Restaurant VAT Hike Causes Stir

“The increase of the VAT on food catering services will not affect the taxation of all-inclusive tourism packages sold abroad,” Finance Minister Evangelos Venizelos said during a press conference in late August.

The Greek Government received criticism from restaurant owners and tourism professionals during the summer once it announced a VAT hike on food catering services (restaurants, cafeterias, canteens and hotel restaurants) from 13 to 23 percent. The VAT hike came into effect as of 1 September 2011.

Following the reaction, the minister announced that the specific VAT hike would not affect all-inclusive package holidays booked abroad or half-board holiday deals in hotels obtained from outside Greece.

Greeks that book the same services in Greece would be obliged to pay the full 23 percent VAT rate.

The Association of Greek Tourism Enterprises (SETE) opposed the VAT hike on food catering services and in late August filed a new tax law proposal to the Finance Ministry.

SETE recommended a unitary 6.5 percent VAT rate on the entire range of package services (accommodation, bed and breakfast, half board accommodation, full board accommodation and all inclusive) and called for the VAT on food catering services to return to its original rate of 13 percent as of January 2012.

According to reports, one of the main factors of Greek tourism’s gains this year was due to the government’s decision in November 2010 to slash the VAT rate on accommodation services to 6.5 percent.

However, the gains possibly will be cancelled out next year because of the VAT hike on food catering services, the press said.