Hello everyone!
A new calendar year has begun, and Bulgaria switched to the euro on 1.1.26.
Gradually, reviews of the past year (2025) will start to arrive. Until then, it is important to stay up to date on the tax changes in the countries that took effect at the start of the year and to organize accordingly.
This month we would like to draw your attention to:
A. Greece - a review of 2025, facing 2026.
B. A new mayor for Bucharest.
C. Romania: the Nordis Law changes the real estate market - from developer conduct to bank financing.
D. Romania - regulatory and tax tightening from 1.1.26.
E. A tax reform in Cyprus took effect on 1.1.26.
F. Bulgaria moved to the euro.
Adv. Ilan Leibovitch and the office team
Greece
A review of 2025 and a look ahead to 2026
2025 is shaping up as Greece's turning-point year, from a country in rehabilitation to a key player in the European economy. The cumulative data present a picture of steady growth alongside structural changes in the real estate and tourism markets.
1. Macroeconomics: stability and a high international rating
- GDP growth: according to OECD and European Commission data, Greece is closing 2025 with growth of about 2.1%, with a forecast of a rise to 2.2% in 2026. The growth rests on strong private consumption and the continued flow of funds from the European Recovery Fund (RRF).
- The Economist ranking: in December 2025 Greece was ranked 6th in The Economist magazine's best-performing economies index (out of 36 developed countries), overtaking most Northern European economies on inflation, employment and capital-market performance.
- The political arena: the election of Greek Finance Minister Kyriakos Pierrakakis as president of the Eurogroup in December 2025 constitutes formal recognition by the European Union of the country's financial stability.
2. The real estate market: moderating prices and geographic shifts
- Price indices: after the double-digit rises of 2024, 2025 showed a more moderate increase. Bank of Greece (BoG) data indicate an average annual rise of about 6.2% in apartment prices in the cities.
- Regional dynamics: Thessaloniki led the growth with a price rise of about 10%, while Athens saw stabilization at around 5.5%.
- The impact of the Golden Visa: raising the investment threshold to 800 thousand euros in high-demand areas (Athens, Thessaloniki and the large islands) shifted foreign investors' interest to properties intended for conversion (Commercial to Residential) in secondary cities, where the investment bar was kept at 250 thousand euros.
- Tax incentives for 2026: the government approved a reduction in the ENFIA tax (property tax) in rural areas from 2026, alongside lowering the tax ceiling on rental income (from 35% to 25% for the middle bracket).
3. Tourism: a record year in revenue and a change of destinations
- Financial data: tourism revenues in the first half of 2025 recorded a record of 7.6 billion euros (an increase of 11% year over year). There was an average rise of 5%-10% in the value of commercial and hotel properties.
- Profitability indicators: the RevPAR indicator (average revenue per available room) is rising consistently, which is drawing international hotel chains to expand their operations in Athens, Thessaloniki and the large islands.
- A change in the demand map: while the Cycladic islands (Santorini and Mykonos) experienced some decline in bookings due to high costs and saturation, areas such as Crete and northern Greece (Halkidiki) recorded a jump of tens of percent in tourism demand.
- A “quality over quantity” strategy: the Greek Ministry of Tourism reported a rise in average spending per tourist, a trend supported by the entry of international luxury hotel chains into the local market.
- Quality of life: Greece was ranked by International Living as the number 1 destination in the world for retirement, a figure that increases demand for residential and long-term real estate.
4. Financing and investment channels
- Debt tracks: because of relatively high interest rates in the banking system, the use of “debt tracks” (Debt Financing) as a tool for entrepreneurial investment has grown. These tracks offer investors priority in repayment and predetermined returns backed by real estate assets, which is considered a more conservative channel in a maturing market environment.
- A “user-friendly” investment environment: the US government's Investment Climate 2025 report defines Greece as an “investor-friendly” destination. This year the government advanced laws that streamline building-permit procedures, reduce bureaucracy and increase regulatory transparency - steps that are critical for reducing risks for foreign developers.
Greece closes 2025 as a market that has matured and stabilized. The combination of political stability within the European Union, strong macro data and unprecedented tourism demand makes it an optimal destination for long-term investments in 2026.
Our media coverage
The revolution of 1989 did not create chaos; it began a long process that built a mature, stable European market that is open to capital.
