VAT CHANGES IN CATERING – REINSTATEMENT OF 24% ON CERTAIN DRINKS – SPECIAL EXCISE TAX ON ELECTRONIC CIGARETTES OR ‘ELECTRICALLY HEATED PRODUCTS’
With the new decision E.2002/28-12-2023, we have changes in the VAT of non-alcoholic beverages. Therefore, until 31.12.2023, the reduced VAT rate (13%) applies to the provision of non-alcoholic beverages, juices, and drinks, according to the provisions of article 11 of Law 4690/2020. However, from 1.1.2024 onwards, the standard VAT rate (24%) applies to the provision of both alcoholic and non-alcoholic beverages, juices, and drinks, with the exception of the provision of coffee, cocoa, tea, chamomile, and other infusions, for which the reduced VAT rate of 13% applies until 30.6.2024.
It is noted that from the above it emerges that regarding alcoholic and non-alcoholic drinks, juices, and beverages, from 1.1.2024, their on-premises consumption is subject to the standard VAT rate of 24%, as are the deliveries of alcoholic drinks in “packages”, while the delivery in “packages” of non-alcoholic drinks, juices, standardized or not, and beverages, is subject to the reduced VAT rate of 13%. However, for the provision of coffee, cocoa, tea, chamomile, and other infusions, the reduced VAT rate of 13% applies until 30.6.2024, regardless of whether these are consumed on-site or delivered in “packages”.
Therefore, catering businesses should charge these items distinctly based on the VAT rate they fall under.
It is noted that despite the above change in the applicable VAT rate on catering services from 1.1.2024, what has been accepted with the circular E. 2080/2020 of the AADE Director regarding the distinction in the application of VAT rates by hotel businesses providing accommodation and catering services, or other services for a unified price, which cannot be split into individual rates, remains valid until 30.6.2024.
Also, we have a change in the Special Excise Duty on electronic cigarettes or otherwise Electrically heated products
- On article 45 of law 5073/2023 “Excise Duty on electrically heated products without smoke – Amendment of article 53A National Customs Code”
The provisions of this article bring about amendments to the provisions of article 53A of Law 2960/2001 (A’ 265) “National Customs Code”, specifically:
- a) The imposition of excise duty is introduced on new products, namely:
– “electrically heated products without smoke” and
– “nicotine pouches”,
by including them in the existing national framework of taxation on tobacco products in separate tax categories, as they do not fall within the EU-harmonized excise duty products, according to the provisions of Council Directive 2020/262 (which replaced Directive 2008/118/EC) and Directive 2011/64/EU.
- b) Necessary legal-technical improvements are made in sub-section a) of paragraph 1 of article 53A of Law 2960/2001, regarding the updating of the HS codes, in accordance with the current Common Customs Tariff.
Specifically, regarding the imposition of excise duty on the new products, in sub-section z) of paragraph 1 of article 53A of Law 2960/2001, the basis for imposing excise duty on “electrically heated products without smoke” is determined, within the framework of including the new electrically heated products in the excisable products of paragraph 1 of article 53A of the same law, based on their different composition, i.e., substrate or containing nicotine or nicotine and other substances or other substances without nicotine, in solid form.
Additionally, in sub-section h) of paragraph 1 of article 53A of Law 2960/2001, the basis for imposing excise duty on “nicotine pouches” is determined, within the framework of including these products in the Excise Duty products of paragraph 1 of article 53A of the same law, based on their different composition (i.e., nicotine substrate or nicotine and other substances, in solid form).
In sub-section z) of paragraph 2 of article 53A of Law 2960/2001, the excise duty rate imposed on the “electrically heated product without smoke” is determined, i.e., one hundred fifty-six euros and seventy cents (€156.70) per kilogram of net weight of substrate or containing nicotine or nicotine and other substances or other substances without nicotine, in solid form of the product.
In sub-section h) of paragraph 2 of article 53A of Law 2960/2001, the excise duty rate imposed on “nicotine pouches” is determined as fifty euros (€50) per kilogram of net weight of nicotine substrate or nicotine and other substances, in solid form of the product.
