Greece’s tourism industry, which has been hit hard by coronavirus shutdown measures, will see relief in the form of temporary VAT cuts on some products, employment and social security subsidies, and reduced advance tax payments.
Greek Prime Minister Kyriakos Mitsotakis announced May 20 that the VAT rate will be reduced from 24 percent to 13 percent on public transportation tickets, coffee products, open-air movie tickets, and nonalcoholic beverages from June 1 to October 31.
“These are cuts that rejuvenate consumption,” Mitsotakis said in a televised announcement. “They stimulate purchasing power. But they are also increasing the turnover of tourism and catering professionals.”
The VAT cuts are part of a €24 billion investment to save jobs and businesses in the travel and tourism industry, which brings in over €30 billion annually to Greece. Mitsotakis noted that the tax reduction for consumption is temporary and will be used as a bridge “to cross the recession.”
The government will continue to allow a 40 percent discount on rent payments and a significant reduction in advance tax payments for individuals and businesses. The exact percentage of the advance tax payment reductions will be determined after a study, Mitsotakis said.
Using €1 billion from the EU’s Support to Mitigate Unemployment Risks in an Emergency (SURE) program, Greece’s Syn-Ergasia work program will subsidize employee salaries and social security contributions and allow those in the hardest hit businesses to work reduced shifts without being laid off. For seasonal workers unable to work, unemployment benefits will be extended.
Another €1 billion will be added to a fund for businesses to obtain financing with up to 80 percent government-backed loans. Loan and bankruptcy payments will be suspended until September, Mitsotakis said.
Greece’s tourism season will kick off June 15, and international flights to Greece will resume “gradually” July 1, according to the prime minister.