36 years of reforms, NATO, the European Union and Schengen - and prices are still priced as if time had stopped.
March 2025 changed the game: a B1-level language test became mandatory for obtaining a Romanian passport. Already in the process? The clock is ticking until March 14, 2026, otherwise the file is closed and you start from scratch.
Bucharest is no longer playing “cheap versus expensive.” It is going through a phase, from an emerging market to a market that understands branding, experience and status.
Romania
The Bucharest mayoral election - December 2025
On December 7, 2025, partial local elections were held in Bucharest for mayor of the capital, following the vacancy of the post (after the previous mayor, Nicușor Dan, was elected President of Romania). Voter turnout was reported at around 33%, a figure considered low relative to the previous local elections.
The winner is Ciprian Ciucu, candidate of the liberal PNL party, who is close to the sitting Prime Minister Ilie Bolojan, and who received about 36% of the votes (more than 210 thousand voters). In second place was Anca Alexandrescu, who was politically supported by AUR, followed by other candidates from the local party spectrum.
The policy presented by the elected mayor during the election campaign:
Advancing central statutory planning: adopting a new PUG for Bucharest
In the campaign messages and descriptions of the “first priority year,” Ciucu set as a central goal advancing/adopting a new Plan Urbanistic General (PUG) for the city - an umbrella document that regulates land-use policy, building rights and the principles of urban development. In the Romanian context, this is a tool that directly affects planning certainty, permits and development frameworks.
Urban renewal of the city center and the Unirii-Victoriei axis, through a PUZ
Ciucu committed to an “urban regeneration” move in the historic center and on the Piața Unirii-Piața Victoriei axis, and stressed that in practice this is a process that requires more detailed planning (PUZ), followed by a sequence of tenders/planning/execution.
A “park city” and a metropolitan green belt
Ciucu advanced a concept of “oraș-parc” (park city): more green areas, public spaces, bike paths and pedestrian continuity. As part of this, the “București-Ilfov Green Belt” project was also mentioned, as a green ring/green corridors around the metropolitan area, with stated goals of reducing pollution and reducing the “urban heat island.”
Traffic, pollution and transportation - as a planning implication
Ciucu marked traffic congestion and transportation pollution as “urgent” goals, alongside renewal of the center. In the planning context, this means an emphasis on changing the prioritization of street space, public transport connectivity, perimeter/small parking facilities, and bicycle infrastructure (also relying on the MasterplanVelo approved by the city council).
Urban infrastructure as a basis for development, and above all central heating (Termoficare)
Alongside “classic” planning issues, Ciucu placed significant emphasis on rehabilitating the city's heating infrastructure, including continued modernization of the distribution network and replacement of old sections. For the construction market, this is a component that affects schedules, infrastructure coordination and development costs in certain areas.
The Nordis Law changes the real estate market - from developer conduct to bank financing
On December 11, 2025, a substantive legislative amendment in the residential sector came into force in Romania, known in the local media as the “Nordis Law” (Legea nr. 207/2025). The law, enacted following high-profile cases in the sale of off-plan apartments, is intended to strengthen buyer protection, but in practice it is leading to a much broader change in developer conduct and in the financing structure of real estate projects.
The law provides that a commitment to sell an apartment will be signed only after the building permit is registered in the land book, and in building projects - after the preapartamentare procedure is carried out and land books are opened for the future units. In addition, the law also limits the scope of advance payments that may be collected from buyers and sets a graduated payment mechanism according to the stages of construction progress. Advance payments are required to be deposited in a bank account dedicated to the project, and their use is limited to financing the works only, subject to professional approvals. The media stress that this is a deep change in the developer-buyer relationship, which narrows the possibility of using buyers' money as a free source of financing. Some of the implementation provisions, first and foremost the full obligation to carry out preapartamentare, will take effect at the beginning of March 2026.
Since the law took effect, growing caution is evident among developers. The economic media in Romania report a postponement in the launch of new projects, an adjustment of marketing and contracting documents, and a reduction in early off-plan sales. Many developers are hurrying to complete planning and title registrations even before approaching the market, and some are turning to alternative financing structures or professional partnerships during the transition period.
