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They’re Here: Greek Tax Rate Increases

  • Jul 20, 2015 | Gail Cole

 Dining out in Greece just became a bit costlier.

It’s a good day to be a banker in Greece. Doors are open after a three week hiatus, and if it isn’t exactly business as usual, at least it’s business. Instead of being limited to daily withdrawal limits of €60, bank customers may bundle together a week’s worth of withdrawals and leave the bank with €420 in their pockets. Several additional banking services have also been restored, although many restrictions remain in place.

The semblance of normalcy may (or may not) be enough to soften another blow: increased value added tax (VAT) on many goods and services, including restaurant transactions and certain food items, and a new consumer tax on previously untaxed basic food items. Tax increases are also now in effect in the transportation industry, while rate increases (from 6.5% to 13%) in the hospitality industry are scheduled to take effect on October 1.

In an ideal world, tax rate changes come with lead time, which businesses use to change point of sale systems, train staff, and educate consumers. There has been little time for businesses to prepare for the tax changes now being implemented in Greece – the result of a last ditch economic bailout agreement reached between the European Union and Greece just one week ago. Worse, there is much confusion as to which products are subject to the increased rate. For example, CNBC reports that spaghetti without meat is now taxed at 13% but spaghetti with meat is taxed at 23%; milk is taxed at 13% but sugar gets the higher 23% rate.

As a result, many businesses are absorbing the extra tax for now. The New York Times reports that Loukas Papanastasiou is not raising prices at Loukas’s Café, where customers can still buy their iced coffee for €1. To make his business work, he says, “I will have to find a way to reduce my profit margin.” He is not alone. A checkout clerk in an Athens supermarket could not identify which products are now subject to higher tax rates. All that will be sorted “as time goes by.”

New tax rates at a glance

More than 100 types of goods and services are now subject to a higher rate of VAT in Greece, including the following:

  • Admissions to cinemas: 23%
  • Catering: 23%
  • Florist services: 23%
  • Foods (some, not all), including coffee, meat, milk, sliced bread, and sugar: 23%
  • Restaurant services: 23%
  • Transportation services (buses and taxis): 23%

A handful of rate decreases also take effect July 20, 2015:

  • Admissions to theaters: 6% (down from 6.5%)
  • Books: 6% (down from 6.5%)
  • Medicines: 6% (down from 6.5%)

Confused? So are the Greeks.

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photo credit: A Village Taverna via photopin (license)

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.