The Council of Ministers on Thursday approved an amendment to the VAT Law, introducing a reduced VAT rate of 5%, down from 19%, for the construction and renovation of public and private buildings intended for educational institutions that provide exempt education.

The measure aims to improve access to high-quality and modern educational facilities, Finance Minister Makis Keravnos said in statements after the Cabinet meeting.

According to Mr Keravnos, the Cabinet approved an amendment to the VAT Law of 2000–2025, proposing the application of a reduced VAT rate of 5%—instead of the current 19%—for the construction and renovation of public and private buildings intended for educational institutions that provide exempt education.

He explained that this applies to public schools, private schools registered under the Register maintained in accordance with the Private Schools and Institutes Law of 1971, private tertiary education institutions registered under the Register maintained in accordance with the Tertiary Education Institutions Law of 1996, and individuals, organisations or other institutions recognised by the Commissioner upon application, “provided they are directly related to the services referred to in the above paragraphs.”

Responding to a question about how the reduced rate will apply, he said that, in general, for renovation works—“whatever that entails, both labour and materials”—as well as for the construction of new buildings, VAT will be set at 5%.

Asked about the duration of the measure, he said that the Ministry of Finance will reassess the regulation every five years, reviewing its fiscal impact and effectiveness, “and we will submit corrective measures to the Cabinet at the end of each five-year period.”

Regarding the cost of the measure, Mr Keravnos said that based on available 2023 data, “as no newer data currently exist,” the cost is estimated at approximately €2 million.