The European Commission’s latest Mind the Gap report offers a mixed verdict on Greece’s tax system—acknowledging significant steps forward in digital modernization while underscoring persistent distortions that continue to undermine the country’s fiscal stability. The report praises tools such as myDATA and the E-appodixi app, which have improved real-time monitoring and encouraged citizen participation in tackling tax evasion. It also notes that recent investments in artificial intelligence and EU-supported technical assistance have strengthened the capacity of Greece’s Independent Authority for Public Revenue.
Yet these advances are overshadowed by deeper structural weaknesses that place Greece near the bottom of European rankings. The most striking concern is the country’s “VAT policy gap,” which in 2023 surged to 57 percent of potential ideal revenue—roughly €29 billion. This is the second-highest figure in the European Union and has been growing steadily. According to the Commission, much of the loss does not arise from unlawful tax evasion but from Greece’s own policy choices, including reduced VAT rates, exemptions, and special regimes that chip away at the tax base.
Equally troubling is the breadth of Greece’s tax expenditures.
With 1,116 separate provisions costing a combined €18.82 billion—about 31 percent of total tax revenue—the system is weighed down by a vast network of exemptions and incentives. Although Greece does publish data on these expenditures, it lacks any mechanism to evaluate whether they are effective or still justified. Without such assessment, the Commission warns, the tax system risks being perpetually burdened by outdated or inefficient measures.
Adding to the challenge is the chronic understaffing of audit and enforcement units, which hampers Greece’s ability to implement a fully developed tax-risk management strategy. This shortfall is felt acutely in the case of VAT, where losses remain stubbornly high. The Commission concludes that Greece must accelerate its reform efforts, strengthen its workforce, and adopt more targeted tools to prevent revenue leakage if it hopes to bring its tax system closer to European standards.