At the same time, there is a direct effect on financing mechanisms. The restrictions on using buyers' money as an early source of financing are returning the banks to the center of the development process. Although no new official banking guidelines setting binding numerical requirements have been published, the market's conduct shows that banks are taking a more conservative approach toward developers: demands for higher equity, thorough preliminary checks, and tougher financing terms.
Developers report that equity that was previously required at rates of about 15%-25% of project cost is now being replaced by requirements approaching 25%-35%, especially in new projects or for developers without a proven record. The way land value is assessed is also becoming more conservative, with reduced weight given to future potential and to income from early sales, and a strong emphasis on a clear registration status in the land registry.
In addition, there is a tightening in the nature of bank financing: tighter control over project accounts, release of funds according to engineering milestones rather than the pace of marketing, and an increase in interest margins, mainly for small and medium-sized developers. These trends are expected to accelerate processes of selection and consolidation in the industry, and to favor established developers with equity and a proven record.
Economic commentary in Romania indicates that the law was received positively at the public level, but raises concern about regulatory burden, a slowdown in the pace of new project launches and even rising prices, because of the need for more expensive early financing and high compliance costs. At the same time, a change in buyer behavior is reported, with a decline in willingness to buy apartments “on paper” and a preference for projects that are more advanced in terms of registration.
Taken as a whole, the Nordis Law turns out to be not only a consumer law but a move that changes the financial balance of the Romanian real estate industry. March 2026, the date the law's provisions take full effect, is expected to serve as a central test of the market's ability to adapt to the new rules of the game.
Regulatory and tax tightening - what Israeli developers and investors must know
2026 marks a clear change of direction in Romania's fiscal and regulatory policy. After years of a relatively flexible environment friendly to developers, a broad package of changes is taking effect whose purpose is to increase collection, reduce gray areas and strengthen corporate discipline. For Israeli investors and developers, the meaning is not only a rise in taxes but a deep change in the rules of the game. They shift the balance point between entrepreneurship, financing, use of company funds and risk management.
Below are the main relevant provisions and their implications:
Dividend tax raised to 16%
From January 1, 2026, the dividend tax rises from 10% to 16%, and it applies to any dividend actually distributed from that date, even if the profit accumulated in previous years. The tax is withheld and reported at the time of payment to the shareholders. This is a direct blow to the net return of foreign investors, and in particular to holding structures based on ongoing profit distribution.
Taxation of personal use of company funds - closing the “shortcut”
Purchase of goods or services by the company that are actually used by the shareholder or a related person for private needs (a car, an apartment, travel, services) will be treated as personal income subject to 16% tax, similar to a dividend.
For example: a car purchased/leased by the company and actually used by the shareholder without a clear business justification;
an apartment/villa registered in the company's name but used as the shareholder's residence; expenses for flights, hotels, cars, restaurants, conferences - without a clear connection to the company's activity; an “inflated” payment to a shareholder for services or rental of a property at a price above market price. All of these, if real and reasonable business use cannot be proven, will be treated as personal income of the shareholder.
The emphasis shifts from a formal test to a substantive test: an invoice is not enough - real, reasonable and documented business use is required. For Israeli developers who were accustomed to “drawing” value from the company through expenses, this is a critical change with real personal exposure.
A change in the micro-company regime
The revenue ceiling for a micro-company stands at only 100,000 euros, and it is mandatory to employ at least one full-time employee. Exceeding the ceiling during 2026 leads to a move to regular corporate tax, permanently, with no possibility of returning. In addition, the 3% tax bracket was abolished and only a uniform 1% tax remains.
New restrictions on dividends and loans to shareholders
A new law restricts the distribution of dividends and the granting of loans to shareholders and related persons. A company that has distributed interim dividends may not extend loans to shareholders in the same year. In addition, if equity is lower than half of the registered capital, repayment of loans to shareholders and distribution of dividends are prohibited until the situation is corrected. A violation entails significant fines and even personal liability.
Suppose a company with equity of 200 lei set up a project and channeled money into construction, but along the way losses or debts arose. Even if in the end there is money in the bank account, Romanian law provides that the owner may not take money out of it, neither as profit nor as repayment of funds he himself gave the company, until the company's situation improves.
