James Thornton 
A Comprehensive Guide to VAT in Greece: Rates and Exemptions
Table of Contents
- Introduction to VAT in Greece
- The Greek VAT System: An Overview
- Standard VAT Rate in Greece
- Reduced VAT Rates in Greece
- VAT Exemptions in Greece
- VAT Registration and Compliance
- VAT Reporting and Payment
- VAT Refunds for Businesses
- VAT for Non-Resident Businesses
- Recent Changes and Future Trends in Greek VAT
- Conclusion
- FAQs
1. Introduction to VAT in Greece
Value Added Tax (VAT), known as “Foros Prostithemenis Axias” (FPA) in Greek, is a crucial component of the Greek taxation system. As a member of the European Union, Greece aligns its VAT regulations with EU directives while maintaining some country-specific features. This comprehensive guide aims to provide a detailed overview of the VAT system in Greece, including rates, exemptions, and compliance requirements for businesses operating within the country.
Understanding VAT in Greece is essential for both local and international businesses, as it affects pricing strategies, financial planning, and overall business operations. Whether you’re a small business owner, a multinational corporation, or an individual interested in Greek taxation, this guide will equip you with the necessary knowledge to navigate the complexities of the Greek VAT system.
2. The Greek VAT System: An Overview
The Greek VAT system, implemented in 1987, follows the general principles of the EU VAT Directive. It is a consumption tax applied to goods and services at each stage of the production and distribution process. The tax is ultimately borne by the final consumer, with businesses acting as intermediaries in collecting and remitting the tax to the government.
Key features of the Greek VAT system include:
- Multiple VAT rates depending on the nature of goods or services
- Reverse charge mechanism for certain transactions
- Intra-Community supply and acquisition rules
- Specific regulations for imports and exports
- Special schemes for small businesses and certain sectors
The Greek tax authorities, under the Ministry of Finance, are responsible for administering and enforcing VAT regulations. They work closely with EU counterparts to ensure compliance with broader European tax policies and to combat VAT fraud.
3. Standard VAT Rate in Greece
The standard VAT rate in Greece is currently set at 24%. This rate applies to the majority of goods and services sold within the country. It’s important to note that this rate has fluctuated over the years as part of Greece’s economic adjustments and in response to financial crises.
The 24% rate applies to a wide range of products and services, including:
- Most consumer goods
- Telecommunication services
- Alcoholic beverages
- Tobacco products
- Electrical appliances
- Professional services
- Construction and real estate (with some exceptions)
Businesses must carefully apply this rate to their sales and purchases to ensure accurate VAT calculation and reporting. The standard rate is a significant factor in pricing decisions and can impact the competitiveness of Greek businesses in the international market.
4. Reduced VAT Rates in Greece
In addition to the standard rate, Greece employs reduced VAT rates for specific categories of goods and services. These reduced rates are designed to make certain essential items more affordable and to support particular sectors of the economy.
4.1 The 13% Reduced Rate
The 13% reduced rate applies to various goods and services, including:
- Fresh food products
- Non-alcoholic beverages
- Electricity and natural gas supply
- Hotel accommodations
- Restaurants and catering services (excluding alcoholic beverages)
- Certain medical equipment and pharmaceuticals
- Public transportation services
4.2 The 6% Super-Reduced Rate
Greece also has a super-reduced rate of 6%, which applies to:
- Books and e-books
- Newspapers and magazines
- Theater tickets
- Certain pharmaceuticals
- Vaccines for human medicine
These reduced rates play a crucial role in the Greek government’s social and economic policies, aiming to balance tax revenue with affordability for essential goods and services.
5. VAT Exemptions in Greece
Certain goods and services are exempt from VAT in Greece. VAT exemptions mean that no VAT is charged on the sale of these items, but the supplier may not be able to recover the input VAT on related purchases. Key VAT-exempt categories include:
- Financial services (e.g., banking, insurance)
- Healthcare services provided by licensed professionals
- Educational services
- Postal services
- Rental of residential property
- Certain cultural services (e.g., museums, art galleries)
- Exports of goods to non-EU countries
It’s important to distinguish between VAT exemptions and zero-rated supplies. Zero-rated supplies are technically taxable but at a 0% rate, allowing businesses to reclaim input VAT, while exempt supplies do not allow for input VAT recovery.
