The consensual approach taken by the Parliamentary Economic Committee, regarding the reduced VAT rate of 5% on the construction and purchase of primary houses and apartments, appears to be gaining approval from both the Ministry of Finance and the European Commission.

Last week, the Parliamentary Economic Committee submitted a consensus-driven proposal to the Ministry of Finance on this matter, urging it to seek the European Commission’s formal opinion as well. The proposal aims to establish a reduced VAT rate of 5% for both houses and apartments, provided that they meet certain criteria. Specifically, the reduced rate would apply to the first 150 square meters and the initial €350,000 of the property value, with the condition that the total square footage does not exceed 200 square meters and the total value does not surpass €475,000.

Under this proposal, properties falling within these parameters would be subject to a 19% VAT rate, only for the area between 150 and 200 square meters. For residences exceeding 200 square meters, the 19% VAT rate would apply to the entire value of the property. This approach seeks to provide a fair and balanced tax treatment for homeowners while ensuring that larger properties are subject to the standard VAT rate.

In addition, Members of Parliament have expressed their intention to explore the possibility of raising the eligible property area. This potential adjustment is currently under review, and the Ministry of Finance is expected to provide further insights on the matter.

Furthermore, there is a growing consensus regarding the transitional period that will be put in place. It is expected that the application process for urban planning permission will play a crucial role in determining the duration of the transitional period. By establishing clear guidelines for the application and approval process, stakeholders aim to streamline the implementation of the new regulations and ensure a smooth transition for all parties involved.

As for the legislative timeline, the specific draft law, along with any proposed amendments by the political parties, is scheduled for a plenary vote on June 8th. This timeline allows for adequate deliberation and ensures that all perspectives are considered before reaching a final decision.

In her post-session statements, Christiana Erotokritou, the Chairperson of the Economic Committee and a DIKO party member, expressed satisfaction, noting that the Committee has received information suggesting that last week's unanimous recommendation on harmonizing criteria for apartments and houses, appears to be well-received by both the Ministry of Finance and Brussels. She mentioned that, based on this consensus-driven proposal, there is one specific detail that the Ministry of Finance has been asked to communicate to Brussels. However, Ms. Erotokritou avoided discussing this particular detail, emphasizing the sensitivity of the current period and the potential problems that public dialogue on pending specifics could create. She also informed that responses from Brussels are anticipated in the coming days.

Overall, these recent developments signal a positive step towards creating a more favorable and comprehensive framework for VAT rates on residential properties. The consensual approach taken by the Parliamentary Committee, along with the engagement of the Ministry of Finance and the European Commission, demonstrates a collaborative effort to address the concerns of homeowners and foster economic growth in the housing sector.