Sale of property by a private individual: When can it be considered a business activity

The sale of property by a private individual is not always treated as a simple act of utilizing personal assets. Depending on the circumstances, the transaction may be considered to have the character of a business activity, a fact that entails different tax treatment, specific obligations towards the Independent Authority for Public Revenue (AADE), and possible sanctions. Circular E.2031/2023 provided guidelines on when such an act falls under the provisions of Article 21 of Law 4172/2013, introducing the innovative approach that continuous or repeated activity is not necessarily required in order for someone to be considered as engaging in business; it is sufficient that an intention of profit and an organized action is demonstrated, even in a single case. The elements taken into account are the number of purchase and sale transactions, the time period between acquisition and resale, the financial benefit obtained, any actions of utilization of the property prior to its transfer, as well as the organized nature of the activity. It is not necessary that there be typical business characteristics, such as a professional establishment or keeping of accounting books, as long as the actual conduct points to a commercial intent.

The circular presents specific examples that facilitate the understanding of the boundaries between simple management of property and business activity. Indicatively, the sale of a residence in which the individual lived for many years or the sale of a property acquired through inheritance without any intervention is not considered a business act. On the contrary, the purchase of a plot and its partition into smaller sections, the continuous resale of many properties in a short period of time, the renovation and resale with the aim of profit, or the establishment of a special purpose company for the transfer of a property may lead to characterization as business activity. The administration emphasizes that each case is examined individually and the above criteria do not function in isolation but in combination.

The case law of the Council of State has reinforced this position. Decision 2050/2024 stressed that even a single property transaction can be characterized as business activity if it is carried out with the intention of profit and exceeds the limits of ordinary management. The Court identified as crucial elements the frequency and the number of transactions, the length of time the property was held, the existence of actions that increase the value such as renovations or partitioning, as well as the amount of the price difference between acquisition and sale. It was noted that the absence of formal business indications, such as accounting books or a professional establishment, does not exclude the characterization as business activity. In the same spirit, decision 1840/2024 ruled that the sale of a property just three days after its acquisition, with a significant price difference and a specific method of settlement, did not constitute utilization of existing property but an organized act with the purpose of making profit.

At the same time, the decisions of the Dispute Resolution Directorate contributed decisively to the consolidation of this interpretation. Decision 2993/2024 held that the purchase and sale after renovation constitutes a business act, even if it is carried out by a natural person. Decision 3942/2022 emphasized that the intention of profit and repetition are decisive elements, while decision 3853/2022 underlined that even without multiple acts, the existence of organized actions that lead to an increase in value and profit is sufficient for characterization.

On the basis of all the above, the tax treatment of the sale of property by private individuals has now acquired a new dimension. Even acts that in the past were considered simple and private may today fall under the regime of business activity. Essentially, the intention of the individual and the actions that precede or accompany the sale are those that determine the final outcome. For this reason, it is crucial that every citizen planning to sell property carefully examine the data of his transaction, so as to avoid surprises in terms of tax burdens and obligations.

Our office provides comprehensive legal support in matters concerning the transfer of real estate and its tax treatment. With specialized knowledge and experience in the field of tax and commercial law, we offer reliable guidance at every stage of the process, ensuring that the actions of our clients comply with the applicable legislation and are protected from unnecessary burdens. Those interested may turn to our office to have the certainty that their cases are handled with responsibility and professionalism.