The European Commission (EC) sent two formal letters of notice to Greece after it was deemed to have failed to comply with VAT directives and to communicate actions and transpose into its national law relevant directives linked to the imposition of reduced VAT rates for certain products and small enterprises.
According to the the first directive, essential products such as food, pharmaceuticals and products intended for medical use are subject to lower VAT rates.
Under the same directive, Greece is allowed to apply VAT rates up to 30% lower than those in mainland Greece for the regions of Lesvos, Chios, Samos, the Dodecanese, the Cyclades, Thasos, the Northern Sporades, Samothrace, and Skyros. This directive secures the government’s ability to permanently implement a 30% VAT reduction for five islands—Chios, Lesvos, Kos, Leros, and Samos—without linking it to the migration crisis. Additionally, depending on fiscal capacity, the government retains the option to reinstate the VAT discount scheme for all Aegean islands, except Crete, as previously applied.
In the second instance, the European Commission opened infringement procedures against Greece, (7 more member-states) for failing to transpose a Directive on the special VAT scheme for small enterprises.
The Directive on the special VAT scheme allows small enterprises to sell goods and services without charging VAT and alleviates their VAT compliance obligations. Moreover, small enterprises established in another Member State than where VAT is due may exempt their supplies from VAT in the same way as domestically established small enterprises can in their respective Member State.
Following this, the Commission sent a letter of formal notice to Greece to respond in two months and complete the transposition of the directive. If Greece fails to comply the EC might issue a reasoned opinion.
In the absence of a satisfactory response, the Commission may decide to issue a reasoned opinion (a formal request to comply with EU law).
