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Tuesday, 12 July 2011 09:15

In Greece, Real Estate Investment Trusts (REITS) are known as Real Estate Investment Companies (REIC), and the first one was listed in 2005, although the law L.2778/1999 authorizing them was passed in December 1999. REICs must be listed on the Greek Athens Stock Exchange. They are for the exclusive purpose of managing a portfolio of real estate mainly, but can also own securities and cash. They must own initial capital of 29.35m Euros. Over 80% of the Greek REIC's assets must consist of real estate property in Greece or in the European Economic Area (EEA). This may include subsidiaries which are at least 90% owned and engaged exclusively in real estate activities. The Greek law defines real estate as commercial business property which would seem to exclude residential and undeveloped land. They may hold real estate in a non-Greek or non-EEA country, but that cannot be more than 10% of their total portfolio. REICs can invest in moveable assets to meet operational needs, but this is limited to 10% of their total. One individual property investment may not exceed 25% of the REIC's total asset values. A REIC is Required to Emphasize Ownership and Management, Not Speculation. They cannot develop property from the beginning. They may own property underdevelopment only if it’s within 25% of the final cost. Greek REICs may not invest more than 25% of their net in property bought through financial leasing arrangements. And each such contract may not exceed 10% of their total net equity. No more than 10% of their properties can be ones in which they hold less than 100% ownership. Once they buy a property they can’t sell it for at least 12 months. Greek Real Estate Investment Trusts need to only distribute at least 35% of their annual net profits. Greek REITs do not pay income taxes, but must pay an annual 0.2% tax on their asset values. Property taxes are only 0.1% instead of 0.6%, and when they buy property, the transfer tax is only 11%. They're also attractive for investors, because there is no tax withholding of dividend payments from REICs. There is a 10% mandatory tax withholding from dividends pay by other types of companies. There's no withholding of taxes because dividends from REICs are not taxable income to private individual investors, and neither is their capital gains. Companies must pay taxes however.