Greece’s 20 major challenges: Commission pushes to scrap subsidies and slash tax breaks

The European Commission’s report on Greece, prepared within the framework of the European Semester, combines positive assessments of the Greek economy with 20 critical findings highlighting persistent structural weaknesses and longstanding challenges facing the country.

The Commission calls on Greece to limit support measures related to the conflict in the Middle East to strictly targeted interventions, to promptly review its extensive framework of tax exemptions, and to phase out fossil fuel subsidies. The Commission also raised concerns over high rental prices and a number of labor market distortions, including the limited participation of women and young people in employment.

The list of concerns identified by the Commission is extensive and spans multiple aspects of the country’s economic and social landscape:

• Environmental permitting procedures remain time-consuming, while the legal framework governing coastal concessions is outdated.
• Professional services sectors (including lawyers, architects, civil engineers, and accountants) continue to face stringent market entry and operational restrictions.
• Research governance and funding remain fragmented. Delayed public-sector payments affect 33% of SMEs.
• The digitalization rate of SMEs remains low (55.95% compared with 71.39% across the EU in 2025).
  Despite reforms, the duration of judicial proceedings in Greece remains among the highest in the European Union.
• Only 20% of the country’s territory is covered by approved local spatial planning schemes.
• Greece remains highly dependent on fossil fuels for electricity generation, contributing to wholesale electricity price volatility.
• Significant fossil fuel subsidies remain in place, with no phase-out plan extending to 2030.
• Greece operates one of the oldest vehicle fleets in the European Union, while more than 80% of its passenger vessel fleet is over 20 years old.
• Excise duty on diesel fuel is considered “particularly low” compared with excise taxation on gasoline, despite diesel’s greater environmental impact.
• Railway sector reforms are focused on improving safety and deploying the European Rail Traffic Management System (ERTMS).
• Greece is particularly vulnerable to climate change, while private insurance coverage against natural disasters remains among the lowest in the European Union.
• Greece is one of the most water-stressed countries in the EU, with agriculture accounting for more than 80% of water consumption.
• Approximately 80% of municipal waste is landfilled, while the recycling rate stands at just 17.4%, compared with an EU average of 48%.
• The gender employment gap is twice the European Union average. The share of young people not in employment, education, or training (NEETs) reached 13.6% in 2025.
• Participation in early childhood education and care for children under the age of three stood at 28.8% in 2024, compared with 39.3% across the European Union.
• According to the 2022 PISA assessment, a high proportion of Greek students underperform in basic skills.
• Adult participation in training programs stands at 16.6%, significantly below the EU target of 40% by 2030.
• Residential property prices and rental costs continue to rise rapidly, further undermining housing affordability.
• Greece records the highest share of out-of-pocket healthcare expenditure in the European Union.

Five Key Recommendations

Against this backdrop, the European Commission has put forward five specific recommendations to the Greek authorities:

• Continue adhering to the ceilings on net expenditure growth, while making use of the flexibility provided for defence spending and ensuring that any energy-support measures remain temporary, targeted, and proportionate.
• Strengthen tax compliance through the digitalization of customs operations and audit mechanisms, streamline tax expenditures, implement the multi-level governance framework, and accelerate judicial procedures related to non-performing loans (NPLs).
• Ensure the continuity of reforms under the Recovery and Resilience Facility (RRF) and maintain the momentum of Cohesion Policy programmes.
• Simplify the regulatory framework, complete environmental permitting procedures, remove barriers in professional services, expand financing opportunities for start-ups, accelerate the digital transformation of SMEs, expedite judicial proceedings, and finalize the ongoing spatial planning reform.
• Advance the development of offshore wind farms, phase out fossil fuel subsidies, modernize rail transport infrastructure, strengthen climate resilience, improve water and waste management, increase labour market participation among women and young people, enhance educational outcomes, expand social housing provision, and reduce out-of-pocket healthcare expenditure.