Varying VAT Hikes on Greek Islands Cause Confusion

It seems that vacationers don’t know what to pay and entrepreneurs don’t know what to charge on the so-called “upscale” Greek islands after the government released a directive “explaining” the new adjusted value-added tax (VAT) rates on commodities including food and drinks and services such as accommodation.

Three tax rates — five percent, nine percent and 16 percent — have been adjusted, to six percent, 13 percent and 23 percent respectively, doing away with a special reduced — by 30 percent — tax rate which was applicable on the islands until now.

Business people on the islands of Mykonos, Santorini, Rhodes, Skiathos, Naxos and Paros are at a loss over the directive which among others foresees changing tax rates for ferry boat passengers depending on destination and port of departure as well as on in-between stops.

At the same time, tax rates on edible products such as meats, dairy and fish will again depend on the receiving destination: eg fish from Mykonos going to the tiny island of Anafi will be charged at 9 percent VAT but fish from Anafi going to Mykonos will be taxed at 13 percent.

Hoteliers, in the meantime, will be charging guests depending on the package deal (full board, half board, breakfast only, all inclusive) with additional services being taxed accordingly. According to the directive, a 23 percent VAT rate on food services should be calculated cumulatively from 5 percent to 30 percent on the total price of the package deal, depending on whether it includes breakfast or meals.

To read the directive (in Greek), press here.