Government Announces Significant VAT Reduction for Border Islands Starting January 2026

Key Facts

• A 30% VAT reduction has been granted to 19 eligible Greek islands.
• Originally temporary, the cut is now extended indefinitely from 2026 onward.
• It targets islands with populations under 20,000, primarily along Greece’s borders.

Objectives

• Stimulate local economies by lowering prices for residents and tourists
• Support the hospitality and retail sectors on remote islands
• Curb depopulation by reducing the cost of living and doing business

Eligible Islands

While the full list varies slightly by source, typical beneficiaries include:

• North Aegean islands (Lesbos, Chios, Samos, Kos)
• Dodecanese islands (Rhodes, Kastellorizo)
• Ionian islands (Corfu)
• Other remote border isles with small communities

Timeline & Scope

• Initial pilot period ran for a limited time in 2025.
• From 2026 the 30% VAT cut applies indefinitely.
• Covers most goods and services, including accommodation, food & beverage, transport and retail.

Sources

• Greek Government Cuts VAT by 30% on 19 Islands to Boost Local Economies (GTP Headlines) https://news.gtp.gr/2025/09/09/greek-government-cuts-vat-by-30-on-19-islands-to-boost-local-economies/
• Greece Cuts Value Added Tax by 30% for Remote Islands (Greek Reporter) https://greekreporter.com/2025/09/07/greece-cuts-value-added-tax-by-30-for-remote-islands/
• Greece Announces 30% VAT Cuts for Islands with Under 20,000 Residents (Parapolitika) https://en.parapolitika.gr/economy/52143/greece-announces-30-vat-cuts-for-islands-with-under-20000-residents/
• Nineteen Border Islands Get VAT Relief, Starting 2026 (Argophilia) https://www.argophilia.com/news/19-border-islands-vat-cut/245022/
• VAT Reduction and ENFIA Reform in Greek Border Islands (Athens Times) https://athens-times.com/ministry-of-finance-vat-reduction-and-gradual-abolition-of-enfia-in-border-islands/
• vatcalc

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Economy and Finance Minister Kyriakos Pierrakakis held a two-hour teleconference with regional governors and mayors of 19 border islands to discuss a significant VAT reduction effective January 1, 2026. The meeting focused on tax reform, demographic support, and reducing VAT on border islands, with plans to gradually abolish the ENFIA property tax in small settlements. VAT will decrease from 24% to 17% and from 13% to 9% for all products and services. Pierrakakis emphasized that while these measures don’t solve demographic issues, they show the state’s commitment to addressing declining birth rates.

Source: ekathimerini.com

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