World Tax Summaries: Taxation in Greece

Our report provides an insightful analysis of the Greek tax system. In Greece, tax collection performance lags behind the European average, while complexity and ineffectiveness are posing obstacles to fiscal consolidation.

The Greek tax system is characterised by high tax rates which do not result in the anticipated revenue. At the same time, while total annual tax revenues remain fairly stable the tax parameters are constantly changing, leading to a number of peculiarities, as for example:

• 7 changes in the corporate tax rate since 2005
• tax-free income, 2x the poverty threshold
• low minimum tax-free income and low income threshold for the maximum tax rate
• VAT deficit estimated at 34% due to tax evasion, tax avoidance and ineffectiveness in the tax collection mechanism
• indirect and property taxes well above most European countries.

In Greece, tax rates in all categories are among the highest in Europe, with tax collection remaining close to the average or even lower. Growth is the only way to achieve fiscal consolidation. Indicatively, a 10% increase in GDP could raise tax revenues by 11.3%.

The complete reconfiguration of the tax system towards simplification, tax rate reductions, tax-free threshold increases and higher marginal income will make it more effective in terms of revenues and a facilitator for growth.