The Greek parliament has approved a 1% hike in VAT, effective from 1 June. This increase will see the standard rate of VAT go from 23% to 24%. The rise is expected to generate between €400m and €500m, and will help meet a gap in the 2017-18 budget forecast. It will also help avoid a potential VAT rise in domestic electricity, water and private education
Financial analysts have warned that the VAT increase is likely to have a depressing effect on the Greek economy as it will negatively affect the nation’s core industry – tourism, amongst a myriad of other industries. The effects of the VAT increase could also have negative repercussions within Greece’s superyacht charter market.
Category I vessels chartering in Greece (that is vessels that have been granted permission to perform international cruises) are entitled to a 60 % VAT discount. Therefore, the VAT rate applicable to these vessels will rise to 9.6 % from the current 9.2 %.
Category II vessels, which are permitted to perform long range cruises within Greek waters, benefit from a 50 per cent VAT discount; the rate for these vessels will now be 12% rather than 11.5%. Vessels chartering for a period of 48 hours or less are not entitled to any VAT discount and will be subject to the full 24% standard rate of VAT.
Statistics suggest that over 60 per cent of all Greek goods will be affected by the tax hike; affected goods include fuel, restaurants and most provisions, all in all leading to a costlier Greek charter or holiday experience. There are also fears that tax increases will further exacerbate Greece’s issue with tax evasion and avoidance, potentially driving the struggling nation into a progressively more recessionary position.
Written by Samantha Snow, Client Services Manager