A sharp reduction in the so-called VAT gap is expected this year, according to John Tsoukalas, head of the Parliamentary Budget Office.
A key role in this improvement is anticipated to come from the digitalization of several platforms by the Independent Authority for Public Revenue (AADE), such as e-invoicing and the digital customer registry, among others.
Tsoukalas estimated that narrowing the VAT gap could generate an additional 1 billion euros in state revenue, on top of the 2.0 billion euros collected last year.
According to estimates by the Parliamentary Budget Office, the shadow economy in Greece is estimated at around 16%–18% of GDP. The latest available data on the VAT gap refers to 2022, when it had dropped to 13.7%, down from 29.1% in 2018 and 17.5% in 2021.
Last year — when a series of government measures such as POS interconnectivity were implemented — the gap fell below 10%. Therefore, it could approach the EU average this year of 7% in 2022. It is worth noting that the Independent Authority for Public Revenue (AADE) has set a target to reduce the VAT gap to 5% by 2029.
Based on the quarterly report of the Parliamentary Budget Office:
- Income tax revenues from individuals have exceeded the 2025 budget target by 220 million euros, driven by rising wages.
- From January to April, VAT revenues increased by 9% year-on-year, mainly attributed to the effectiveness of measures tackling tax evasion and the reduction of the VAT gap.
- The increase in tax revenues could pave the way for tax relief measures, with a focus on employees.
