Law 5246/2025 – Key Tax Reforms

Recent Law 5246/2025 (articles 1–12) introduced significant changes to the income taxation of individuals. The new provisions enter into force on 1 January 2026 and provide for substantial reductions in tax burdens. The main ones are as follows:

Income tax reductions for individuals

• A new, reduced tax scale is introduced for employees, pensioners, and self-employed individuals.

• Additional reductions are provided for families with dependent children.

• A special favourable taxation scheme is provided for young taxpayers. Specifically, for taxpayers up to 25 years old, the tax rate for the first two brackets (up to €20,000) is 0%, while for taxpayers aged 26–30 the tax rate for the first two brackets (up to €20,000) will be 9%.

Reform of property taxation

The tax scale for rental income is revised, and a new intermediate tax rate of 25% is introduced for annual income between €12,000 and €24,000 (until now the tax rate for income exceeding €12,000 was 35%). The reduction will apply to rental income collected in 2026 and taxed in 2027.

Three-year exemption of income from long-term leasing

A three-year exemption from income tax is provided for owners who lease residential properties through long-term leasing (for at least 3 years), provided that the properties were empty or used for short-term rentals. The exemption covers residences up to 120 sq.m., with an additional 20 sq.m. for each dependent child of the tenant beyond the second. The provision does not include income criteria.

Reduction of annual objective living expenses

The amounts of living-expense presumptions are reduced by 30% to 35% for residences, by 7% and up to 73% for private cars up to 15 years old, and by 30% for recreational vessels up to 10 years old.

Exemption from the minimum deemed income for new mothers

Self-employed women who are new mothers are exempt from taxation based on the minimum imputed income from business activity for three years. The exemption applies retroactively from the 2025 tax year.

Reduction of the minimum net income of small businesses

The minimum imputed income resulting from the objective taxation criteria for self-employed persons based in regions with a population of up to 1,500 inhabitants is reduced by 50%. This reduction applies retroactively to income of the 2025 tax year.

ENFIA reductions and exemptions in small regions

A 50% reduction in ENFIA on the primary residence is provided in regions with up to 1,500 inhabitants for the year 2026, while from 2027 a full exemption (under certain conditions) is foreseen.

VAT reduction

VAT rates are reduced by 30% (from 24%, 13%, and 6% to 17%, 9%, and 4%) on the islands of the North Aegean Region, the Prefecture of Evros, and the Prefecture of Dodecanese with populations of up to 20,000 inhabitants.

Extension of the VAT suspension on new buildings

The suspension of VAT on the transfer of newly built residences is extended until 31 December 2026.