Starting January 1, 2026, the 30% VAT reduction will be extended to more Greek islands with populations up to 20,000 inhabitants, covering goods, services, branches, and imports. The goal is to boost local economies and reduce living costs.
According to the Independent Authority for Public Revenue (AADE), the VAT reduction does not apply to tobacco products or vehicles, and applies only under specific conditions such as where the business or service is based and physically executed.
Examples illustrate when the reduction applies depending on the seller’s location, shipping destination, business branch, or use of goods. The reduction also applies to imports, provided they are carried out directly on eligible islands by residents or businesses located there.
The reduced VAT applies to 24 islands (e.g., Kalymnos, Chios, Lesbos, Karpathos, Ikaria, Samothraki) and numerous islets. Practical guidelines are issued to help businesses comply with the new regulation.
Furthermore, pursuant to a relevant decision issued by the Minister of Finance, the above rates will be reduced by 30% and are set at 17%, 9% and 4%, respectively, on the islands.
The reduced rates apply to goods which:
aa) are located on these islands and are provided by a taxable person established on said islands; or
bb) are sold by a taxable person established anywhere within the territory of Greece, to be delivered to these islands, to a buyer established on said islands who may or may not be a non-taxable legal person; or
In the former case, it is clarified that where the supplier of the goods undertakes the obligation of shipping these goods, then delivery will take place at the time the shipping of the goods commences.
Moreover, with regard to service provision, the reduced VAT rates will apply if both the following requirements are met:
aa) The services are provided by taxable persons established in these island regions. The concept of ‘establishment’ includes the existence of the seat or headquarters or a branch that operates permanently and not sporadically and from where the services are provided.
bb) The services are physically provided within these island regions.
