Council of State

According to a decision of the Council of State, the State is not obliged to compensate the property-owning companies, but also the private property owners, with the amounts that reduced (from 40% to 100%) the rents of their shops and houses, during of the dominance of the coronavirus.

In particular, 10 companies, which lease their properties, appealed to the CoE and asked them to recognize that the State owes the companies, as property owners, which lease business premises to third parties (shops, etc.), but also to private individuals who lease apartments and other properties, to pay the amounts of rent they lost due to the application of its measure mandatory rent reduction at a rate of 40%, from March to December 2020 and 100% from January to March 2021. Also, 96 homeowners had intervened in the CoE in favor of the positions of the 10 companies.

At the same time, all (all 106) asked to be paid to each of them the amount of 1,000 euros for moral damage who suffered from the reduction in rents.

The seven-member composition of the 1st Department of the CoE (pilot decision), chaired by Vice-President Spyridoula Chrysikopoulou and rapporteur by State Councilor Christos Liakouras, rejected as unfounded all the claims of the applicants.

In particular, the SC rejected the annulment applications of the applicants, judging that the property owners, through the Administrative Courts, do not establish a right to compensation according to article 105 of the Introduction Law of the Civil Code (EisNAK).

In more detail, the decision states that “the claim against the State for the restoration of the damage (property and non-property – moral damage) which the companies have suffered, according to their claims, from legislation, in violation of provisions of superior formal force, cannot to be established in article 105 of the Income Tax Act”.

However, in 2021, 60% of the losses they had from the rents during the disputed time period were reimbursed by the Ministry of Finance to the real estate owner companies and 80% of the lost rents were reimbursed to the private property owners. These returns were tax-free and non-disposal.

The companies asked the SC to recognize that the State must pay the sums corresponding to the rents they lost, as owners of real estate they had leased under business lease agreements, for the 11 months in question, due to the mandatory rent reduction for the tenant businesses affected by the covid-19 pandemic.

They argued that these reductions as a measure to support tenants are contrary to a multitude of constitutional provisions and the European Convention on Human Rights.

At the same time, the companies argued that the principle of equality was violated, due to the unfavorable, unjustified discriminatory treatment that the legislator reserved for the lessors – legal entities in relation to the lessors – natural persons for whom he provided more support measures.

Also, the companies requested, in addition, to be paid the difference of 20% which arises between the reduction of the rent of the legal entities (companies) and the natural persons who rented real estate.

According to the decision, “these legislative regulations do constitute an intervention in commercial real estate rental contracts drawn up between individuals, introducing a harmful change for the lessor in order to deal with the adverse consequences of the COVID-19 coronavirus for the respective professional or business activities, but only the enactment of these provisions is not sufficient in itself to cause the damage (property and non-moral damage) invoked by the lessor companies in their legal action against the Greek State”.

And this, because “the harmful consequences for the lessors of commercial real estate do not result directly and immediately from the provision by the laws of the measure in question of the (partial and/or full) exemption, but from the differentiated, in relation to the contractually provided, execution of the relevant contracts by the lessees as a result of the fact that the latter shaped their contractual behavior based on the provisions of the legislative regulations and thus did not pay part or all of the due rents”.