6. VAT Registration and Compliance
Businesses operating in Greece must register for VAT if their annual turnover exceeds certain thresholds or if they engage in specific types of transactions. The registration process involves obtaining a Greek Tax Identification Number (AFM) and submitting the necessary documentation to the tax authorities.
6.1 VAT Registration Thresholds
The VAT registration thresholds in Greece are as follows:
- €10,000 for providers of services
- €5,000 for suppliers of goods
Businesses below these thresholds may opt for voluntary VAT registration if they wish to benefit from input VAT recovery or if they expect to exceed the threshold in the near future.
6.2 Registration Process
To register for VAT in Greece, businesses must:
- Obtain a Greek Tax Identification Number (AFM)
- Complete and submit the M2 form for VAT registration
- Provide supporting documentation (e.g., company registration documents, ID of company representatives)
- Register for the MyTAXISnet online platform for VAT filing and payments
Non-resident businesses may need to appoint a fiscal representative in Greece to handle their VAT obligations.
7. VAT Reporting and Payment
Once registered, businesses must comply with Greek VAT reporting and payment requirements. This involves regular submission of VAT returns and timely payment of any VAT due.
7.1 VAT Return Filing
VAT returns in Greece are typically filed on a monthly or quarterly basis, depending on the business’s turnover and type of activities. The standard filing periods are:
- Monthly: For businesses with annual turnover exceeding €1.5 million
- Quarterly: For businesses with annual turnover below €1.5 million
VAT returns must be submitted electronically through the MyTAXISnet platform by the last working day of the month following the reporting period.
7.2 VAT Payment
VAT payments are due concurrently with the submission of VAT returns. Businesses can make payments through various methods, including:
- Online bank transfers
- Direct debit arrangements
- Payment at authorized banks
Late filing or payment can result in penalties and interest charges, making timely compliance crucial for businesses operating in Greece.
8. VAT Refunds for Businesses
In situations where a business’s input VAT exceeds its output VAT, they may be entitled to a VAT refund. The process for claiming VAT refunds in Greece can be complex and time-consuming, especially for non-resident businesses.
8.1 Refund Process for Greek Businesses
Greek businesses can claim VAT refunds through their regular VAT returns. If a refund is due, they can either request a direct repayment or carry forward the credit to offset against future VAT liabilities. The Greek tax authorities may conduct audits before approving significant refund claims.
8.2 Refunds for EU Businesses
EU businesses not established in Greece can claim VAT refunds through the EU VAT Refund Portal. This electronic system allows businesses to submit refund applications to their home country tax authorities, which then forward the claims to the Greek tax authorities for processing.
8.3 Refunds for Non-EU Businesses
Non-EU businesses can claim VAT refunds in Greece under the 13th Directive procedure. This involves submitting a paper-based application directly to the Greek tax authorities, along with supporting documentation and proof of VAT incurred in Greece.
9. VAT for Non-Resident Businesses
Non-resident businesses supplying goods or services in Greece may have VAT obligations, depending on the nature of their transactions and their customers. Understanding these obligations is crucial for compliance and avoiding penalties.
9.1 Distance Selling
EU businesses selling goods to Greek consumers (B2C) must register for VAT in Greece if their annual sales exceed the distance selling threshold of €35,000. Below this threshold, they can charge VAT at their home country rate.
9.2 Reverse Charge Mechanism
For B2B supplies of services, the reverse charge mechanism often applies. This means the Greek business customer accounts for VAT on the purchase, relieving the non-resident supplier of VAT obligations in Greece.
9.3 Fiscal Representation
Non-EU businesses may be required to appoint a fiscal representative in Greece to handle their VAT affairs. This representative is jointly liable for the business’s VAT obligations in Greece.
