VAT in Greece: Rates, Refunds, and Compliance for Property and Business Investments

Reading time: 15 minutes

Table of Contents

• Introduction to VAT in Greece
• Greek VAT Rates and Categories
• VAT on Property Transactions
• VAT for Businesses in Greece
• VAT Refunds and Recovery
• Compliance and Reporting Requirements
• Impact of VAT on Foreign Investments
• Recent Changes and Future Outlook
• Conclusion
• FAQs

Introduction to VAT in Greece

Value Added Tax (VAT) is a crucial component of the Greek tax system, playing a significant role in the country’s fiscal policy and economic landscape. As Greece continues to navigate its economic recovery and attract foreign investment, understanding the intricacies of VAT becomes increasingly important for both local and international stakeholders. This comprehensive guide delves into the Greek VAT system, its application to property transactions and business operations, and its implications for investors and entrepreneurs.

Greece, as a member of the European Union, adheres to the EU VAT Directive, which provides a framework for VAT implementation across member states. However, like other EU countries, Greece has some flexibility in setting specific rates and applying certain exemptions. The Greek VAT system has undergone several changes in recent years as part of broader economic reforms and efforts to improve tax collection and compliance.

Greek VAT Rates and Categories

The Greek VAT system operates with multiple rates, each applying to different categories of goods and services. Understanding these rates is essential for businesses operating in Greece and for consumers making significant purchases, such as property.

Standard VAT Rate

The standard VAT rate in Greece is 24%. This rate applies to most goods and services not specifically categorized under reduced rates or exemptions. The standard rate has been subject to changes in recent years as part of Greece’s fiscal adjustments.

Reduced VAT Rates

Greece employs two reduced VAT rates:

• 13% – This rate applies to certain food products, pharmaceuticals, medical equipment, and some services related to tourism and hospitality.
• 6% – This super-reduced rate is applicable to books, newspapers, magazines, and certain pharmaceutical products.

Special VAT Rates for Islands

Historically, certain Greek islands enjoyed reduced VAT rates as part of a special regime. However, this system has been gradually phased out in recent years. As of 2018, most islands now apply the standard mainland VAT rates, with a few exceptions for remote islands.

VAT on Property Transactions

The application of VAT to property transactions in Greece is a complex area that has seen significant changes in recent years. Understanding these rules is crucial for anyone considering greek property for sale or investment.

New Properties

VAT at the standard rate of 24% is generally applicable to the first sale of new buildings or parts of new buildings, including the land on which they stand. A building is considered “new” for VAT purposes if its construction permit was issued or revised after January 1, 2006.

Exceptions and Special Cases

There are several exceptions and special cases to consider:

• Residential properties used as primary residences may be exempt from VAT under certain conditions.
• The sale of land not accompanied by buildings is generally exempt from VAT, but there are exceptions for building land.
• Renovations and repairs to existing buildings may be subject to VAT at the standard rate.

Impact on Property Investors

For property investors, the VAT implications can significantly affect the overall cost and profitability of investments. In some cases, investors may be able to reclaim VAT paid on property purchases if the property is used for VAT-able business activities. However, this requires careful planning and compliance with Greek tax regulations.

VAT for Businesses in Greece

Businesses operating in Greece must navigate a complex VAT landscape. Understanding VAT obligations is crucial for compliance and effective financial management.

VAT Registration

Businesses with an annual turnover exceeding €10,000 are required to register for VAT in Greece. Non-resident businesses may need to register for VAT if they conduct taxable transactions in Greece, even if they don’t have a physical presence in the country.

Charging and Collecting VAT

VAT-registered businesses are responsible for charging VAT on their taxable supplies and remitting this VAT to the Greek tax authorities. They can also reclaim VAT paid on their business inputs, subject to certain conditions and limitations.

Intra-EU Transactions

For businesses engaged in intra-EU trade, special rules apply. Supplies of goods to VAT-registered businesses in other EU countries are generally zero-rated, while services are typically taxed where the customer is established.

VAT Refunds and Recovery

The ability to recover VAT is a crucial consideration for businesses operating in Greece, particularly for those making significant investments or dealing with international transactions.

VAT Recovery for Greek Businesses

Greek businesses can generally recover VAT paid on their inputs through their regular VAT returns. However, certain types of expenses may have restrictions on VAT recovery, such as entertainment expenses or personal use items.

VAT Refunds for Non-EU Businesses

Non-EU businesses can claim VAT refunds on expenses incurred in Greece under certain conditions. This process is governed by the 13th EU VAT Directive and requires careful documentation and adherence to specific procedures.

EU VAT Refund System

EU businesses can claim VAT refunds from Greece through the EU VAT refund system. This electronic system simplifies the refund process for businesses established in other EU member states.

