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Published:September 16, 2021

Greece retains reduced VAT rate for tourism as economy improves

Reduced VAT rate to encourage economic growth 

Greece retains reduced VAT rate for tourism as economy improves

Greece is keeping VAT at a reduced rate of 13% for the tourism sector. The reduced Greek rate also applies to soft drinks, coffee, cinemas and gyms. Greece’s Prime Minister Kyriakos Mitsotakis announced the extension of the reduced VAT rate while outlining the state of the Greek Economy. Corporate tax will also be lowered in 2022.


Robust economic growth

Mitsotakis says the economy is expected to grow at 5.9%, beating forecasts. The government expects that a resurgent tourism industry will further boost the country’s economic recovery.  

In addition, the government outlines measures to help drive entrepreneurial activity in Greece. 


VAT cuts to counter inflationary pressure

Greece is maintaining its reduced VAT rate on specified items amid rising fuel and transport costs.

As prices rise, Greece’s food retailers have urged the government to reduce the VAT rate on food. Food price increases in Greece have so far been relatively modest. However, retailers warn that  “there are signs there may be some stronger pressure for increases in the consumer price index in Greece and in prices in the market.”


Relief against rising energy prices

Mitsotakis also announced specific measures to address energy price increases. These include household energy subsidies and measures to absorb the cost of rising prices.

Rising energy prices have caused headaches for leaders throughout the EU. In Spain, the government recently announced temporary tax relief to counter rising electricity and gas prices.

At the same time, many lawmakers have proposed ‘green VAT’ initiatives designed to combat climate change. Managing the apparently contradictory demands of providing energy price relief and developing effective climate tax policies remains a complex challenge for legislators.  


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