- VAT cut: 30% reduction from January 1, 2026
- Applies to 19 border islands, including Kastellorizo, Patmos, Ikaria, and Karpathos
- Standard VAT drops from 24% → 17% and 13% → 9%
- Part of a broader government plan to support small island communities
- Local leaders welcome the move but stress deeper issues remain
The Islands That Benefit
Leipsoi, Tilos, Agathonisi, Chalki, Megisti (Kastellorizo), Kalymnos, Nisyros, Patmos, Symi, Karpathos, Kasos, Astypalaia, Lemnos, Agios Efstratios, Ikaria, Fournoi, Oinousses, Psara, and Samothrace will all see a 30 percent VAT reduction from January 1, 2026.
For residents, that means lower prices on everyday goods in places where the cost of living is already high. For local businesses, it promises a small but real boost in competitiveness. And for tourism, the measure helps make remote destinations a bit more attractive to visitors who often pay more for basics once they arrive.
The Government’s Reasoning
Economy Minister Kyriakos Pierrakakis, announcing the measure, was clear: “The measures alone cannot solve the demographic problem. But they show that the state recognizes declining birth rates as a major issue and is determined to help reverse the trend.”
The government framed the VAT cut as part of a broader attempt to support fragile island communities facing economic isolation and shrinking populations. Alongside, there is the gradual abolition of the ENFIA property tax on primary residences in thousands of villages nationwide, set to be completed by 2027.
Local Voices, Local Worries
Local leaders welcomed the VAT reduction but quickly pointed to broader challenges:
- Calls to extend the measure to more islands
- Demands for clarity on how development funding will be shared
- Concerns about Airbnb limiting affordable housing
- Proposals to allow municipalities to build homes for doctors and teachers on public land
South Aegean Governor George Hatzimarkos called the cut “a measure that gives strength and optimism to Greek society.” Optimism, perhaps — but paired with a reminder that tax relief alone does not build schools, staff hospitals, or keep young families from leaving.
Tax relief may ease receipts at the taverna or the grocery, but the real weight of life on the smaller islands is not just in prices. It is whether the doctor stays through winter, whether teachers can find a flat they can afford, and whether the ferry still runs when the sea is rough. Visitors may notice the cheaper bill for ouzo and fish, but for residents, the measure is one more line of support in a daily balancing act between survival and hope.
