On Sunday 22 May the Greek parliament approved a one per cent hike in VAT, effective 1 June, taking VAT from 23 per cent to 24 per cent. This is the sixth VAT increase in six years.
Financial analysts have warned that the VAT increase is likely to have a depressing effect on Greece’s economy as it will negatively affect the nation’s core industry - tourism, amongst myriad other industries. The effects of the VAT increase could also have negative repercussions within Greece’s superyacht charter market.
Category I vessels chartering in Greece, that is, vessels that have been granted permission to perform international cruises, are entitled to a 60 per cent VAT discount. Therefore, the VAT rate applicable to these vessels is now 9.6 per cent rather than 9.2 per cent.
Category II vessels, which are permitted to perform long range cruises within Greek waters, benefit from a 50 per cent VAT discount; the rate for these vessels is now 12 per cent rather than 11.5 per cent. Vessels chartering for a period of 48 hours or less are not entitled to any VAT discount and are subject to the full 24 per cent rate.
Over 60 per cent of all Greek goods will be affected by the tax hike; affected goods include fuel, restaurants and most provisions, all in all leading to a costlier Greek charter or holidaying experience. There are also fears that tax increases will further exacerbate Greece's issue with tax evasion and avoidance, driving the struggling nation into a progressively more recessionary position.
However, while there is little disagreement that the initial effect will be recessionary, the consensus is that this is a necessary evil to ensure an effective bailout process and bolster stability in the long run. A Greece that is back on its feet can only benefit the superyacht industry.