VAT Exemption Threshold to Increase for Small Businesses

The government is pushing to increase the VAT exemption threshold for small businesses in line with the European Directive 2020/285, which was supposed to be integrated into the tax system by December. Currently, the annual turnover limit for VAT exemption stands at €10,000. According to new plans from the Ministry of Finance, this threshold is expected to rise to €15,000 or even €18,000. This change will provide significant relief to thousands of small businesses and freelancers by reducing their tax and administrative burden. However, businesses opting into the exemption regime forfeit the right to claim VAT deductions on purchases and services related to their exempt activities. This factor is crucial and must be carefully considered by each business when deciding whether to join the new system. Even with the planned adjustment, Greece’s threshold will remain significantly lower compared to other EU countries. The directive allows small businesses to operate up to €100,000 annually within the EU without VAT obligations, while individual country limits can reach up to €85,000. For instance, Italy, Romania, and the Czech Republic have a maximum limit of €85,000, Lithuania €55,000, and Poland €40,000. Enterprises and professionals can apply electronically through the Independent Authority for Public Revenue (AADE) to use the exemption regime in member states where they wish to operate, provided their total turnover does not exceed €100,000 in the EU and specific country limits are respected. Additionally, small businesses from other EU member states meeting the criteria can also apply for VAT exemption status in Greece, facilitating cross-border activities and strengthening the single market. The final regulation is expected to be finalized and announced by the end of May, ahead of the full implementation of the European Directive in June. It should be noted that Greece was required to integrate the directive by December 31, 2024. The delay led to intervention by the Commission, which issued an official warning. In response, Greek authorities committed to completing the legislative process by the end of June 2025, as outlined in the AADE Operational Plan.