10,000 euros, or 10% of the cash price, in addition to the cancellation of the contract.
Greece adopts a stringent approach to combat tax evasion and money laundering by strengthening its legislative measures. Although the new law sparks debates, it reflects the government’s efforts to ensure increased transparency in financial transactions, especially in the real estate and commercial sectors. Tax authorities are now tasked with closely monitoring the relevant transactions and imposing severe sanctions for non-compliance, aiming to promote a more responsible and ethical tax culture.
