Greek VAT flat rate proposal
Greek is again considering the possibility of a flat-rate VAT regime, consolidating the existing standard VAT rate of 23% with the reduced VAT rates of 13% and 6.5%. A potential combined rate of 20% has been discussed.
The aim is to start unwinding some of the sharp VAT rises of recent times. Greece went through a number of VAT increases since the start of the financial crisis. Its standard VAT rate went from 19% to 23% by
However, any reduction in Greek VAT rates and government revenues will by closely watched by the European Commission, European Central Bank and International Monetary Fund – the ‘Troika’. These groups helped bail out Greece at the height of the recent sovereign and Euro crisis. Greece will have to gain their approval for such tax cuts, and it can be expected that matching tax rises or spending cuts will have to be submitted.
The government was able to achieve a reduction in the Greek restaurant VAT rate to 13% in 2013. This required agreement from the Troika, and is only intended to last one year.