Holidaymakers facing food and drink VAT hike on six Greek islands

Six Greek islands are applying an increased rate  in VAT from 1 October, making holidays to such favourite destinations as Mykonos and Santorini dearer for holidaymakers.

Plati Gialos, Mykonos, Greece.

Plati Gialos, Mykonos, Greece where VAT rates will increase on accommodation and food and drink fromOctober 1 Image by Leonora Enking / CC BY-SA 2.0

Tourists to the  islands will find they have to shell out more for food, drink and accommodation. The increase will also be introduced in Naxos, Paros, Skiathos and Rhodes.

Santorini, Greece.

Santorini, Greece where holiday makersl also face VAT hikes from October 1. Image by Edward Dalmulder / CC BY 2.0

The Daily Telegraph reports that from 1 October, these islands will lose a range of VAT subsidies due to the latest round of financial measures to help the bailout for the Greek economy.

The move by the troubled nation has given rise to fears that the increases could hit the tourist industry which provides the backbone to the country’s economy.

Up to now there were three different tax rates of 5%, 9% and 16% but these will be adjusted upwards to 6%, 13% and 23%.

The islands were spared the adjustment made by Greek Prime Minister Alexis Tsipras elsewhere during the summer but now the government is continuing with its plan to streamline the VAT rate. However a number of smaller islands will keep the subsidies until next June with a few likely to hold onto the lower rates for a further year after that.

The country’s tourism authorities are hoping that the impact will be negligible because they feel that Greece offers excellent value as a destination.

Richard Asquith of tax experts, Avalara, said the tourism industry in the country had stood up remarkably well during the recent crisis.

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