The new restrictions on distributing dividends and repaying loans when equity is eroded require active capital management. Investors who injected funds as shareholder loans will need to consider converting them to equity or changing the structure, otherwise they will be stuck with money “trapped” in the company.
Minimum wage
The minimum wage remains 4,050 lei in the first half of 2026, with an intention to raise it to 4,325 lei in July.
An obligation to hold an active bank account
Every company is required to hold an active bank account throughout its period of activity. A company without a bank account will be classified as “fiscally inactive,” which leads to denial of expense and VAT deductions - an especially severe sanction for real estate and development companies.
An obligation to allow card payment (POS)
Companies and sole traders are required to allow payment by electronic means (cards, apps), unless all activity is carried out through bank transfers only. Here too the direction is clear: a push toward a documented and transparent economy.
The changes for 2026 are not isolated but systemic. Romania is clearly signaling a move to tighter enforcement, full transparency and reduced structural flexibility. For Israeli investors and developers, the meaning is an immediate need to re-examine holding structures, profit distribution policy, use of company funds and overall tax planning. It must be taken into account that more and more provisions impose direct liability on shareholders and managers, not only on the company. For an Israeli developer who is not present day to day in Romania, the meaning is higher personal risk in the case of negligent management or excessive reliance on local parties. What worked until 2025 may become a legal and tax exposure in 2026.
Bulgaria
Bulgaria joins the eurozone
The European Union has given final approval to Bulgaria's accession to the eurozone; from January 1, 2026, the euro will become the country's official currency and replace the Bulgarian lev. With this, Bulgaria will become the 21st country to use the common European currency.
The move is the result of a long process lasting more than a decade, during which Bulgaria was required to meet the eurozone's economic criteria, including price stability, budgetary discipline, financial stability and maintaining a fixed exchange rate. Since 2020 the Bulgarian lev has been pegged to the euro under the ERM II mechanism at a fixed rate of 1 euro = 1.95583 leva, a rate that will also remain the basis for the final conversion.
The transition is expected to be carried out in a gradual and controlled manner, including an overlap period in which prices will be displayed in both leva and euros, adjustments in banking systems, and preparation by businesses and financial institutions for the currency change. The Bulgarian government and central bank stressed that there is no intention to round prices upward, and that supervisory measures will be taken to prevent the transition from being exploited to the detriment of consumers.
Bulgaria is one of the relatively poorest economies in the European Union, and the move to the euro is seen by its leadership as a significant step in deepening economic integration in Europe, strengthening international confidence in the local economy and reducing barriers to trade and cross-border financial activity.
At the same time, there is a lively public debate in the country about the implications of the move, including fear of price rises in the short term, the effect on the purchasing power of the local population, and adjustment challenges for small businesses. The authorities, for their part, stress that the experience of other countries that joined the eurozone shows only moderate effects, mainly when the transition takes place under a pre-set fixed exchange rate.
The move to the euro marks a new stage in the Bulgarian economy and will place it fully within the European monetary area, alongside the countries of Western and Central Europe.
From the writer's desk:
Bulgaria's adoption of the euro is expected to affect not only the macro-financial economy but also real markets, first and foremost the real estate market. A currency change does not create demand out of nothing, but it changes the way pricing works, the perception of risk and access to capital.
First, the move to the euro in effect eliminates exchange-rate risk for European and international investors, and aligns with the pricing and financing mechanisms used in the eurozone. This means greater financial transparency and the removal of a technical barrier that existed for some foreign investors.
Second, in other countries that joined the eurozone, an increase in interest from institutional capital and funds was recorded in the first years, mainly in central urban areas, income-producing projects and properties with clear “European” characteristics. However, past experience teaches that the effect is not uniform, and depends greatly on product quality, location and deal structure.
At the same time, it is important to stress that the move to the euro does not change overnight the structural characteristics of the local market: regional gaps, local purchasing power, developer quality, planning regulation and enforcement capacity. Therefore, while the operating environment becomes more “European,” the level of risk does not disappear but changes shape.
As a result, real estate investments in Bulgaria in the coming period are expected to attract growing interest, but also to require a higher level of analysis, differentiation between areas and properties, and a deep understanding of local dynamics and not only of the macroeconomic headline.
The move to the euro marks a new chapter for Bulgaria, but for investors and developers it is a starting point for a fresh analysis - not an end point.
