Overtourism: Greece to target short-term rentals and levy port charges

The government was “very concerned” about an influx of cruise passengers during certain months of the year and will start charging taxes, Mitsotakis said on Saturday during his annual speech at the Thessaloniki International Fair. It will also increase a climate crisis-related tax on accommodation.

Greece received a record 36.1 million visitors in 2023, while arrivals rose 16 percent to 11.6 million in the first half of 2024, according to the latest data from the Bank of Greece. The tourism sector contributes about 20% to the economy, making it vital to the health of the nation.

The country will also extend its so-called “Golden Visa” program to investors who are willing to invest at least 250,000 euros ($277,000) in local startups. Foreigners were previously required to buy property to obtain a visa.

All passengers arriving at Greek ports will pay a tax, and the tax will be higher in the popular tourist islands of Santorini and Mykonos. Also, an accommodation tax will be increased for the period from April to October, with the proceeds benefiting local communities.

Mitsotakis reiterated concerns that parts of Greece are facing the problem of “over-tourism”. In an interview with Bloomberg in June, he announced plans to restrict cruise ships visiting the country’s most popular islands starting in 2025.

Short-term rentals have been blamed for fueling the country’s housing crisis, which along with high consumer prices has been at the center of recent political debate.

The government will ban any new short-term rentals for at least a year in three main parts of Athens, Mitsotakis said. Property owners who switch from short-term to long-term tenancies will not have to pay rental fees for three years, as will owners who choose to rent their homes instead of keeping them off the market, he said.

Vacation rentals grew by an annual average of 28% from 2019 to 2023, while available short-term rentals doubled over the same period. Meanwhile, hotel stays rose by just 3.5% in that period, according to data published in a Grant Thornton report for the country’s Chamber of Hotels published this week.

The government will also start a new €2bn program which will be used to reduce interest costs on mortgages.

More measures

Mitsotakis on Saturday unveiled a series of measures aimed at reducing the cost of living, including a cut in social security contributions by 1 percentage point in 2025, instead of an earlier plan for a cut of 0.5 points.

The Prime Minister also announced, among other things:

• An increase from 2.2% to 2.5% of around 2 million pensions from 1 January.
• An increase in the minimum wage starting in April
• An increase in public sector wages, especially for doctors, firefighters and workers in the military and political forces.
• Various tax breaks to help the self-employed, farmers and others
• Changes to unemployment benefits

“I don’t have a sack of reckless spending today,” he said. “Our spending for 2025 is well balanced.”

Greece has already committed to a primary budget surplus – an index showing revenue minus spending, excluding interest payments – of 2.1% of GDP for both 2024 and 2025, up from 1.9% in 2023 .

Fiscal discipline is one of the most important criteria for financial markets, and the country’s recent prudent budgetary path was one of the drivers for rating companies to return Greece to the investment rating zone in 2023, after 13 years in junk status.

“Healthy and growing primary surpluses, in tandem with solid nominal growth, will facilitate a further significant reduction in the public debt-to-GDP ratio, which is expected to fall below 140% by 2027 from 161.9% in 2023,” said DBRS Morningstar. Friday.

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