Reduced VAT on repair and maintenance expenditure


VAT is an indirect tax imposed on the final consumer of goods or recipient of services. In this short article, we will try to examine the VAT charged on the repair and maintenance cost of old private residences.

In Greece, in accordance with the rulings 1082/25-5-2007 and 1241/5-11-2013, reduced VAT rate governs every work performed for the renovation or repair of the property, which has been used at the same time as the residence of persons or is going to be used as a dwelling after renovation. For instance, a reduced VAT rate (13%) is imposed on works concerning replacement, repair or maintenance of plumbing, electrical, carpentry, glassware and other installations, tiles, boilers, elevators, facades and public spaces, as well as walls and cavities painting.

Should be noted that the cost of materials used during the renovation is also considered as a service provision, in case that the relative expenditure does not exceed one third (1/3) of the total remuneration.

It must be mentioned that the following works or services are not subject to the reduced, but to the standard VAT rate (23%):

  • Services on goods that are not integrated in the property, such as washing machines, air conditioners etc.
  • The construction of new spaces or installation of new facilities in old privately owned houses, such as new heating system, gas supply and security systems.
  • Services provided by architects, engineers, electricians, etc., which may be necessary in order to be able to carry out renovation works and repairs.

The new VAT regime is expected to push domestic and foreign investors in real estate market. More specifically, current framework is going to allow investors to purchase properties at lower prices and then realize the indispensible repairs and renovations. Following such a practice, the total burden observed because of the imposition of indirect taxes declines sharply.