Greece continues to stand apart in the European Union for its heavy reliance on indirect taxation, with nearly half of the country’s revenues derived from consumption-based levies, particularly Value Added Tax (VAT).
Despite imposing one of the highest standard VAT rates in Europe at 24 percent, Greece tempers the burden through reduced brackets, most notably a 13 percent rate applied to essential goods and services. These concessions lower the effective average VAT rate to around 15.6 percent. Even so, receipts from VAT have risen sharply in recent years, both in absolute terms and as a share of state income.
Government figures show indirect tax revenues have grown from €24.2 billion in 2020 to an expected €38 billion this year—an increase of about €14 billion. By comparison, direct taxes such as income and corporate levies have increased by roughly €12 billion over the same period, but still account for a smaller share of the overall tax take. This stands in contrast to many EU member states, where governments rely more heavily on direct taxation, generally considered to be fairer and more progressive.
The spike in VAT revenue in Greece reflects a confluence of forces. Inflation has pushed up prices across the board, driving higher tax receipts with each purchase. The tourism boom has expanded consumption, while the widespread adoption of electronic payments, combined with digital oversight, has curtailed tax evasion and delivered billions of euros in additional income over the past two years.
According to European Commission data, Greece now ranks among the EU’s top performers in terms of reliance on indirect taxes. Such revenues account for 17.3 percent of GDP—the fourth-highest level in the bloc. Consumption taxes, including VAT and excise duties, represent 44.4 percent of Greece’s total revenues, far above the EU average of 33.2 percent.
The picture looks quite different elsewhere. Germany, with a lower standard VAT rate of 19 percent, raises a smaller share of revenues through indirect taxation, relying more on income and corporate taxes. France, with VAT set at 20 percent, leans more heavily on social contributions and labor taxes to fund public finances.
