What is a Real Estate Investment Company R.E.I.C. (A.E.E.A.P. in Greek ) and how it operates in Greece?
The real estate market in Greece has a promising future, as the significant fall in real estate values set the ground for large investments in this field. Real Estate Investment Companies (REICs), are special purpose companies for large scale investments in real estate. REICs are preferred by investors with a long -term investment horizon.
The initial minimum share capital required is 25.000.000€, which may consist of contribution in cash, securities, property, money market instruments. The establishment of REICs requires the granting of an operating license by the Hellenic Capital Markets Commission. By law, a REIC must apply before the Athens Stock Exchange Market in Greece for the listing of its shares, within two years after its establishment.
REICs are allowed to invest, without any restrictions, within the European Union market. Investments in third countries outside EEA is permitted up to 20% of the company’s property portfolio value. A REIC must pay annual dividends to its shareholders of at least 50% of its annual net profits.
What benefits do REICs have?
The major advantage of REICs in Greece is the particularly favorable tax framework, under which they operate. Specifically, REICs:
• are exempt from income tax on profits generated by the sale of an asset (which currently is 29%)
• are exempt from property transfer tax, when purchasing property (which currently is 3%),
• are exempt from tax on rental income
• are exempt from withholding tax on dividends (which currently is 10%)
• pay a reduced rate of real estate capital tax (REICs pay 0,1% of the objective value, while other investors pay 0,6%)
• pay a reduced rate of tax, based on the fair value of the investments made in property and cash (which was in 2016 less than 1% yearly)
• pay a reduced rate on the Land Registry fees
Also, the stocks issued by a REIC are exempt from any kind of tax, duty, stamp duty, right and the investors of a REIC have no further income tax liability, meaning the liability is exhausted at the company’ s level.
Which are the domestic REICs?
There are currently six active companies in the Greek REIC industry:
• Grivalia Properties ( http://grivalia.com/ ).
• Trastor (http://www.trastor-reic.gr/ )
• NBG Pangea ( http://www.nbgpangaea.gr/ )
• Intercontinental Real Estate & Development Corporation (http://www.ici-reic.com/ )
• BriQ Properties ( http://www.briqproperties.gr/ )
• Ble Kedros
Today the above companies acquire and manage the most important and big, mainly commercial and touristic properties throughout Greece (mainly in Athens, Thessaloniki and in touristic resorts), since there are no options left for other interested investors for large transactions, due to REICs distinct tax advantages.
It is estimated that a number of another 2-3 entities are at the moment at a procedure of getting the licenses to establish REICs .