Summary
- VAT Rate and Deductions: The circular clarifies that services involving the rental of passenger cars with a driver, provided by travel agencies, car rental agencies, and Passenger Public Use Car cooperatives, are subject to a reduced VAT rate of 13%. These businesses are also entitled to deduct VAT on related expenses such as vehicle purchase, import, fuel, repair, maintenance, and rental costs.
- Regulatory Details: The minimum rental duration for such services is set at three hours, with a reduced duration of 30 minutes for certain islands from April 1 to October 31 each year. The minimum rental fees are established at €90 for three hours and €40 for 30 minutes.
- Scope and Compliance: The guidelines apply to businesses providing passenger transport services, which are considered as such for VAT purposes if the service includes a driver. The circular ensures uniform application of VAT rules and confirms the right to VAT deductions for expenses incurred in providing these transport services.
Source Circular dd. Sept 20, 2024
Unofficial translation
Subject: VAT Rate for Passenger Car Rental Services with Driver and VAT Deduction Rights for Related Expenses
SUMMARY A) OBJECT This circular provides clarifications regarding: a) the VAT rate applied to the rental services of passenger cars with a driver by travel agencies, car rental agencies, and companies and cooperatives of Passenger Public Use Cars, and b) the right to deduct VAT on related expenses incurred by these businesses.
B) CONTENT This circular clarifies the VAT treatment of the services of providing passenger cars with a driver by travel agencies, car rental agencies, and companies and cooperatives of Passenger Public Use Cars in our country, and, consequently, the ability of these businesses to deduct VAT incurred on the purchase, import, or intra-community acquisition of the relevant passenger cars, as well as on fuel, repair, maintenance, rental, and circulation expenses in general.
C) SCOPE Travel agencies, car rental agencies, and companies/cooperatives of Passenger Public Use Cars.
In response to queries presented to our Service on the above topic, the following clarifications are provided to ensure the correct and uniform application of the relevant provisions:
- Travel agencies and car rental agencies specified in points c and d of paragraph 1 of Article 1 of Law 4276/2014 (A’ 155), as well as companies and cooperatives of Passenger Public Use Cars established according to Article 6 of Law 3109/2003 (A’ 38) and Article 87 of Law 4070/2012 (A’ 82), may proceed with full rental with a driver through pre-booking with a corresponding contract of a minimum duration of three (3) hours for Passenger Private Use (PPU) cars, prohibiting the transportation of passengers for a fare with these cars. Specifically, for the islands of the country, except Crete and Evia, and for the period from April 1 to October 31 each year, the minimum duration of the full rental contract with a driver through pre-booking is set at half an hour (see relevant point 1 of subparagraph H2 of paragraph H of the first article of Law 4093/2012 (A’ 222) and Article 219A of Law 4512/2018 (A’ 5)). This regulation was established, as indicated in its explanatory report, to provide a clear distinction between these tourism-related services and those provided by taxis.
- Paragraph 11 of Joint Ministerial Decision No. 15732/2012 (B’ 3053) set the minimum rental fee for PPU vehicles rented with a driver through pre-booking with a minimum contract duration of three (3) hours at ninety euros (90 €). Similarly, the minimum rental fee for a contract of a minimum duration of thirty minutes (30’) was set at forty euros (40 €).
- According to paragraph 1a of Chapter B “SERVICES” of Annex III of the VAT Code (Law 2859/2000, A’ 248), as amended by Article 61 of Law 5116/2024 (FEK A’ 100), the transport of persons and their luggage is subject to a reduced VAT rate.
- As clarified by Circular E.2080/2020 of the A.A.D.E. Governor, paragraph 1a of Chapter B “SERVICES” of Annex III of the VAT Code covers all types of passenger transport, whether land, sea, or air, carried out either by ticket for each passenger or as group transport, such as tourists on behalf of a travel agency or company personnel. It also covers passenger transport services provided by Public Use Car operators.
- Furthermore, the VAT Committee, in its Guidelines issued after the 92nd Meeting (taxud.c.1(2011)1235994-689), clarified that when a transport means is made available to the customer with adequate personnel, the service provider is considered responsible for the transport and thus provides transport services. Additionally, if the service provider also undertakes to transport the customer to any location as directed, they are deemed to provide a transport service.
- Moreover, according to paragraph 1 of Article 30 of the VAT Code, the taxable person is entitled to deduct, from the tax due on their supply of goods, provision of services, and intra-community acquisitions, the tax charged on goods delivered and services provided to them, and on goods imported by them, as well as the tax due on intra-community acquisitions made by them.
- Subparagraph e of paragraph 4 of Article 30 of the VAT Code stipulates that there is no right to deduct tax charged on expenses for the purchase, import, or intra-community acquisition of passenger private use cars with up to nine (9) seats, as well as on fuel, repair, maintenance, rental, and circulation expenses in general. However, this provision does not apply to the above-mentioned transport means if they are intended for sale, rental, or transport of persons for a fare.
- Based on the above, it is clarified that in the case of full rental of PPU cars with a driver, travel agencies, car rental agencies, and companies and cooperatives of Passenger Public Use Cars are considered to provide passenger transport services subject to the reduced VAT rate of 13%. This implies that these businesses have the right to deduct VAT on expenses incurred for the purchase, import, or intra-community acquisition of the relevant PPU cars, as well as on fuel, repair, maintenance, rental, and circulation expenses in general, regardless of whether these cars are used for providing rental services with or without a driver, as both scenarios fall under the exception of Article 30, paragraph 4, subparagraph e, last sentence of the VAT Code.
The Governor of the Independent Authority for Public Revenue Georgios Pitsilis
DISTRIBUTION LIST: I. RECIPIENTS FOR ACTION
- Recipients of Distribution List C except numbers 2 and 3
- IT Strategy Directorate for posting on the website and the A.A.D.E. Electronic Library
- Communication Directorate
II. RECIPIENTS FOR NOTIFICATION
- Recipients of Distribution List A, only numbers 1 and 4
- Recipients of Distribution List B
- Recipients of Distribution List C, only numbers 2 and 3
- Recipients of Distribution List Z
- Recipients of Distribution List H, except numbers 4, 10, and 11
- Recipients of Distribution List Θ, only numbers 13, 19, 27
- Recipients of Distribution List ΙΒ
- Recipients of Distribution List ΙΣΤ
- Recipients of Distribution List ΙΘ
- Recipients of Distribution List ΙΗ
- Recipients of Distribution List ΚΒ, only number 1
- Office of the Minister of National Economy and Finance
- Office of the Deputy Minister of National Economy and Finance
- Office of the Secretary General of Tax Policy
- Tax Policy Directorate of the General Secretariat of Tax Policy
- Association of Car Rental Tourism Businesses of Greece ([email protected])
III. INTERNAL DISTRIBUTION
- Office of the Governor of the Independent Authority for Public Revenue
- Office of the General Director of Taxation
- Legal Support Directorate of the A.A.D.E.
- Indirect Taxation Implementation Directorate, Section A
