Special VAT Rate on Five Greek Islands Extended Until End of 2019

The island of Kos in Greece.

The reduced value-added tax (VAT) regime for five Aegean islands in Greece has once again received a six-month extension, according to a ministerial decision signed recently by Finance Minister Euclid Tsakalotos and Deputy Minister Katerina Papanatsiou.

The islands in question are those in the northeastern Aegean that have received the main burden of refugee flows – Leros, Lesvos, Kos, Samos and Chios. The reduced value-added tax regime sees a 30 percent discount on VAT rates.

The island of Chios in Greece.

The decision refers to the “extremely urgent need to address the consequences of increased refugee flows on the islands of Leros, Lesvos, Kos, Samos and Chios”.

The special VAT status will be extended for the five islands until December 31, 2019.

Moreover, the decision underlines that the average number of refugees at the Reception and Identification Centers on the aforementioned destinations have exceeded reception capacities since June 2018.

It is reminded that the abolition of reduced VAT rates for 27 Northeast Aegean and Dodecanese islands originally took effect on January 1, 2018. The five islands had been exempt from the higher VAT rates originally until June 30, 2018 and then until December 31, 2018. A further extension was then given until June 30, 2019.

All the islands, with the exception of the five, have been required starting January 1, 2018, to implement new VAT rates from the 5 percent, 9 percent and 17 percent to 6 percent, 13 percent and 24 percent, respectively on basic food items, medication, hotel stays, books and magazines.