VAT in Greece: standard rate to increase

Tue May 24, 2016

The standard rate of VAT in Greece is to increase from 23% to 24% on June 1 after the relevant tax bill amendments were adopted by the Greek Parliament on May 22.

VAT in Greece

The tax rate increases approved on Sunday will have a broad impact as increases were announced to the taxation of cars, fuel, cable TV, lotteries, telephone subscriptions, beer, and cigars.

The background to these taxation measures was the May 24 meeting of Eurozone finance ministers in Brussels. When this meeting concluded – at 2am on Wednesday morning (May 25) – Greece had unlocked a further tranche of €10.3 billion from the €86 billion bailout fund agreed to in August 2015.

One of the key reasons for releasing this latest batch of bailout funds, according to most observers, was the Syriza-led government’s approval of the €1.8 billion of revenue-raising measures, including those tax increases on coffee, tobacco, internet use and a higher VAT.

VAT in Greece headline amendments

The headline taxation amendments passed on May 22 by the Greek Parliament include:

  • Standard VAT rate increase from 23% to 24% as of June 1, 2016: this measure is expected to yield €437 million.

  • As of June 1, 2016, the new VAT rates will apply to the following islands: Syros, Thasos, Andros, Tinos, Karpathos, Milos, Skyros, Alonnisos, Kea, Antiparos, and Sifnos. So, special reduced VAT rates of 16% and 9% will still apply to other Aegean Greek islands but for B2B transactions only. This marks the first time we are aware that there is such a distinction between B2C and B2B customers in European VAT legislation. The standard VAT rates of 24% and 13% will indeed apply to B2C transactions in all of the Greek Islands as of June 1, 2016.

  • A new 10% cable TV tax that kicks in on June 1, 2016, and a new 5% tax on telephone subscribers that comes in on January 1, 2017: these combined measures are estimated to raise €90 million.

  • New car tax rates will also be introduced on June 1, 2016, and will be based on a vehicle’s value rather than its engine size

  • An excise duty increase on fuels used for lighting, heating and other uses will be phased in but an increase to the tax on heating oil will apply from October 15, 2016

  • Introduction of a fixed telephone subscribers tax at a rate of 5% which will apply with effect from January 1, 2017

  • No more beer tax

  • Cigar tax to rise six percentage points from 20% to 26% on January 1, 2017

  • A new accommodation tax for hotels and room-letting will apply from January 1, 2018.

Note: Taxamo content is created for guidance only, please consult your local tax advisor for professional advice.

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