10. Recent Changes and Future Trends in Greek VAT
The Greek VAT system has undergone several changes in recent years, partly in response to economic challenges and partly to align with EU directives. Some notable developments include:
- Temporary VAT rate reductions for certain sectors during the COVID-19 pandemic
- Implementation of electronic bookkeeping requirements (myDATA)
- Enhanced digital reporting obligations to combat VAT fraud
- Gradual adoption of real-time invoice reporting systems
Looking ahead, businesses operating in Greece should anticipate:
- Further digitalization of VAT compliance processes
- Potential adjustments to VAT rates and exemptions as part of ongoing economic reforms
- Increased focus on VAT fraud prevention through advanced data analytics
- Harmonization efforts with EU-wide VAT initiatives, such as the definitive VAT system
11. Conclusion
Navigating the VAT system in Greece requires a thorough understanding of the applicable rates, exemptions, and compliance requirements. While the system shares many similarities with other EU countries, it has its unique features and complexities that businesses must carefully consider.
From the standard 24% rate to the reduced rates of 13% and 6%, and the various exemptions, the Greek VAT landscape offers a nuanced approach to taxation that balances revenue generation with economic and social considerations. Businesses operating in Greece must stay informed about these regulations and any changes to ensure compliance and optimize their VAT strategies.
As Greece continues to modernize its tax administration and align with EU directives, businesses can expect further developments in VAT regulations and compliance procedures. Staying abreast of these changes and seeking professional advice when necessary will be crucial for successful operations in the Greek market.
Ultimately, while the Greek VAT system presents challenges, it also offers opportunities for businesses that navigate it effectively. By understanding the intricacies of VAT in Greece, companies can make informed decisions, ensure compliance, and contribute to the broader economic ecosystem of this historic Mediterranean nation.
12. FAQs
Q1: How often do I need to file VAT returns in Greece?
A1: The frequency of VAT return filing in Greece depends on your business’s annual turnover. If your turnover exceeds €1.5 million, you must file monthly returns. For businesses with turnover below this threshold, quarterly filing is required. All returns must be submitted electronically through the MyTAXISnet platform by the last working day of the month following the reporting period.
Q2: Are there any special VAT schemes for small businesses in Greece?
A2: Yes, Greece offers a special VAT scheme for small businesses. Enterprises with annual turnover below €10,000 for services or €5,000 for goods can opt for the small business scheme, which exempts them from charging VAT on their sales. However, they cannot recover input VAT on their purchases under this scheme. It’s important to note that businesses can voluntarily register for VAT even if they’re below these thresholds.
Q3: How does the VAT reverse charge mechanism work in Greece?
A3: The VAT reverse charge mechanism in Greece applies primarily to B2B transactions involving non-resident suppliers. Under this system, the responsibility for declaring and paying VAT shifts from the supplier to the customer. The Greek business customer must account for VAT on the purchase in their VAT return, effectively both charging and reclaiming the VAT in the same return. This mechanism simplifies VAT compliance for foreign businesses providing services to Greek VAT-registered customers.
Q4: What are the penalties for late VAT filing or payment in Greece?
A4: Penalties for late VAT filing or payment in Greece can be severe. For late filing, penalties range from €100 to €500, depending on the books kept by the taxpayer. For late payment, there’s an initial penalty of 10% of the VAT due if paid within two months, increasing to 20% for delays between two and twelve months, and 30% for delays over a year. Additionally, interest is charged on late payments at a rate set by the tax authorities, currently around 8.5% annually.
Q5: Can I reclaim VAT on business expenses incurred in Greece if my company is not established there?
A5: Yes, you can reclaim VAT on business expenses incurred in Greece even if your company is not established there, subject to certain conditions. If you’re an EU-based business, you can apply for a VAT refund through the EU VAT Refund Portal in your home country. Non-EU businesses can claim refunds under the 13th Directive procedure by submitting a paper application directly to the Greek tax authorities. In both cases, you must ensure that the expenses are for business purposes and that you have valid VAT invoices to support your claim.
Article reviewed by Michelle Hope, Real Estate and Investment Expert, on March 1, 2025
