Despite the significant progress made in recent years in the overall tax competitiveness of the Greek economy, tourism—and particularly the hotel sector—continues to be at a disadvantage compared to its main competitor countries. High VAT rates on accommodation, the new Climate Crisis Resilience Levy, and the exceptionally high non-wage labor costs create an over-taxed environment that limits business sustainability and shortens the tourism season.
This is the main conclusion of two interrelated studies presented by the Institute of the Greek Tourism Confederation (INSETE), in collaboration with PwC. The first study, titled “Survey and Comparative Evaluation of the Tax Framework Governing Tourism Enterprises in Greece and Abroad,” compares Greece with six competing markets: Italy, Spain, Croatia, Turkey, Cyprus, and Portugal. The second study, “The Impact of High Tax Rates on Hotels,” examines the practical consequences of this tax burden.
The contradiction: overall progress, tourism stagnation
At the level of corporate taxation, Greece has significantly improved its position, rising to 3rd place among the seven countries examined, from 6th place in 2015. However, when the analysis focuses specifically on the tourism sector, the picture reverses: Greece ranks only 5th in terms of taxes affecting business operations and 4th when taxes affecting investors are included.
This divergence confirms that, despite the general reductions in corporate taxation, tourism businesses continue to bear a disproportionate burden. The excessive tax load limits profitability, weakens incentives for investment, and makes it harder to maintain or increase employee wages.
The Greek hotel under pressure
A comparison of a typical four-star hotel, with an average room rate of 150 euros, highlights Greece’s unfavorable position. While Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) in Cyprus amount to 171.1% of total taxes and contributions, and in Portugal to 111.9%, in Greece this figure drops to only 56.9%. In simple terms, hotels in Greece earn less than they pay in taxes and social security contributions.
Even more telling is the comparison with Cyprus, considered the most tax-competitive market: Greek hotels show up to 38.4% lower operating profitability. The total amount of taxes and contributions in Greece reaches 44.7 euros per 150 euros in price (29.8%), nearly double Cyprus’s 24.1 euros (16.1%). Thus, the “break-even point” for operation—the price level required to cover costs—in Greece reaches 124.6 euros, compared to 108.7 euros in Cyprus.
This means that a Greek hotel needs higher prices and a shorter operating season to survive, leading to a reduced tourism period and lower employment levels.
The new burden of the “Resilience Levy”
The replacement of the overnight stay tax with the new “Climate Crisis Resilience Levy” as of January 1, 2025, intensifies the problem. Although the levy varies seasonally (higher during summer months, lower in winter), it is imposed per overnight stay, affecting especially lower-priced accommodations and less popular destinations.
This uneven distribution of the burden worsens the imbalance between developed and regional tourist areas, where demand is already limited. Smaller units, without strong branding or differentiation, face an increased risk of financial strain.
The broader dimension: regulatory cost and business environment
The issue is not limited to tax rates alone. According to the TMF Group’s Business Complexity Report, Greece ranks first—meaning worst—among 79 countries representing 94% of global GDP. High administrative and regulatory costs add to tax pressure, making tourism business operations even more challenging.
The same picture is confirmed by the World Economic Forum’s Travel & Tourism Development Index 2024: Greece ranks 21st overall but only 52nd in the category of business environment.
Consequences and outlook
The over-taxation of tourism is not just a matter of business burden; it is a strategic obstacle to maintaining Greece’s international competitiveness on the global tourism map. The consequences are multiple:
- Loss of competitiveness against countries with more favorable frameworks.
- Pressure for higher prices, affecting both foreign and domestic tourists.
- Shortening of the tourism season and, consequently, reduced employment.
- Discouragement of investment and productive upgrades.
At a time when Greece seeks to transition toward a more sustainable, high-quality, and less seasonal tourism model, the need for a stable, fair, and competitive tax framework becomes urgent.
The experience of other countries shows that balancing tax burdens with investment and innovation incentives does not reduce public revenues but instead enhances long-term growth. For Greece, reducing VAT on accommodation and revising the Resilience Levy could be the first steps in that direction.
Tourism, the most outward-looking and dynamic sector of the Greek economy, cannot continue to bear a disproportionate weight. Without substantial tax reform, the country’s comparative advantage risks turning into a lost opportunity.
