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Greece VAT Increase Likely to Affect Charters

This week, an increase took effect for VAT rates in Greece that is expected to affect yacht charter vacations. Previously, anyone chartering a yacht for a week in Greece paid a value-added tax of 4.5 percent. As of Monday, the 4.5 percent VAT rate officially rose to 5 percent.

Absolute Yachting sent word yesterday from its office in Athens that the increase had already taken effect for charter yachts, and, which also has an Athens office, reported the same on its blog today. However, a competing broker with longtime ties to the Greek market told me today that while he expects the increase to affect yacht charters, it’s not yet set in stone.

“We are still waiting for the official announcement from the government that this increase will include charters, and we expect this to be the case,” Ocean Independence charter and sales broker Costa Lourandakis said this morning from Piraeus. “It has not yet specifically been stated that the increase will apply for yachts, but we do assume that it will be a general rule that applies to everything. I very much doubt that yachts would be excluded.”

The general VAT increase is part of a $6.5 billion government plan to get fiscal deficits under control. According to this report today from CNN, Greece’s budget deficit stands at 12.7 percent of its gross domestic product. The European Union limit is 3 percent, and Greece’s fiscal woes may threaten the value of the euro. Bloomberg BusinessWeek reported today that the nation’s economy is projected to shrink as much as 2.8 percent this year. This report from explains the situation in further detail:

On the streets in Greece, civil servant salaries are being cut, pensions are being frozen, and protesters are demanding that more tax increases be levied on the wealthy. Thus, anyone chartering a yacht in Greece this summer is unlikely to receive local sympathy regarding the half-percent VAT rate increase, which is paid in addition to a yacht’s advertised weekly base rate. For a €25,000-per-week yacht, the new VAT would add €1,250 to the charter fee. At a €50,000 base rate, the new VAT would be €2,500, and at €100,000, the new VAT would be €5,000.

Lourandakis told me that the 5-percent rate is expected to apply to charters that already have been booked for this summer, even if the VAT was 4.5 percent at the time the charter contract was signed.

“I am hoping that many yacht owners will decide to absorb this half-percent increase,” Lourandakis said. “Some are already saying that they will. Others are waiting to see. Even some brokers might absorb that small fee increase on charters for this season.”

Lourandakis said he did not expect the increase to affect demand for charters in Greece, where, as I reported yesterday, yacht owners are continuing to invest in upgrades ahead of the summer season.

“On a €50,000 charter, we’re not talking about a big amount of money,” Lourandakis said. “It’s not going to be a concern that will change the balance of things in terms of more people chartering elsewhere versus Greece.”

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