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From the dream of the “zone of drachma” in Bulgaria that never came true to the “zone of lev” in Greece

09 April 2012 / 18:04:28  GRReporter
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"Until yesterday, we knew that Greek drivers went to Bulgaria to fill up with cheap petrol. Now we learn that their cars are with Bulgarian registration plates," stressed an article in the Greek newspaper To Vima. The author compares the situation after the changes in Bulgaria with today’s situation and shows how from potential investors then, the Greeks from the north have become customers in Bulgaria today.

In the early 1990s, the world changed very quickly. Authoritarian regimes in the Balkans fell one after another and then, the first economic immigrants in Greece came. Trade associations urged their members to focus on bankrupt countries, which gave opportunities for investment. Then, the "caravans" of ambitious investors rushing to find "gold" in the new "El Dorado" began. Hopeless but adventurous minded small and medium businessmen filled hotels in Sofia each week. The majority of them never achieved anything. Large Greek companies entered the "game" with a short delay. Then, some circles started talking about the "zone of drachma". It was a time when the Balkan region had begun to be divided into zones based on the use of some of the strongest currencies - the German mark and the US dollar.

Many years have passed since then. The drachma gave way to the euro, Bulgaria joined the European Union. Meanwhile, very close links with neighbouring countries were formed in northern Greece. When the world economic crisis broke out in September 2008 and Greece ended up in the centre of an unprecedented financial meltdown, the markets in neighbouring countries became a favourite destination of thousands of Greeks, because of lower prices. However, Bulgaria won "the lion's share". The Bulgarian lev has become a "required" currency in many areas in the north of the country. So, the "zone of ​​the lev" took the place of the "zone of the drachma", which was ingloriously buried many years ago. And it is about to absorb even the slight growth that is left in northern Greece. The main reason for this in recent years turns out to be the continuously increasing taxes, especially VAT and excise duties.

Across the border, things are simple and clear, especially with regard to taxes. The tax in Bulgaria is only 10 per cent for individuals and companies, and the sole VAT rate is 20 per cent. Furthermore, the cost of labour there continues to be low. The average salary amounts to 200-300 euro per month and prices of goods are similar. Free movement of goods and services is determined by European treaties. From there, things have taken their own course. A few weeks ago, during their annual tour of the region of Thrace, a representative of one of the largest insurance companies found out that there were many cars with Bulgarian registration plates on the road. Surprised, he asked his assistants what caused this. They told him that many people have submitted their Greek registration plates to tax offices and replaced them with Bulgarian plates, because it was cheaper.

First, because the car will not be considered as a factor in charging them with taxes. Second, the vignettes in Bulgaria are much cheaper. Third, they pay much smaller amounts for car insurances to the Bulgarian companies. Moreover, many of them installed gas systems, because the price per litre in Bulgaria is 0.60 euro. They travel there and fill up with gas or petrol for a euro per litre, thus covering their monthly needs for fuel. Accordingly, the price per litre of gas in Greece is between 0.89 and 0.92 euro, while that of diesel fuel is almost 2 euro.

At the same time, more Greeks prefer to shop in supermarkets in Greece. The article states that in recent years, the town of Svilengrad has become the trading centre of the area. Even advertising leaflets are in Greek and distributed in the region to Alexandroupoli. Not only citizens go to the supermarkets. Many retailers buy cheaper goods from Bulgaria and then, sell them in shops across the border. In  Alexandroupoli alone there are three shops, selling Bulgarian goods. There are others in the villages in the region of Evros. The head of the National Confederation of Hellenic Commerce Vassilis Korkidis believes that "besides the additional problems this "customer" immigration creates in the Greek market, it is proves how hopeless the policy pursued so far is." He suggests that in the specific areas tax incentives should be created to support the Greek markets in border areas.

At the same time, impressive is the jump in the so-called "parallel imports", i.e. products that are not imported legally. In 2010, when the excise duty on alcoholic drinks increased sharply, a representative of a large company for the import of alcoholic drinks noticed that while exports to Bulgaria were increasing, the sales in northern Greece were falling.  When he studied the case, he found out that a significant proportion of its exports to Bulgaria were imported back to Greece from wholesalers, which, in turn, led to loss of taxes from the state. The situation is similar to other products, the newspaper wrote, with only one difference: the quality of many goods is lower than that of the goods sold in Greece, although they belong to the same brand. This, obviously, makes no impression on anybody in today's economic environment, stated the author of the article.

Along with that, many textile companies in northern Greece have moved to neighbouring countries; they continue their activities in the country too and profit. According to people familiar with the way the owners of shops operate, they export the raw materials that are necessary for Bulgaria and Macedonia at lower prices, and then, import them at higher prices to the expense of their Greek company. They receive the money in the neighbouring country, where taxation is low. And then, they deposit them in a Greek bank, where they receive an interest rate of 6 per cent.

Tags: EconomyCompaniesBulgariaGreeceTaxationFuelSupermarkets
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