Areas of Strength
- Widespread use of innovative digital solutions to combat tax fraud and evasion. Greece has in recent years deployed a digitalisation strategy in the tax administration with a wide range of tools that are recognised as best practices. These include the establishment of myDATA system (businesses must send invoices digitally to the tax administration) for realtime checks and fraud detection, electronic book-keeping and E-Invoicing, automated audits (for example Airbnb transactions are monitored using smart tools to spot undeclared income). These are complemented by more creative digital tools such as the ‘E-appodixi Application’, where citizens can verify receipts, report tax violations (anonymously or named), and earn up to EUR 3 000 for confirmed reports. There is also an AI model for geo-locating swimming pools that have not been declared for tax obligations.
- Provision of Comprehensive Taxpayer Services for Compliance. Greece has developed thorough capabilities in providing access to information and a wide range of taxpayer services which encourage voluntary compliance. The tax administration has placed a strong emphasis on digitalization, aiming to streamline and make tax processes more efficient. Such digital developments make it easier for taxpayers to fulfil their obligations, reducing the need for physical interaction with tax offices and thereby enhancing compliance.
Areas for Improvement
- Greece has a very large number of tax expenditures (TEs) with significant budgetary impact. Moreover, TEs in the area of VAT in Greece tend to have a regressive effect. While it is positive that Greece has comprehensive reporting on tax expenditure, it currently has no mechanism for evaluating the cost effectiveness of their TEs. In 2023 foregone revenues due to TEs were estimated at EUR 18.82 billion, about 31% of total government tax revenues collected. In total, 1 116 cases of TEs were recorded (948 related to specific taxes and 148 related to general exemptions, some of which are also included in the tax specific expenditures). Such an exceptionally high number of TE provisions, with a significant budgetary impact and sometimes regressive, points to the value of establishing a dedicated mechanism to evaluate their effectiveness on a permanent basis.
- Greece could speed up the establishment of a formal compliance strategy to assess the most significant compliance risks identified in the tax system (including risks for VAT compliance) and how the tax administration intends to respond to tax compliance risks. For example, the strategy could be based on the results of internal audit mechanisms on the functioning of VAT administration processes and a regular review of the effectiveness of the penalty system for late filing and/or late-payment. An increase in the staff dedicated to audit, investigation and other verification functions (currently, very low), could strengthen the implementation of the strategy.
Tax Complexity
Greece has a relatively low level of tax complexity as it ranks 8th out of the 27 Member States in the Tax Complexity Index (‘TCI’). The TCI is based on the Global MNC Tax Complexity Project, a joint research project of Deborah Schanz (LMU Munich) and Caren Sureth-Sloane (Paderborn University). The TCI 2024 places Greece 16th among the Member States with regards to Tax Framework Complexity, and 7th with regards to Tax Code Complexity. This may indicate that whereas the structure of the tax regulations is rather efficient (notably with regards to group treatment, according to the authors), there is room to improve the tax processes carried out by the tax authorities (particularly in the area of audit, according to the authors). Interestingly, the exceptionally high number of tax expenditures existing in Greece does not seem to impact on the performance of the country in the TCI – structure of tax regulations.
The full Commission Staff Working Document of the Mind the Gap Report - Challenges and opportunities for tax compliance and tax expenditure in the EU regarding Greece can be found here.
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