Some finance ministers in the EU could envy their Greek counterpart Kostis Hatsidakis. The state treasury of Greece is well filled, it is clear from the data that the Greek Minister of Finance presents every month, writes "Handelsblatt". In the first eight months of 2024, tax revenues have exceeded the plan by 1.9 million euros, which is five percent more than predicted, the economic edition states.
The increase in revenue is due to some extent to the strong economy, writes "Handelsblatt" - the growth of the Greek economy in the second quarter was 2.3 percent, whereas for the countries of the Eurozone this indicator is only 0.6 percent on average. However, the large revenues are mostly due to Greece's successful fight against tax evasion.
How Greece achieved this success
For a long time, the Greek governments failed to deal with this problem. But conservative Prime Minister Kyriakos Mitsotakis declared "war" against tax evasion as one of its priorities. Now the changes that many in Greece thought were impossible have been implemented. At the same time, the prime minister does not intend to stop there – for him, the fight against tax evasion is a fight for social justice.
"Handelsblatt" recalls that tax evasion was one of the causes of the Greek debt crisis around 2010, especially as regards VAT. However, according to EC data, Greece managed to reduce the six billion euro shortfall in VAT revenues by almost half from 2017 to 2021. It therefore follows that it has made particularly great progress in this respect and ranks after Germany, Hungary and the Netherlands. Greece is still missing out on 15 percent of the VAT it owes, but the finance minister wants to reduce that quota to 9 percent by 2026.
The successful recipe is in the consistent digitization of tax affairs. Since last year, the obligation has been introduced for all cash registers and terminals in commercial establishments and in restaurants to be connected via mobile telephony or the Internet to the fiscal office – in this way, the tax authorities have an idea of the turnover in real time. Market traders and taxi drivers were also required to start accepting bank cards. And this immediately gave results, points out "Handelblatt": in the second quarter, the volumes of cashless payments increased by 15 percent compared to the previous year.
How the self-employed avoid taxes
According to data from economists from the University of Tübingen, cited by the RND media network, the shadow economy in Greece last year amounted to 21.7 percent of GDP. However, according to other estimates, it is even 30 percent. In Italy, the indicator is 21.8%, while in Germany it is 10.9%, in Austria - 7.9%, and in Switzerland – 6.1%.
The high level of the shadow economy in Greece is mainly due to the self-employed, who are 27.3 percent there, i.e. twice as much as the EU average (13.8 percent). They have many opportunities to hide their income, the German economic publication points out. And this mainly happens with the question "With or without an invoice?" - who refuses it, receives a reduction, thus creating opportunities for VAT evasion. This applies to both the plumber who goes to unclog a clogged pipe and the doctor with a private office.
According to the information published by "Handelsblatt", for the year 2022, seven out of ten self-employed entrepreneurs in Greece declared an income of less than 11,000 euros, and 400,000 out of a total of about 750,000 self-employed people declared an average of only 3,216 euros per year. On this occasion, Finance Minister Hatsidakis says: "I cannot accept that someone lives on 268 euros a month".
From this year, the self-employed are now obliged to pay taxes on at least the minimum income. Depending on the industry and experience, it is between 10,920 and 50,000 euros per year. And whoever does not agree to the requirements for declaring a minimum income must accept a tax audit – an act that most fear.
Thus, the Finance Ministry of Greece expects additional revenues of 874 million euros just after the changes in the law on taxation of the self-employed. And this will make it easier to cover the interest owed by Greece on the loans.
Bilyana Mihailova (editor)