In particular, the ENFIA legislation suffers in three areas: the way in which the age of buildings subject to ENFIA is calculated, the determination of the taxable value of real estate that is burdened with increased ENFIA and the way in which the amount of the annual tax is determined family income of each taxable owner in order to determine whether this is lower or higher than the income threshold applicable for the grant of partial or total tax exemption.
In particular, the three points of the ENFIA legislation which cause unfair additional charges and overcharges to millions of owners are the following…
1 The scaling of seniority factors taken into account in determining the amount of main ENFIA: Every year too many low and middle income taxpayers are forced to pay main ENFIA with a “hat” of up to 66.67% because of the way aging factors are determined. The calculation system of the main ENFIA includes age factors, which the Basic Tax derived based on the zone price per sq.m. of a newly built 1st floor apartment facing 1 street do not reduce it according to the years that have passed since the date of the building permit, as would be logical and correct, but increase it further! To calculate the final amount of the main ENFIA, some other coefficients of age are used every year (they were used in the period 2014-2023 and will be used this year as well) which are increasing, not decreasing: They start from 1 for buildings erected from 1930 up to 26 years ago and reach up to 1.25 for buildings built in the last four years! Thus, while the Basic Tax is calculated based on the objective values (zonal values per square meter) of brand new buildings, it is not reduced at all for those of these buildings that are older than 25 years, while for those that are older than 25 years up to 1 year the Basic Tax (although representing -we repeat- objective new build values) is further increased by 5% up to 25% as the age factors used scale from 1.05 to 1.25!
This crooked way of calculating the seniority factors that we described above has as a consequence in many regions of the country that taxpayers pay the main ENFIA with a “hat” of 43.75% up to 66.67%.
2 The method of calculating the increase of the main ENFIA, which replaced the “supplementary”: With the provisions of paragraph 4 of article 43 of Law 4916/2023, Section C’ was added to article 4 of the original law of ENFIA, of Law 4223/2013. Section C’ provides that for rights on real estate, “additional ENFIA” is calculated on the total value per real right on real estate, as reflected in statement E9. The tax is calculated incrementally with rates from 0.2% for the part of the property value from 400,000.01 to 500,000 euros, up to 1% for the part of the property value above 2,000,000 euros. The tax is imposed on the total value of 100% of the full ownership of the property and is then reduced based on the co-ownership rate, if there is co-ownership in the full or small ownership, and apportioned. The above provisions apply, as long as the total objective value of the taxable person’s immovable property exceeds 300,000 euros.
The Scientific Service of the Parliament had pointed out a significant distortion caused by these provisions when they were tabled for a vote in the Parliament. Specifically, the Service in question had given an opinion that: “…two taxpayers, whose real estate has the same total taxable value, end up paying a different amount of Section C tax (s.s.: additional tax that replaces the additional tax) , depending on the number of properties they own. For example, a taxpayer who owns the full ownership of a property with a taxable value of 2,000,000 euros will be required to pay Section C tax (s.s.: additional tax that replaces the supplementary one) amounting to 11,700 euros, while another who owns the full ownership of five properties with a taxable value of €400,000 each and a total taxable value of €2,000,000 will not pay Section C tax. The above-mentioned differentiation of the tax burden, depending on the number of the taxpayer’s properties, raises a question as to its compatibility with the principle of tax capacity”.
In addition, with the above provisions, any taxpayer with real estate with a total value of more than 300,000 euros, who owns even a small percentage, just 6%, of a property with a total objective value of more than 400,000 euros is considered liable to pay the “additional ENFIA” of Section C’ which burdens every owner of a property worth more than 400,000 euros. That is, while the taxable value of his real property is an amount much lower than 400,000 euros, tax is calculated for the part in which the total value of the property (the value corresponding to 100% of full ownership) exceeds 400,000 euros and in then the resulting amount of tax is distributed to the taxpayer based on the percentage of co-ownership he owns.
3 The method of determining the annual family income of each taxpayer, which is taken into account to determine whether the income criterion for the 50% reduction in ENFIA or the full exemption is met. Thousands of unemployed, disabled, three-child and multi-child taxpayers who have very low annual incomes in the previous year and should normally be entitled to a partial or total exemption from ENFIA, lose the right to exemption and are forced to pay the full tax every year. The reason is that the total annual family income of each of these taxpayers is “inflated” excessively in an artificial way and finally appears to be greater than the applicable case-by-case limit for the granting of partial or total exemption from the ENFIA.
In particular, every year when issuing the ENFIA settlement notes, the total annual family income of each taxpayer is included in the total annual family income, which is taken into account to determine whether he is entitled to a partial or total exemption from the ENFIA, even incomes that are extraordinary and non-recurring, such as severance pay, as well as amounts of social benefits which are not taxed, such as child support allowances, special allowances for three children and multiple children, salaries, pensions and the fixed remuneration of the totally blind and physically disabled at a rate above of 80%, as well as retroactive payments made to beneficiaries of the special salaries. Unemployment benefits are also included in the total annual family income of each taxpayer that will be taken into account to determine whether or not they are entitled to the exemption from ENFIA.
All these amounts are added to the taxpayers’ other declared income which is normally subject to tax or is taxed independently, i.e. wages, pensions, rents, business profits, interest on deposits, etc. Then, in too many cases, any additional income difference due to high living standards is added to the resulting sum. Thus, in many cases of poor families, the total amounts of “net annual family income” inflate excessively, to unrealistic levels and exceed the relatively low limits of annual family income that have been set as conditions for the granting of exemptions from ENFIA to socially vulnerable groups of the population of the country.
The end result is that hundreds of thousands of citizens with low real incomes are asked to pay the full amount of ENFIA.
Beneficiaries
It is noted that, according to the current legislation, any taxpayer who meets the following income and property criteria is entitled to an exemption from 50% of the ENFIA:
a) The total annual net family income of the previous year has not exceeded 9,000 euros, increased by 1,000 euros for the spouse and for each dependent family member.
b) The total area of the buildings owned by the taxpayer and other members of his family does not exceed 150 square meters.
c) The total objective value of the buildings and plots within city plans owned by the taxpayer or his family does not exceed 85,000 euros if he is single, 150,000 euros if he is married without children and 200,000 euros if he is married with one or two dependent children.
In particular, families with three children or many children or with disabled people at rates of 80% or more are granted a full exemption from ENFIA under the following conditions:
a) The total annual net family income of the previous year has not exceeded 12,000 euros, increased by 1,000 euros for the spouse and each dependent member.
b) The total area of the buildings in which the taxpayer, his wife and dependent children of his family have full or partial ownership or usufruct rights does not exceed 150 square meters.
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