Greece leads the way in reducing tax evasion

Greece is making significant strides in the fight against tax evasion, with the Value-Added Tax (VAT) gap now estimated to have already fallen below 10% for 2024. For the first time ever, the “VAT gap” in our country (as calculated by the EU) is close to or below the European average.

The European Commission’s new report, “VAT Gap in Europe Report 2025,” estimates savings of 2.7 billion euros per year, meaning more tax revenue for the government without tax increases, simply by curbing VAT evasion.

Specifically, according to the Report:

* In 2023, the VAT gap in Greece stood at 11.4%, compared to 12.4% in 2022 and 24% in 2019. Over a five-year period, it thus declined by 55%, or 12.6 percentage points.

* VAT revenue losses in Greece in 2023 came significantly closer to the European average (9.5%) whereas until 2019 they were more than double that figure (24% versus 11.1%).

* For 2024, preliminary estimates indicate a single-digit percentage of VAT revenue losses, less than 10%. The European Commission puts it at 9%, which is below the European average for the past two years, marking a decline of 15 percentage points—or nearly 60%—compared to 2019, when it stood at 24%.

Based on an analysis of European Commission data for the 2019–2023 period, Greece leads the way in reducing the VAT gap over the six-year period from 2019 to 2024.

The countries with the largest reductions in the VAT gap since 2019 are:

* Greece: a decrease of 12.7 percentage points, from 24.0% in 2019 to 11.4% in 2023

* Ukraine: A decrease of 11 percentage points, from 28.5% in 2019 to 17.5% in 2021. However, there is no data available for 2022–2023 due to the war.

* Czech Republic: 6.6 percentage points, from 14.6% in 2019 to 8.0% in 2023

* Austria: 5.8 percentage points, from 6.8% in 2019 to 1.0% in 2023

* Netherlands: 4.2 percentage points, from 11.2% to 7.0%

* Croatia: 3.7 percentage points, from 11.4% in 2019 to 7.7% in 2023

* Slovenia: 3.5 percentage points, from 8.4% to 4.9%

* Hungary: 3 percentage points, from 10.4% to 7.4%

* Cyprus: 3 percentage points, from 6.3% to 3.3%

If we also take into account the preliminary estimate for 2024, Greece makes an even greater leap: from 24% in 2019 to 9% in 2024. This 15-percentage-point reduction places it far ahead of any other EU country or even the accession countries.

2.7 billion more in the funds each year

In absolute terms, in VAT alone, the government lost 4.87 billion due to tax evasion in 2019. These losses fell to 2.53 billion euros in 2023 and further to 2.12 billion euros in 2024.

This means that an additional 2.3 billion euros flowed into the state’s «coffers» in 2023—revenue that would have been lost as recently as five years ago. Meanwhile, preliminary data for 2024 put the benefits from these collections at 2.7 billion euros annually.

These funds, resulting from the reduction in tax evasion, have increased the primary surplus in recent years.

However, there is another aspect to this: because the European Commission acknowledges that this revenue essentially constitutes a permanent and recurring savings for the state, it allows our country to «return» them each year to citizens and the market, using them to fund new wage increases or other permanent benefits, without the risk of violating the new fiscal rules that will take effect across Europe in 2024 and set an annual cap on the growth of government spending.

The sharpest decline will occur in 2025

The European Commission clarifies that the VAT gap does not exclusively represent tax evasion. It also includes legitimate tax exemptions and exceptions provided for under national and European law.

The so-called «VAT policy gap» in Greece, which mainly concerns reduced rates and exemptions, stood at 57.1% of hypothetical ideal revenue in 2023. In other words, even with zero tax evasion, the Greek government would collect only about half of the theoretically possible revenue due to the tax exemptions or reductions the country applies.

This means, however, that a further drastic reduction should also be expected in the two-year period 2025–2026, not only due to the increased effectiveness of digital anti-tax evasion measures that have been implemented with particular intensity over the past three years—primarily (mandatory integration of POS terminals and cash registers, myDATA, universal acceptance of payments via IRIS) but also due to the new VAT rate reductions under 30%, which will take effect on January 1 on an additional 20 Aegean islands.