The art of misdirection
In recent years, short-term rentals have become the default answer to questions such as why we have a housing crisis, why rents have skyrocketed, and why people struggle to find affordable flats to buy. Each successive government targets Airbnb properties, giving the impression that they are the main culprit behind every economic hardship. However, the reality is not quite so straightforward.
Airbnb: The scapegoat
Short-term rentals have become the scapegoat for all the woes of recent years, and now they are facing yet another blow. Under new rules, every property used for short-term rental will be classified as a ‘branch’ for the purposes of the business levy, which is set at €600 per year for each branch.
You can read more about the business levy for sole proprietorships or legal entities here.
This initial proposal was issued by the Independent Authority for Public Revenue (AADE) in April 2024 (circular E2024/2024). The circular stated that “properties rented or sublet under Article 111 of Law 4446/2016 by legal entities, without the provision of any services other than bedding, are considered business premises and are subject to the provisions of Article 31 of Law 3986/2011 regarding the business levy.”
Essentially, the word “not” was removed from the phrase “are not considered business premises”, which had been in effect until then. The Council of State had previously ruled that simply letting a property for short-term rental cannot be considered a branch, especially when there is an explicit prohibition on providing additional services. This decision is now pending review by the Full Bench of the Council of State this coming December.
Now, the government has returned with a new bill that not only seeks to legislate the above but also to collect the business levy retroactively from 1 January 2024 (just before the issuance of circular E2024/2024).
Airbnb with hotel prices
It has now become a given: whatever happens, short-term rentals are the target. Management companies such as Sparrow not only take on properties but also the responsibility of informing owners about these developments, trying to explain why their income continues to decline.
Lower turnover due to these levies will inevitably lead to price increases at hotel levels – after all, the resilience levy is now comparable to that of a five-star hotel.
If these practices continue, short-term rentals will record unprecedented losses, as will the state coffers from tourist revenues, since many travellers choose these accommodations for greater flexibility and independence. Those who have invested significant sums to build a healthy business – whether owners or managers – will be left completely stranded.
The only apparent winner in all this is the government, which, once again, uses short-term rentals as a convenient smokescreen to cover gaps and deficits in every other sector.
