Following up the agreement between the Greek Government and the institutions (IMF-EU Commission-ECB), the Greek parliament approved – with a late midnight session – the omnibus bill containing important …
Most important VAT changes in compliance with the Memorandum of Understanding agreement (MoU)
Following up the agreement between the Greek Government and the institutions (IMF-EU Commission-ECB), the Greek parliament approved – with a late midnight session – the omnibus bill containing important VAT (FPA) changes. As per ministry of finance announcement, all necessary actions will be taken in order for the changes to apply from the 20th of July:
- Several products prior taxed with the reduced VAT rate (13%) are now transferred to the standard VAT rate (23%):beef and derivatives, herbs, livestock destined for Human consumption or fur making (poultry, rabbits, foxes etc.), cane sugar, vinegars, animal food, insecticides, firewood, sanitary towels, vehicles destined for transportation of disabled people (over 10 persons). Extended description on the goods that changed VAT rate, may be found in clarification circular issued by the Ministry on the 17th of July (POL 1160)
- Services also transferred to the standard VAT rate (23%): Non exempted Medical and Dental services, e.g. private Hospital services to patients and services rendered for aesthetical purposes, e.g. Plastic surgery. Restaurant services and related services rendered by Cafeterias, Pastries, Taverns, Bars, Catering, Coffee shops, Snack Bars etc. Notice: services in Night Clubs remain at 13% while alcohol drinks continue to be taxed with the 23% rate. Tickets to Cinemas – theaters excluded (details below), concerts, sport events, amusement parks expositions and other similar cultural events also fall under standard VAT rate. Same thing applies to Transportation of people and their luggage. Services rendered by writers, composers, artists and performers and their intellectual rights as far as they are not exempted as per article 22 of VAT legislation. Standard VAT rate now also applies for charity services, services rendered to the elderly, funeral & cremation services, garbage collection, burial and recycling services, clothing, bicycles and special instrument repairs (special: used by doctors or disabled people). Restoration and repairs of old housing and contractor (facon) services related to movable property are also taxed with 23% VAT rate. Radio and television broadcasting duties will now bear standard VAT rate as well.
- Services transferred from the super reduced VAT rate (6.5%) to the standard VAT rate (23%): contractor services related to books, newspapers and magazines (tariff class 4901 & 4902). This part of legislation refers to collections of printed works of art, illustrations and books/leaflets sold in separate issues that altogether constitute a complete product/work of art.
- Provision of Educational services such as foreign languages, computer skills and other general or complementary school educational services are no longer VAT exempted and fall under the standard VAT rate of 23%. Same thing applies to the electronic provision of the aforementioned services. It has to be noted that certain educational services continue to be exempted: tutoring, pre-school and school education, universities, professional training, music schools, and cinema, acting and dance academies.
- Hotel Services are no longer taxed with 6.5% VAT rate. This change will apply from the 1st October of 2015, obviously not to affect Hotel industry incomes of summer 2015. Reduced VAT rate (13%) will apply for Hotel accommodation and related services (camping, trailer parking space rental etc.)
- Services related to agriculture will now be taxed with the standard VAT rate of 23%. Government promised to look for alternatives to compensate farmers.
- Super reduced VAT rate (6.5%) falls to 6%. This rate applies to Theater tickets, in-house services rendered for the care of the elderly, medicine and vaccines (tariff class 3004,3003 & 3002), books and newspapers (tariff class 4901.4902 & 4903)
- Greek Island’s special VAT regime (a 30% reduced implementation of all VAT rates) will gradually stop to apply, starting from the 1st of October 2015 when the most touristic developed Islands (Mykonos, Santorini, Paros) will no longer enjoy the aforementioned special VAT regime. From the 1st of January 2016 rest of the less developed Islands will follow. Remote Islands will remain under the reduced VAT rate regime where the following rates apply: standard (23%), reduced (13%), super reduced (6%).
- VAT attribution via the Banking system. VAT on payments over 1500€ (on retail) and over 3.000€ (on wholesale) made via the Banking system will automatically be withheld by the Banks and attributed directly to the Greek state within five days. These services will not bear extra Bank fees.
All aforementioned changes will start to apply from Monday the 20th of July, 2015. Exceptions in application dates are noted separately in the text above.
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