Greek VAT rises in confusion

Mon 20th Jul 2015

Today, over 100 types of goods and services, including milk, fruit, fish, meat switch from the 13% reduced VAT rate to the Greek standard VAT rate of 23%. This is part of the reforms committed to by the Greek government with its creditors to open up discussions on a third bailout.

Whilst some of the major changes are clear, including restaurant and catering services rising to 23%, the is doubt around the details of many of the other increases. Hotel accommodation VAT will also rises from 6.5% to 13%. The 6.5% rate will fall to 6%, although it is only applied for a very narrow range of foodstuffs and medicines. The reduced rates enjoyed by the holiday and remoter islands will not be changed until the Autumn or in 2016.

The changes should raise over €2 billion per annum. However, there has been no detailed estimation of this amount, the likely dent to consumption or the risk of tax evasion.

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