Greece Commercial Security deposits: Hosho-kin & Custom

Governed primarily by the Greek Civil Code (Articles 574-618), Presidential Decree 34/1995, and significantly by Law 4242/2014 (Article 13), commercial security deposits in Greece (referred to as engyisi) operate under a flexible, contractual framework. Under Law 4242/2014, all new commercial leases have a mandatory minimum duration of three (3) years, even if a shorter term is contractually agreed upon. While residential deposits are often limited by custom, Commercial (B2B) LeasesPreview unavailable involve professional entities (AS, EPE, IKE, OE) where requirements are noticeably stricter due to higher functional risks.

1. Amount of the Commercial Deposit (Harsher Terms)

While in housing the norm is 1 or 2 rents, in the commercial sector the amount is governed by the principle of contractual freedom (Article 361 of the Civil Code).

• The Market Rule: Owners of offices and shops consistently demand two (2) to four (4) monthly rents (sometimes up to 6 months upfront for newly established businesses/Startups without history).
• Bank Letter of Guarantee: For medium and large properties (Supermarkets, large Corporate offices), the simple "cash deposit into the landlord's account" is abandoned. Instead, the contract requires a "Bank Letter of Guarantee", so that if the tenant-Company goes bankrupt, the landlord instantly collects its debts from the Bank without waiting for liquidation.

2. The Purpose and Operating Expenses

The deposit in a corporate property covers not only unpaid rents. It often serves a heavier purpose:

1. Delayed Medium/High Voltage Bills (DEH/Electricity): A small industry that leaves suddenly can leave "unpaid tabs" of thousands of euros in its operating electricity. If the electricity was in the landlord's name, the deposit is the only way to be saved.
2. Space-Planning Restoration (Shop Remodeling): Per Article 599 of the Civil Code, the lessee is obligated to return the property in the exact condition it was received, barring normal wear and tear. If the company knocked down (with permission) internal walls to build showcases or Meeting rooms, contracts require "Restoration to original condition". The cost to tear down corporate signs and plasterboards burdens the tenant (B2B), and if they do not do it, the cost is retained entirely from the deposit.

3. Withholding against Unpaid Taxes (Stamp Duty)

A unique peculiarity of Commercial LeasesPreview unavailable is the 3.6% Stamp Duty (3% base + 0.6% OGA surcharge) pursuant to the Stamp Duty Code. While often contractually assigned to the tenant, the legal default is a 50/50 split between landlord and tenant. If the company is responsible for the payment but leaves the Tax Office's stamp duty unpaid, the landlord (whom AADE will ultimately chase) has the legal right, when the lease expires, to withhold this tax debt from the Deposit money!

4. The Lack of an Escrow Account

Just as in residential, Greece does not offer a state tool for the safe custody of deposits. The money usually goes as an advance payment into a corporate/individual account of the owner and is tax-justified as a "deposited guarantee" in TAXISnet without further tracking, until expiration.

Substantive Legal Guidance in Greece

Explain the 'Commercial Restoration' clauses where business tenants are often required to return the property 'as it was' (often stripped of fit-outs). This is critical because the Single-Member Court of First Instance (Monomeles Protodikeio) typically handles these disputes under the specialized 'Lease Disputes' procedure. While courts prioritize the 'protection of the tenant's primary residence' in residential cases, commercial agreements are governed by the principle of contractual freedom (Article 361 CC). Failures to accurately register leases on the TAXISnet portal by the end of the month following the commencement of the lease (AADE Circular A.1139/2020) can lead to your legal actions being dismissed and may result in heavy fines from the AADE tax authority.

Compliance Strategy for Greece Property Owners

Managing a rental portfolio in Greece requires a blend of digital compliance (TAXISnet) and traditional legal procedures (Exodiko). Owners must ensure that every lease is registered by the end of the month following the commencement of the lease to maintain standing in court. also, tracking the 3-year statutory minimum established by Law 4242/2014 is essential for financial planning, as it limits when rent can be negotiated to market rates. Landager's specialized Greek compliance engine automates these reminders and provides a secure vault for certificates like the EPC (PEA) and Electrical Safety checks (YDE), ensuring you're always ready for an inspection or a new tenant onboarding process.

How Landager Helps

Landager tracks lease terms, guarantee letter tracking, and complex deposit aging - making it easy to stay compliant with Greece regulations.

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