Major Changes Introduced by the New Legal Framework for REICs
The new legislative framework governing the operation of Real Estate Investment Companies (REICs) introduces significant changes aimed at enhancing transparency, efficiency, and regulatory oversight in the sector. Recently approved by the Hellenic Parliament, the new law marks a decisive step toward strengthening corporate governance and encouraging sustainable growth in Greece’s real estate investment market.
Key Regulatory Changes
The framework raises the minimum share capital requirement from €25 million to €40 million and sets stricter eligibility criteria for board members and executive management. It also provides a two-year deadline for listing shares on a regulated market, with the possibility of a unilateral extension of up to one additional year (a total of 36 months) by the Hellenic Capital Market Commission (HCMC), under exceptional circumstances.
Furthermore, REICs are now required to distribute at least 50% of their net profits as dividends. The framework also introduces tax exemptions for in-kind contributions and property transfers, under specific conditions. A special tax of 10% is established on the European Central Bank’s reference interest rate, increased by 1 percentage point.
Investment Scope and Restrictions
REICs are now permitted to invest:
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Directly or indirectly through subsidiaries and UCITS/AIFs, provided that at least 70% of the fund’s assets are allocated to real estate.
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In properties located in Greece, EU or EEA member states, and—up to 20%—in third countries.
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Through participation in Public-Private Partnerships (PPPs) or special purpose vehicles.
REICs may also acquire:
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Significant stakes (≥10%) in real estate companies, with a seat on the board.
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Minor stakes (up to 10%) in real estate companies, limited to 5% of the REIC's total portfolio.
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At least 20% participation in service companies that manage or serve REIC-owned or subsidiary-owned properties.
At least 70% of the REIC’s total portfolio must be invested in eligible assets under its control. No single investment may exceed one-third of the total portfolio. Investments involving bare ownership or usufruct are capped at 20%, while capital expenditures for property development cannot exceed 40% of the group's total real estate investments, as reflected in the most recent semi-annual investment report after completion of development.
After three years from establishment—or at the time of applying for listing on a regulated market, whichever is sooner—the initial share capital must be invested at a minimum of 50% in real estate assets, either directly or indirectly.
Green Energy and Energy Autonomy
The new law enables REICs to engage in the construction and operation of renewable energy power stations for self-consumption, either for their own needs or those of their tenants. The total installed capacity must not exceed the agreed-upon energy load of the respective properties.
Management of Temporary Funds
Until investment deployment, REICs may allocate their funds in:
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Bank deposits within the EU,
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Money market instruments and Money Market Funds (MMFs),
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Government bonds with maturities of up to one year.
Transparency, Supervision, and Taxation
REICs are obligated to prepare semi-annual and annual financial statements based on International Financial Reporting Standards (IFRS), with asset revaluations conducted by independent appraisers. Transparency is emphasized in transactions with related parties and in the declaration of assets, in accordance with Law 5026/2023.
The new tax regime includes:
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Exemption from transfer taxes and related fees for property acquisitions.
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REICs will be taxed based on the average value of their investments (including cash holdings), as reflected in semi-annual reports. The applicable rate is 10% of the prevailing ECB reference rate, increased by one percentage point.
Enhanced Supervisory Mechanisms
The Hellenic Capital Market Commission gains expanded powers, including the ability to impose fines of up to €3 million, depending on the severity of the violations.
