Tourism Accounts for Over 20% of Greece’s Tax Revenues, Impacting VAT Policy

• 9 May, 26

Greece’s strong reliance on tourism revenues – accounting for more than 20 percent of total tax income – limits the country’s ability to significantly reduce value-added tax (VAT), according to a senior European tax official.

Speaking at the 11th Delphi Economic Forum, Gerasimos Thomas, Director-General for Taxation and Customs Union (DG TAXUD), said that a key factor often overlooked in public debate is the extent to which VAT revenues are linked to tourism.

“In Greece, VAT cannot be reduced significantly as we often forget that part of VAT revenue comes from tourists,” he said, noting that lowering VAT would result in lost income not borne by Greek taxpayers.

“If this revenue is reduced, it will have to be covered by Greeks. This is a parameter that is not often mentioned in public discussion,” he added, stressing that more than 20 percent of the country’s revenues are connected to tourism.

Greece’s tax mix in a European context

Thomas also described Greece’s current mix of direct and indirect taxation as “rational”, while placing the discussion within a broader European context.

Across the European Union, he noted, labor remains heavily taxed, accounting for roughly half of state revenues – a burden he suggested should be eased to support labor market participation.

At the same time, he linked overall tax levels in Europe to the bloc’s social model, which prioritizes public spending on services such as healthcare and education. However, he pointed out that discussions on reducing taxation have slowed due to rising defense spending needs, which are increasingly factored into fiscal planning.

EU tax policy and limits on VAT reductions

Referring to VAT on fuels, Thomas clarified that reductions are not under consideration, adding that similar measures implemented in countries such as Spain and Poland fall outside the current EU legal framework if extended beyond short-term limits.

He also noted that targeted measures, such as subsidies or vouchers, are a more effective way to support households, as applied in Greece.

Looking ahead, Thomas said discussions are underway at EU level on setting minimum tax rates for tobacco products, which could lead to modest increases in Greece, particularly for newer products.

Running from April 22 to 25, the Delphi Economic Forum brings together political, business, academic and civil society leaders to discuss global challenges and emerging opportunities.

Cre: Greek Travel Pages