Coffee & eating out now taxed at 23 percent in Greece.

Food served at restaurants, cafes and hotels, and non-alcoholic beverages purchased everywhere, are taxed 23 percent from September 1, 2011.

Ahead of the EU-IMF audit, the government announced in August a number of hasty and contradictory measures that raised value-added tax (VAT) on holiday packages and proposed that tourists wear bracelets to get a reduced rate. It was eventually decided that all-inclusive vacation packages would remain at 13 percent, but a 10-percent tax hike would be assessed on ready-to-consume beverages and make takeaway and tavernas a luxury.

Greece now charges the highest tax in the eurozone and second highest in the EU for eating out.

Restaurateurs, already struggling for survival, want the rate lowered to 6.5 or 9.0 percent and say they will not collect the tax or pay the state its share. Many business owners absorbed the VAT increase to keep customers happy but fear this will lead to layoffs since operating costs remain high. They were right.

As of September 2012, stats show that 4,000 restaurants and cafes have shut down, and 30,000 employees lost their jobs since the VAT hike. In a 2013 poll, some 93 percent of households said they cut back on dining out and ordering takeaway food.

Government promises of tax reform and lower rates never materialized, partly because Greece has seen four different cabinets since November 2011 and remains without an elected government. A coalition took power in June 2012.

*Article updated March 15, 2013

All beverages taxed 23 percent. — Image/testalab.com

Beverages

All ready-to-consume non-alcoholic liquids with sweetener, carbonation or flavoring are taxed at 23 percent, no matter where they’re purchased. It’s fairly straightforward.

Included (taxed 23 percent): Carbonated plain/mineral water, iced/hot coffee, flavored drinks, frappe, fresh or packaged fruit or vegetable juice, granita/slush/icee, hot chocolate, smoothies, soda, sport drinks, iced/hot tea.

Alcohol, wine and beer are already taxed at the higher rate as of January 1, 2011.

Not included (taxed 13 percent): Plain, non-carbonated table water.

Milk, chocolate milk, tea leaves, tea bags, dried chamomile flowers, coffee beans, plus the powdered form of coffee, tea, chocolate, Nescafe, Nesquik and Ovaltine are considered raw ingredients and therefore do not fall into the ‘ready-to-consume’ category.

Food

Any meal or food item that is considered prepared, packaged and/or ready-made is taxed at 23 percent to the final consumer, though there are exceptions noted below. It is not a restaurant tax, as it also applies to cafes, hotels, convenience stores and supermarkets.

Food items that are considered raw materials continue to be taxed at 13 percent. Using my own words, I would describe the category as portions of food that have not been assembled into a ready-to-consume form/unit.

Included (taxed 23 percent): Ready-made food from restaurants, tavernas, cafes, takeaway and delivery, fast-food chains, snack bars, hotels and supermarkets. For example, pizza, souvlaki, sandwiches, tyropita, spanakopita, cheeseburgers, fried chicken, meals out, Chinese food delivered to your home, catering for weddings, room service at the hotel. Plus, plastic containers of sushi, green salads with fixings and dressing, ready roast chickens and pre-packaged sandwiches at supermarkets.

Not included (taxed 13 percent): Bread and baked goods (pastries, cookies, croissants, cakes, bougatsa, bagels, donuts, koulouria, sweets) purchased at bakeries; ready-made, prepared or packaged food sold at educational (public/private schools, colleges, universities), medical facilities (hospitals, clinics, etc.) or social welfare institutions.

Cans of tuna, containers of yogurt and ice cream, ready-made taramosalata, deli meats, cheeses, loaves of bread, packages of spinach, jars of olives, bags of potatoes are considered portions of bulk materials or raw ingredients. Yes, some of them are packaged and could be eaten ‘as is,’ but they have not been ‘assembled’ into a ready-to-consume form/unit, so they are still taxed 13 percent.

It is possible to be charged two rates of VAT at the same location, depending on what items you are purchasing.

Meals in Holiday Packages

The tax applicable to meals and food/beverages in a vacation package will be charged according to whether it includes breakfast, half board (two meals daily) or full board (all meals inclusive).

Breakfast only: 5 percent of package price × 23 percent
Half board: 15 percent of package price × 23 percent
Full board: 30 percent of package price × 23 percent

Food and drink in a mini bar are taxed according to whatever category in falls under. Hotel accommodation, vacation rentals and camping will continue to be charged at the low rate of 6.5 percent.

VAT rates for Greece as of 2012

See “Value-added tax (VAT) rates in Greece” to see what items and services are taxed at reduced and standard rates. It is updated as changes are announced.

Warning

Products not affected by the VAT increase may also go up, as business owners often use the opportunity to raise prices and blame the government, much as the euro was blamed after 2001.

I noticed price increases on dairy products, flour, deli items, tomato sauce and legumes in August.

Sources

“Από σήμερα στο 23% ο ΦΠΑ για την εστίαση” — Ta Nea
“Είδος πολυτελείας από την Πέμπτη το σουβλάκι και ο γύρος” — To Vima
“Σεπτέμβρης – φωτιά στα νοικοκυριά” — Ta Nea
“Τι προβλέπει η αύξηση του ΦΠΑ στην εστίαση” — Kathimerini
“Ακριβαίνουν από 1ης Σεπτεμβρίου εστιατόρια, delivery, χυμοί, καφές, αναψυκτικά” — To Vima
“«Θα αποδίδουμε τον ΦΠΑ για όσο ακόμη αντέξουμε…»” — Ta Nea
“ΦΠΑ εστίασης: Χωρίς διακρίσεις τα τουριστικά πακέτα” — To Vima
“Lowering VAT to 19 percent” — Eleftherotypia
“Tax exemptions and increases under revision” — Kathimerini
“VAT hike shuts down restaurants” — Kathimerini

Clarifications (finally) published October 6 by the Ministry of Finance via Enet

Reference for English-speaking readers; not used for my article

“Gov’t fudge over VAT on catering” — Kathimerini
“VAT on holiday packages stays at 13 percent” — Kathimerini
“VAT circular adds confusion” — Kathimerini

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