ECTAA: Tourism Industry Needs Certainty About Upcoming VAT Reform in Greece

ECTAA, the European association regrouping 31 national associations of travel agents and tour operators, has called on the negotiating parties for the Greek bailout program — the Greek government, the EU and the Eurozone Finance Ministers, and the IMF — to reach a swift conclusion to the negotiations, including a decision on the Greek VAT reform.

In an announcement on Wednesday, the European tour operators and travel agents requested a decision without further delay on the future VAT rates for tourism services in Greece.

“Greece is an important tourism destination for Europeans and tour operators would like to continue selling Greece in their programs”, said President of ECTAA, Lars Thykier.

However, due to the uncertainty, foreign tour operators, Greek tour operators, travel agents, hoteliers and tourism business are unable to sign or commit to contracts for the next tourist season in 2016, a fact that will have a long-term impact on incoming tourism in Greece.

“This is why we call on political leaders to find a swift agreement that will allow Greece to remain an attractive and competitive destination in Europe”, Mr. Thykier said.

Changes to VAT rates, if any, should be implemented with sufficient advance notice, so that they can be integrated into the prices concluded between tourism businesses.

According to ECTAA, any changes to VAT rates must be implemented gradually to avoid a “ripple effect” on Greek’s tourism, the backbone of the Greek economy.

“A drastic increase of VAT rates cannot be absorbed by the industry and will be passed on to the consumers, who are highly price sensitive”, the association noted.

ECTAA added that with average VAT rates for tourism services in Southern Europe ranging between 4 and 8%, Greece could quickly price itself out of a very competitive tourism market.

“ECTAA has always supported the application of reduced VAT rates for tourism services considering the huge economic and employment growth potential for Europe and the fact that Europe is losing market share to other fast emerging destinations in the world”, the association concluded.

Greek tourism contributes more than 20% to the Greek GDP and covers 60% of the trade deficit balance, while it employs 20% of the workforce and generated 40 billion euros in 2014.