The main lever for the development and promotion of rural tourism in Greece has been, and continues to be, through specific EU programmes. Rural tourism in Greece began with a long delay compared to other European countries. The development philosophy was (and still is) to increase rural incomes as a complement to agricultural and livestock production, not by degrading them. This theoretical paper presents previous research studies in rural tourism and EU development programmes and it describes how European financial tools intended for rural tourism were implemented in Greece. Furthermore, it describes the challenges faced by rural people involved in the development of rural tourism in seeking European funding through a multi-layer approach on the obstacles in the EU funds absorption capacity. The analysis shows that the legislation, design of the programmes, processes from local governments, bureaucracy and malpractices create constraints in the absorption of EU funds and the results in the rural tourism development are not the expected ones. It concludes that there is a need for reforms in the national institutional framework and structures along with a different philosophy in approaching the EU funding initiatives in rural areas.