Following the submission of a number of questions concerning the exemption from VAT of short-term lettings of Real Estate in the context of the sharing of Article 111 of Law 4446/2016, as replaced by Article 84 of Law 4772/2017, with POL .1059/2018, the following clarifications are provided for the purposes of uniform application:
1. As is apparent from the relevant provisions, the provisions of Article 111 of Law 4446/2016 on the short-term lease of Real Estate in the context of the sharing economy include the rental of apartment buildings, with the exception of single-family houses which have been classified as such by the annulment of the establishment of horizontal ownership, any other form of building with structural and functional autonomy, and rooms in apartments or detached houses, in the case of leases concluded for a specific time, less than one year, through digital platforms.
As defined in paragraph 3a of the same article, the income earned on the short-term lease of Real Estate in the sharing economy, under the provisions of Article 39a of Law 4172/2013, is exempt from VAT.
2. The above-mentioned VAT exemption is governed by the provisions of Article 22 (1) of the VAT Code (Law 2859/2000), as in force, according to which the leases of Real Estate are exempt from VAT. It is a relatively passive activity in which the lessor grants the lessee, for a certain period of time and against consideration, the right to own the property and to exclude any other person from exercising that right.
3. The above VAT exemption does not include hotel accommodation services and rented furnished rooms, apartments or houses which are subject to the reduced VAT rate (13%), and any other temporary accommodation which is proportionate and competitive with the services provided in the hotel sector.
4. It follows from the above that short-term leases of Real Estate in the context of the sharing economy are exempt from VAT, provided that during the lease the lessor does not provide additional services to tenants similar to those provided in the hotel or such as cleaning services, garbage collection, bedding and other household items replacements, auxiliary staff and other customer care services.
The simple supply of bed linen is not considered to be an additional service as described above, therefore it has no effect on the VAT exemption. Likewise, the fact that other utilities such as electricity, water, telephony, the Internet and shared charges, which are charged to the lessor and subsequently passed on to the lessee, are included in the value of the rent additional provision of services in the above sense and therefore does not affect the application of the exemption. It goes without saying that in this context there is no right to deduct the VAT charged on the lessor’s expense or other costs related to the property (such as repair or maintenance of the property).
5. For the purposes of equal treatment, short-term leases of Real Estate which are operated under the conditions referred to in the previous paragraph 4 for short-term lettings of property in the context of the sharing economy are exempt from VAT but are not operated through digital platforms, whether or not the internet is not a criterion for applying the VAT exemption.
6. The VAT exemption covers both natural persons and legal entities who make such leases, stating that, according to paragraph 8.d of Article 36 of the VAT Code, natural persons who make exemplary leases of Real Estate , are exempted from the obligation to initiate VAT registration / VAT transactions and only for such transactions, while the legal entities are obliged to register their business before the tax authorities.
7. If, however, during the short-term lease of the property (within or outside the framework of the sharing economy), the lessor provides additional customer care services which are equivalent to those provided to the hotel or a similar sector, the total price paid is not exempt but is subject to VAT as it is considered to be a supply of residential services subject to the reduced VAT rate (13%), with the right to deduct VAT related expenditure.
Source: taxheaven.gr