In sub-section st) of paragraph 3 of article 53A of Law 2960/2001, a definition is introduced for “electrically heated products without smoke” as follows: “electrically heated product without smoke” is the manufactured product, which does not contain smoke, is intended for inhalation through a heating process and not combustion, and contains a substrate or container of nicotine or nicotine and other substances or other substances without nicotine, in solid form, excluding products intended for medical and pharmaceutical use.
In sub-section z) of paragraph 3 of article 53A of Law 2960/2001, a definition is introduced for “nicotine pouches” as follows: a manufactured product, which does not contain smoke, is intended for oral consumption without inhalation and without a heating or combustion process and contains a nicotine substrate or nicotine and other substances, in solid form, excluding products intended for medical and pharmaceutical use.
Paragraph 5 of article 53A of Law 2960/2001 introduces alignment of the procedures that apply to the products of paragraph 1 of article 53A of Law 2960/2001 and to the new products (electrically heated products without smoke/nicotine pouches) with the analogous application:
– of article 56 regarding the tax due at the time of placing into consumption,
– of article 65 regarding the destruction of products under suspension of tax, which is carried out by the committee of article 37 of Law 2960/01, with the exception of the products of sub-section st) and z) of paragraph 1, namely “electrically heated tobacco product” and “electrically heated product without smoke,” the destruction of which is carried out by the committee of article 105 of the same law, as well as of article 109 regarding the procedures and formalities for the certification and collection of the tax.
Additionally, further alignment of the procedures that apply to the products of paragraph 1 of article 53A is introduced, with the analogous application of articles 102, 105, 106, and 108 of Law 2960/2001 for the “electrically heated product without smoke” as well as for the “electrically heated tobacco product,” as it was valid.
In sub-section e) of paragraph 5A of article 53A of Law 2960/2001, alignment is introduced for the exemption from excise duty that applies to the products of paragraph 1 of article 53A, if they are acquired by individuals for their own use and are personally transported to the country from another member state or third country, and for the new products of sub-sections z) and h) of paragraph 1 (electrically heated products without smoke/nicotine pouches). Specifically, for these products, the quantitative limit of two hundred (200) pieces is set as evidence that these products are intended for personal use with an exemption from the payment of the corresponding excise duty and without the need for formalities.
In the last sentence of sub-section d) of paragraph 8 of article 53A of Law 2960/2001, alignment is introduced for articles 104 and 111 of Law 2960/2001 regarding the credit of the tax as well as the calculation, certification, and collection thereof, correspondingly for the new electrically heated products without smoke, analogously to manufactured tobaccos.
With paragraph 11 of article 53A of Law 2960/2001, until the issuance of new regulatory decisions:
- a) For the products of sub-section z) of paragraph 1 of article 53A, namely electrically heated products without smoke, the analogous application of the regulatory framework that applies to electrically heated tobacco products of sub-section st) of paragraph 1 of article 53A [number ΔΕΦΚΦ1119744ΕΞ2017/8.8.2017 (B’ 2889) decision of Deputy Minister of Finance “Setting the terms and conditions for the production, possession, receipt, dispatch, import and export from approved warehouses of manufactured tobaccos, the product of case st) of paragraph 1 of article 53A of Law 2960/2001, as amended and in force, the imposition of Excise Duty and VAT, monitoring and control thereof”] is prescribed.
- b) For the products of sub-section h) of paragraph 1 of article 53A, namely “nicotine pouches”, the analogous application of the regulatory framework that applies to refill liquids of sub-section a) of paragraph 1 of article 53A [number ΔΕΦΚΦ B 1182030 ΕΞ 14-12-2016/13.12.2016 (B’ 4173) decision of Deputy Minister of Finance “Setting the terms and conditions for the grant of a tax warehouse license to imported products from third countries, coming from other Member States of the European Union or domestically produced products of case a) of paragraph 1 of article 53A of Law 2960/2001, procedures of production outside suspension regime, receipt from other Member States, imposition of Excise Duty and VAT, monitoring and control thereof”] is prescribed.
Finally, we inform you that article 45 will be effective two months after the publication of the notified law, according to paragraph 7 of article 59 thereof, namely on 11-2-2024.
Article written by Christos Triantafyllopoulos, Founder & CEO of Aegean Consulting
The above text is for informational purposes only and it does not substitute specialized advice