Compliance and Reporting Requirements

Compliance with Greek VAT regulations is essential for businesses to avoid penalties and ensure smooth operations. The Greek tax authorities have been increasingly focusing on improving VAT compliance and reducing tax evasion.

VAT Returns

VAT returns in Greece are typically filed quarterly, with the option for monthly filing for larger businesses. Returns must be submitted electronically through the TAXISnet system, along with payment of any VAT due.

Record Keeping

Businesses must maintain detailed records of their VAT transactions for at least five years. These records should include invoices, receipts, and other documentation supporting VAT calculations and claims.

Intrastat and EC Sales Lists

Businesses engaged in intra-EU trade may need to submit additional reports, including Intrastat declarations for the movement of goods and EC Sales Lists for supplies of goods and services to VAT-registered customers in other EU countries.

Impact of VAT on Foreign Investments

VAT considerations play a significant role in foreign investment decisions in Greece, particularly in sectors such as real estate and tourism.

Real Estate Investments

Foreign investors in Greek real estate need to carefully consider the VAT implications of their investments. While VAT can increase the initial cost of property acquisitions, it may be recoverable in certain cases, particularly for commercial properties used in VAT-able activities.

Tourism and Hospitality

The tourism sector, a key driver of the Greek economy, benefits from reduced VAT rates on certain services. However, the complexity of VAT rules in this sector requires careful management to ensure compliance and optimize tax positions.

Strategic Considerations

Foreign investors should consider VAT as part of their overall investment strategy in Greece. This may include structuring investments to optimize VAT recovery, choosing between leasing and purchasing assets, and considering the timing of significant expenses.

Recent Changes and Future Outlook

The Greek VAT system has undergone several changes in recent years as part of broader economic reforms and efforts to improve tax collection.

Digital VAT Reporting

Greece has been moving towards more digital and real-time VAT reporting systems. This includes the implementation of electronic invoicing requirements and enhanced data reporting to the tax authorities.

Potential Rate Adjustments

While the standard VAT rate has remained stable at 24% in recent years, there have been discussions about potential adjustments to VAT rates as part of ongoing economic policy discussions.

EU VAT Reforms

As an EU member state, Greece will be impacted by ongoing EU-wide VAT reforms. This includes potential changes to cross-border VAT rules and efforts to combat VAT fraud.

Conclusion

Understanding VAT in Greece is crucial for businesses, investors, and property buyers operating in the country. The complex system of rates, exemptions, and special rules requires careful navigation to ensure compliance and optimize tax positions. As Greece continues its economic recovery and seeks to attract foreign investment, the VAT system plays a pivotal role in shaping the business environment.

For those considering investments in Greek property or business ventures, thorough research and professional advice are essential to navigate the VAT landscape effectively. As with many aspects of international business and investment, staying informed about regulatory changes and economic trends is key to success in the Greek market.

The Greek VAT system, while complex, also offers opportunities for strategic planning and potential cost savings when approached with knowledge and expertise. As Greece looks to the future, continued reforms and digitalization of the tax system are likely to further streamline VAT processes, potentially reducing compliance burdens for businesses operating in the country.

FAQs

1. Can I reclaim VAT on a holiday home purchase in Greece?

Generally, VAT paid on the purchase of a holiday home for personal use cannot be reclaimed. However, if the property is used for VAT-able business activities, such as short-term rentals, partial VAT recovery may be possible under certain conditions.

2. How does VAT apply to renovation works on existing properties in Greece?

Renovation works on existing properties are typically subject to the standard VAT rate of 24%. However, certain types of renovations aimed at improving energy efficiency may qualify for reduced rates or incentives.

3. Are there any special VAT considerations for digital businesses operating in Greece?

Digital businesses providing electronic services to Greek consumers must comply with EU VAT rules for digital services. This may require registration in the EU VAT MOSS (Mini One Stop Shop) system for non-EU businesses.

4. How often do Greek VAT rates change, and how can businesses stay updated?

While VAT rates in Greece have been relatively stable in recent years, changes can occur as part of economic policy adjustments. Businesses should regularly consult with tax advisors and monitor official communications from the Greek Ministry of Finance to stay informed about potential changes.

5. Can non-resident businesses appoint a fiscal representative for VAT purposes in Greece?

Non-EU businesses may be required to appoint a fiscal representative in Greece for VAT purposes. This representative acts on behalf of the business for VAT matters and can be jointly liable for VAT obligations. EU businesses generally do not need a fiscal representative but may choose to appoint a tax agent to assist with compliance.

Article reviewed by MDavid Cohen, Chief Strategy Officer | Architect of Scalable Growth for Tech Startups, on March 23, 2025