Limiting tax evasion has been the goal of all governments, past and present. In the last few years, however, some positive steps have been made towards this goal in Greece, based on calculations carried out by the European Commission and government estimates.
More specifically, during the last four years the state budget has shown additional revenue, on a steady basis, worth 2.5 billion euros annually, with finance ministry sources noting that the aim is that by 2026 this additional revenue will add an additional 2 billion euros on a permanent and annual basis. This revenue, combined with economic growth, will be used to cover part or all of possible welfare benefits or a reduction in taxes. These calculations were based on the VAT gap as measured by the European Commission, which is the only objective figure for measuring tax evasion.
Finance ministry sources said measures designed to combat tax evasion, which are currently in the implementation stage or have already been implemented, will lead to the discovery of undeclared incomes. These measures include, among others, the linking of POS terminals with cash machines, pre-filled VAT and income statements based only on income/expenses recorded in the MyDATA system, expanding the use of POS terminals throughout the market and changes in the taxation of the self-employed. The VAT gap in Greece was 23.4% in 2019, according to Commission figures, falling to 19.7% a year later and is estimated to be roughly 15% currently. Based on these calculations, this reduction by 8.4 percentage points offers an annual revenue of 2.5 billion euros, of which 2.0 billion is derived from VAT and 500 million from higher corporate tax income. The finance ministry aims to bring this VAT gap down further, converging with the European average of 9%, which means an additional 2.0 billion euros in public revenue per year.
The 2024 draft budget does not envisage any additional revenue from combatting tax evasion. VAT revenue is projected to total 24.2 billion euros in 2024 from 23.1 billion this year.
Based on the European Commission’s latest data, Greece was among the four EU member-states with the best performance in reducing VAT gap, after Hungary, Germany and Holland.