The European Commission has initiated infringement proceedings against Greece, along with several other EU member states, for failing to implement key VAT-related directives into national law. In response, the Commission has issued formal warning letters, urging compliance with Directive (EU) 2020/285 on the special VAT scheme for small businesses and Directive (EU) 2022/542 on VAT rates.
According to EU regulations, all member states were required to integrate the small business VAT directive into their national legal frameworks and formally notify the Commission of the full implementation of the VAT rates directive by December 31, 2024.
The small business VAT directive aims to simplify tax obligations for small enterprises by allowing them to sell goods and services without applying VAT. It also provides cross-border benefits, enabling small businesses operating in a different member state to receive VAT exemptions similar to those granted in their home country.
The VAT rates directive, on the other hand, grants EU countries greater flexibility in applying reduced VAT rates, including zero rates for essential goods such as food, pharmaceuticals, and medical supplies. Additionally, it standardizes country-specific VAT exemptions, ensuring equal treatment across the bloc.
Greece now has two months to respond and complete the necessary legislative adjustments. If it fails to comply, the European Commission may escalate the case by issuing a reasoned opinion, the next step in the formal infringement procedure, which could eventually lead to legal action before the European Court of Justice.
