Reduced VAT: The Aegean islanders are entitled to its restoration


A great success for Greece and all the islanders of the Aegean, came through the recent one decision of the ECOFIN Economic and Financial Affairs Council, the Ministers of Economy and Finance of all EU Member States, paving the way for the permanent implementation of the experts, reduced up to 30% VAT rates in the Aegean islands.

This is the justification of the struggles that had begun in 2015 when in the context of the negotiation for the 3rd memorandum the reduced rates that were valid in the Aegean islands, were abolished.

It is worth noting that the cost of transporting goods and services to the islands was already high. It is characteristic that Maritime transport burdens the final cost of products by about 10-15%.

This was one of the arguments used by Greece in all the technical meetings at EU Council level. highlighting the issue maintenance of special rates in the Aegean islands, linking the Greek request with the final agreement on all the regulations of the proposal, thus emphasizing the peculiarities of Greek insularity, but also by presenting legal arguments in favor of the Greek position.

The reduction of VAT on goods and services related to tackling climate change, health protection and the European Union ‘s digital transition is extremely important for the island economy. It is also positive that with the implementation of the measure, all the islanders of the Aegean will benefit without exception.

This is a development that, like the Aegean Institutions, argues that this development concerns the safeguarding of national interests and the restoration of tax rights, which the country had secured for decades, regarding, in principle, the application of reduced VAT rates.

The history of reduced rates

In 1937 and while the Dodecanese are under Italian occupation, in the rest of Greece it is published in the Government Gazette, the compulsory law for the imposition of indirect taxation by the well-known FKE (AN 660 / 1-5-1937) “On the Tax on Turnover “, which was implemented until 1986.

With the signing of the Peace Treaty in Paris in February 1947 came the union of the Dodecanese in the Greek Territory.

Many years later, in the consultations for the accession of Greece to the European Economic Community (in 1981) they asked for and received extensions with the argument of difficulty in the transition to the new tax system.

The imposition of the Value Added Tax (VAT), was published in the Official Gazette on August 21, 1986 (for application from 1/1/1987).

Since then, with article 17 of the relevant law, the “special regime of the islands” began, since in the interpretative Circular (10 / 27-10-1987) the new law, determined the reduced tax rates in the Dodecanese.
Specifically, in article 17, paragraph 67, he stated that “reduced rates are established in the area of ​​Dodecanese,” where as it is known, the FKE had not been extended “.

Finally, with article 1 of Law 1676 / 29-12-1986, the VAT rates are announced from 1/1/1987, while with article 2, the reduced rates for the Dodecanese are introduced, by 30% or 15%, with the exception of the tobacco products, electricity, petroleum and services.

The reduced rates in the North Aegean

In March 1990, the law 1881/1990 was passed, where the article extends the geographical limits of the reduced tax rates by 30%, except for the Dodecanese, in Samothrace of the Prefecture of Evros, but also in the prefectures of Lesvos, Chios and Samos. With the exception of now remaining only in tobacco products.

The following year, in 1992 with law 2093, changes were made to the original law (1642/1986 due to the abolition of borders on the movement of goods), and the measure was extended to the Cyclades, Thassos, Northern Sporades and Skyros and almost the entire Aegean .  

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