Greece 2025 New Tourism Budget Aims for Millions with New Charges on Hotels, Airbnb, and Short Term Rentals Market

Published on October 10, 2024

By: Tuhin Sarkar

The Greek government has unveiled its 2025 draft budget, which includes a series of new charges on the hospitality and tourism sectors aimed at generating millions in revenue for state coffers. These measures, presented to parliament earlier this week, target a range of industries within Greece’s thriving tourism sector, including hotels, short-term rentals like Airbnb, and cruise passengers.

The plan outlines a significant increase in the climate resilience fee, an introduction of new charges on short-term rental accommodations, and a new levy for cruise passengers docking at Greek ports. These proposals are part of a broader effort by the Greek government to address various challenges, including the country’s housing crisis and the growing demand on its tourism infrastructure.

New Charges on the Hospitality Sector

One of the central elements of the 2025 budget is the increase in the climate resilience fee. This fee, which is already imposed on hotels and other accommodations, is expected to rise, providing additional funds to strengthen climate change preparedness and sustainability efforts in the country’s key tourism regions.

This increase is in line with Greece’s broader sustainability goals, as the country continues to experience the impacts of climate change, including heatwaves, wildfires, and extreme weather events. The climate resilience fee is designed to help mitigate these risks by investing in infrastructure and initiatives aimed at protecting Greece’s tourism hotspots from environmental degradation.

Regulating the Short-Term Rental Market

The draft budget plan also introduces several changes to the short-term rental market, which includes properties listed on platforms like Airbnb. With the popularity of short-term rentals on the rise, the Greek government is seeking to regulate this market more effectively and address its secondary impacts, particularly on long-term rental prices and housing availability.

According to the draft budget, the new measures will include:

• A 13% Value Added Tax (VAT) imposed on short-term rentals.
• A “stayover duty” similar to the existing levy imposed on hotels, which will now apply to short-term rental accommodations.

These charges will apply to legal entities, such as property management companies, as well as individual owners who are renting out three or more properties. The goal is to level the playing field between hotels and short-term rentals, ensuring that all players in the accommodation sector contribute to the country’s tax system

New Rule for Short-Term Rentals in Athens

In addition to the tax changes, the 2025 budget introduces a rule prohibiting new short-term rental apartments from entering the market in downtown Athens next year. This measure is a response to the high number of properties already listed on platforms like Airbnb, which the government argues is contributing to the housing crisis by reducing the availability of properties for long-term residents.

The rule is expected to cap the growth of the short-term rental market in Athens and help stabilize rental prices in the city’s downtown areas, where the demand for both tourist accommodations and permanent housing remains high.

Incentives for Long-Term Leasing

To further encourage property owners to transition from short-term rentals to long-term leasing, the Greek government has included a three-year tax exemption on rental income for owners of properties up to 120 sq. meters. To qualify, the properties must have been either vacant or used for short-term leases for at least three years prior to being offered as long-term rentals.

This incentive is part of Greece’s broader strategy to increase housing availability for residents, particularly in urban areas like Athens and Thessaloniki, where long-term rental prices have surged in recent years due to the popularity of short-term vacation rentals.

The exemption from income tax on rental income is designed to attract property owners back into the long-term rental market, easing the pressure on housing supply and making affordable housing more accessible to local residents.

Impact on Greece’s Tourism Sector

The new charges outlined in Greece’s 2025 budget are expected to generate millions in revenue for the state, while also addressing several key challenges faced by the tourism industry. By increasing taxes and fees on hotels, Airbnb-style rentals, and cruise passengers, the government hopes to both boost state revenue and address issues such as housing shortages, rising rental prices, and sustainability.

While the tourism sector has long been one of Greece’s primary economic drivers, the growing number of visitors—especially in popular destinations like Athens, Santorini, and Mykonos—has put significant strain on the country’s infrastructure, natural resources, and housing market.

Criticism and Industry Concerns

However, the new measures have not come without criticism. Some representatives of the hospitality industry have expressed concerns that the higher fees could discourage investment and drive up costs for tourists, potentially affecting visitor numbers. Owners of short-term rental properties have also raised concerns about the additional taxes, arguing that they could reduce profitability and make it harder for small property owners to compete with larger hotel chains.

Similarly, the cruise industry has voiced concerns about the new passenger levy, suggesting that it could make Greece a less attractive destination for cruise operators, especially when competing with other Mediterranean countries that do not impose such charges.

Despite these concerns, the Greek government remains committed to implementing these measures as part of its broader strategy to ensure the sustainability of the country’s tourism sector while addressing the pressing issue of housing availability in urban areas.

Conclusion: Balancing Growth with Sustainability

As Greece continues to position itself as a top global tourist destination, the new charges included in the 2025 budget reflect the government’s efforts to balance economic growth with sustainable development. By targeting the hospitality sector, the government aims to both boost state revenue and address housing issues while continuing to support the country’s environmental goals.

While these new charges may pose challenges for some sectors within the tourism industry, the overall goal is to create a more sustainable, equitable, and resilient tourism model that benefits both visitors and residents alike.