Cyprus
Significant tax changes in Cyprus took effect on January 1, 2026
At the start of 2026 a broad package of tax reforms took effect in Cyprus, considered the most significant change in the Cypriot tax system in more than 20 years. The House of Representatives of Cyprus approved the tax reform on December 22, 2025, and the new laws were reported in the local press as a structural overhaul of the tax system, with effects on individuals, businesses and investors.
Main changes to corporate tax and for investors
Among the main changes now in effect is the increase in the corporate tax rate from 12.5% to 15%, a step that brings Cyprus's tax rules closer to international standards and the OECD's minimum taxation framework. Despite the increase, this rate is still considered competitive among European Union countries.
Another significant development is the abolition of the arrangement known as “Deemed Dividend Distribution,” which previously required double profit allocations, alongside a reduction in the SDC (Special Defence Contribution) rate on dividends from 17% to 5% for Cypriot residents. The move is intended to reduce tax liability on profit distribution and streamline the overall tax structure.
Changes in personal taxation and relief for households
The reform is not only about corporate tax. For individuals, the income tax exemption threshold was raised to 22,000 euros a year, instead of 19,500 euros previously, and the tax bracket system was updated as part of an effort to ease households' disposable income.
In addition, new tax credit points were introduced for families with children, intended to offer broader support to households and strengthen their economic standing in the high cost of living of recent years.
A more comprehensive reform - beyond the tax target
The Cypriot press reports that the reform also includes significant steps to strengthen tax enforcement and compliance, simplify reporting obligations, and a system of imposing obligations on businesses that do not meet their tax payments. According to the reports, the government and parliament aim to create a modern, transparent and competitive tax framework in this new era as well.
The reform does not include a dedicated tax-rate increase or a new bracket for real estate rental income. Income continues to be taxed as part of personal income tax, according to the updated brackets, and in relevant cases also subject to the SDC for Cypriot residents.
However, there is a clear and significant tightening in the aspects of enforcement, reporting and the manner of collecting rent.
Collecting rent - cash is out of the game
As of 2026, and in line with the policy being implemented and emphasized as part of the reform, rent collection is required to be carried out only through bank transfers or documented digital payment methods - such as a standing order, bank transfer, credit card or recognized payment platforms.
Collecting rent in cash is not necessarily prohibited in the wording of the law for every amount, but it is not recognized for tax purposes, and may expose the landlord to fines, assessments, administrative sanctions and even claims of non-reporting. In practice, the meaning is clear: cash rent has become impossible from a regulatory standpoint.
The authorities in Cyprus are placing growing emphasis on cross-checking data between:
lease contracts, tax reports, bank transfers and bank data - as part of the fight against undeclared money and widening the tax base.
From the writer's desk:
The changes in the reform may affect international tax structures, the tax planning of start-up companies and private investors, as well as profit and dividend calculations. Businesses operating in Cyprus, or considering an investment in that country, need to re-examine tax plans, holding structures and financial models in light of the new tax changes and their impact on cash flows, profitability and risk management.
For foreign investors and owners of income-producing properties in Cyprus, 2026 is not a year of a “new tax on rent,” but a year of changing operational rules of the game:
The method of collection, documentation, reporting and adaptation to double-tax treaties become just as critical as the tax rate itself.
Overtaking Britain, France and Germany - the migrants are returning to their homeland in Eastern Europe
The article reports, relying on the Daily Mail and on data from the UK Office for National Statistics, that many of the roughly one million Romanians who emigrated to Britain are returning to their homeland, and that the number of Romanians leaving is now higher than that of any other nationality in the European Union, including Poles. Among the reasons cited: crime, the state of the health system and the cost of living in Britain, versus the economic improvement in Romania, where according to the article the average wage has risen sharply over the past decade, unemployment is low, and rent for a two-room apartment in Bucharest stands at 300 to 500 euros a month. The Romanian government, which has lost about a quarter of its population to emigration since 1989, offers grants to returning entrepreneurs, and the article also cites the Numbeo site, which ranks Romania as safer than Britain, France and Germany.
Source: Maariv, Eli Leon, 29.12.25
Accurate as of the issue date. Laws, tax rates and procedures change; check the current position before any decision.
Translated from the Hebrew original. עברית