The European Commission has issued a warning letter to Greece due to delays in transposing two important directives concerning Value Added Tax (VAT). These directives relate to the reduction of VAT on basic goods and services, as well as the exemption of small businesses and professionals from VAT.
The two directives and their significance
1.Directive (EU) 2020/285: This concerns the special VAT regime for small businesses, allowing them to be exempt from VAT under certain conditions.
2.Directive (EU) 2022/542: Allows Member States to make wider use of reduced VAT rates, including the possibility of applying zero rates to essential goods such as food, pharmaceuticals, and medical supplies.
The incorporation of these directives into national law could lead to significant reductions or even zero VAT on products such as:
•Essential food items
•Water distribution
•Seeds, plants, and raw materials for food production
•Pharmaceutical products
•Residential rents
•Means of transport
•Books, newspapers, and magazines
Two-month deadline for compliance
The European Commission has given Greece two months to complete the transposition of the directives into national law and to notify the relevant measures. In case of non-compliance, the country may face further legal action from the EU.
This development highlights the need for rapid adaptation of Greek legislation to European directives, with the aim of improving tax policy and strengthening the economy.
