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VAT Reduced Rates Increased & New “Fast-Track” Framework for Tax & Customs Litigation
Reduced and super-reduced VAT rates in Greece are to be increased from 11% to 13% and from 5.5% to 6.5% respectively. The standard VAT rate of 23% remains unchanged. At the same time the Greek government introduced significant changes in the procedure before the Greek administrative courts aiming to accelerate dispute resolution in Greece (under the current regime, tax litigation in Greece has an average duration of 12 to 14 years, following issuance of the relevant tax assessment). Taxand Greece discusses the latest changes to their tax system and the subsequent impacts on taxpayers.
Increase of reduced Greek VAT rates
The new reduced rates of 13% and 6.5% are effective as of 1 January 2011. In the Aegean islands, where applicable VAT rates are reduced by 30%, the new rates shall be 9% (reduced rate) and 5% (super-reduced rate) respectively. Furthermore, hotel accommodation and certain pharmaceutical products, for which the reduced rate was applicable to date, shall be subject to the super reduced rate of 6.5% or 5% as of 1 January 2011, while the standard VAT rate of 23% (16% for the Aegean islands) remains unchanged.
New legal framework for tax and customs litigation
"Fast track" procedure for legal matters of general interest
Issues of general interest, which affect a wider circle of persons, may be brought directly before the Greek Supreme Administrative Court, following the filing of an application by a litigant party or the submission of a request for a preliminary ruling by an Administrative Court of First or Second Instance. The Supreme Administrative Court may rule on the disputed legal issue without having to go through all Court instances. The adjudication of any pending disputes, in the context of which the same legal issue is at stake, shall be suspended until the Supreme Administrative Court deals with the issue in question. After the adjudication of the issue by the Greek Supreme Administrative Court, the case may be returned to the competent administrative Court of First or Second Instance.
One-instance principle (with matters heard solely before the Court of Appeals)
Tax and customs disputes, involving a disputed amount of main tax, customs or other duty or fine which exceeds EURO 150,000 shall be adjudicated in substance at one instance only by the Administrative Court of Appeal (in the past these cases should initially be heard before the Administrative Court of First Instance and then there was a possibility of appeal before the Administrative Court of Appeal).
The recent increases in the reduced VAT rates fall under the overall effort by the Greek Government to support Greek economy through the increase of indirect taxes. The impact of such increase to the Greek market is yet to be seen.
Further, the new legal framework for tax and customs litigation alters the procedure before the Greek administrative courts by simplifying it. It is expected to accelerate dispute resolution in Greece and reduce the average duration thereof (indicatively, a full scale court procedure may take up to 12-14 years, following issuance of the relevant tax assessment).
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