Greece to seek more time after Brussels objects to reduced VAT rate for education

The Greek government looks set to extend yet again the deadline for the imposition of value-added tax on private education after its plans to impose a reduced rate were rejected by the European Commission.

The coalition is expected to delay until at least November 1 the implementation of the fiscal measure to allow its officials more time to decide what they are going to do.

In August, the government agreed with Greece’s lenders that it would impose a 23 percent VAT rate on private education. This, however, prompted an angry reaction from schools, teachers, parents and opposition parties.

In the face of this opposition, Prime Minister Alexis Tsipras pledged to replace the measure, which would raise more than 300 million euros this year and next. However, his government was unable to find fiscal interventions of equal value.

As a result, last week it arrived at the decision to impose a 13 percent VAT rate at private schools and 6 percent on tuition centers as well as language and music schools.

However, the European Commission has informed Greece that applying a reduced rate goes against EU directives and it will either have to charge 23 percent VAT or none at all.

This seems to leaves the government with the option of either going back to the original measure of 23 percent VAT across the board or having to find equivalent measures.

However, government spokeswoman Olga Gerovasili suggested that Athens would try to convince the Commission that it should be allowed to apply a reduced VAT rate for private education.

Gerovasili pointed to the example of energy, which has a reduced rate of 13 percent, as evidence that exceptions can be made.