Officials are working with an initial €1.5 billion in fiscal room for new measures, according to the government’s current planning. That could expand to about €2 billion if additional budget space becomes available, potentially giving Athens more scope to reduce taxes on businesses and the self-employed and introduce broader measures aimed at supporting incomes.
The package is expected to form a centerpiece of the government’s economic agenda at the Thessaloniki International Fair, an annual event in Greece’s second-largest city where governments traditionally set out their economic-policy priorities for the year ahead.
But geopolitical uncertainty is complicating those calculations. A prolonged escalation in the Middle East could push oil and natural-gas prices higher, forcing the government to reserve funds for emergency measures to shield households and businesses from rising energy costs. An easing of tensions, by contrast, would give the Finance Ministry more room to pursue permanent tax relief.
The government is considering changes across five main areas, with tax relief for Greece’s large self-employed sector among the most prominent.
Around 670,000 self-employed workers are subject to a system that calculates a minimum presumed level of taxable income, an effort introduced to curb widespread underreporting of earnings. Officials are considering adjustments to the system without dismantling its basic structure, seeking instead to address distortions that have emerged since its introduction.
One possibility is to suspend the next automatic increase in the minimum presumed taxable income, which would otherwise rise in line with an increase in Greece’s statutory minimum wage. Another option would reduce presumed income by between 10% and 20% for certain groups of professionals and sole proprietors. Such changes could cost the budget between €100 million and €150 million.
Officials are also considering expanding the discounts and exemptions available under the system. That could bring more self-employed workers into categories subject to lower presumed-income thresholds and lead to changes in the formulas used to calculate tax liabilities.
Those formulas currently take into account factors including how long a business has been operating, its payroll and its annual revenue. Government officials acknowledge that, in some cases, the calculations can produce significant gaps between a taxpayer’s actual earnings and the income assumed by tax authorities.
Businesses could also receive relief. One proposal under discussion would abolish an annual business levy for legal entities from Jan. 1, 2027, at an estimated cost to the government of about €240 million a year.
The government could instead phase out the levy over two years, completing its abolition in 2028 and spreading the cost across two annual budgets. A more targeted option would eliminate it first for small and midsize businesses in 2027, with larger companies following a year later.
That approach is viewed as easier to absorb fiscally while directing the initial benefits toward smaller companies, which tend to face greater financing and liquidity constraints.
Athens is also considering reducing the amount of tax that small and midsize companies are required to pay in advance against future earnings. The measure would be designed to improve corporate cash flow by reducing tax payments made before a company’s final financial results for the following period are known.
A broader package of tax and income measures is also under consideration and could be combined with another increase in Greece’s minimum wage. Any new measures would come on top of more than €2 billion in previously announced policies and support measures that are already set to weigh on the 2027 budget.
Whether the government can push the new package toward the €2 billion mark could depend on two additional sources of fiscal room.
The first involves a potential exemption for spending related to energy security and efforts to reduce dependence on fossil fuels. Greece could spend between €300 million and €500 million on such measures in 2027. If that spending is excluded from limits governing the growth of public expenditure under European fiscal rules, the government could gain equivalent room elsewhere in the budget.
The second potential source is Greece’s recent increase in tax revenue from efforts to combat tax evasion. The key question for Athens is how much of those additional receipts the European Commission will recognize as permanent rather than temporary revenue.
Government estimates put additional revenue associated with efforts to curb tax evasion at €1.7 billion in 2024 and roughly €2.2 billion in 2025. If European authorities accept a larger share of those gains as structural and sustainable, Greece could have more room to finance permanent tax cuts and other recurring measures without jeopardizing its fiscal targets.
The calculations reflect a broader balancing act for a country that, after emerging from a decade-long debt crisis and years of international bailouts, has sought to preserve fiscal credibility while gradually easing the tax burden and supporting household incomes.
For now, officials are reluctant to commit all of the available fiscal space. A renewed surge in global energy prices could quickly revive the need for subsidies or other emergency assistance, particularly if higher energy costs feed through to household bills and corporate expenses.
The government is therefore preparing for two broad outcomes.
If geopolitical tensions ease and energy markets stabilize, Athens would have greater scope to pursue the upper end of the planned package, particularly if it can also tap the additional fiscal room from energy-related spending exemptions and stronger tax revenues.
If the Middle East crisis persists or intensifies, however, the government would likely hold back part of the available funds as a buffer against another energy shock, reducing the amount available for permanent tax cuts.
That uncertainty means the final decisions are unlikely to be made until shortly before the Thessaloniki International Fair, when the government will have a clearer picture of energy markets, geopolitical risks and the amount of fiscal room it can safely deploy.
