The VAT problem returns to the spotlight as new reports reveal revenue losses, extensive exemptions, and some of the highest rates in Europe, while the tax burden continues to shift to consumers.
Despite improvements in recent years, the country continues to lag behind the European average, while high tax rates maintain the strong character of indirect and often socially unfair taxation, with the “bill” ultimately falling mainly on the most vulnerable households.
VAT has historically been the backbone of state budget revenues, as this year’s collections will move above the €29.2 billion threshold, increased by €1.6 billion compared to 2025, a fact that has led governments to avoid substantial interventions. Any changes stumble on fiscal costs, as well as uncertainty about whether reductions will ultimately be passed on to prices for the benefit of consumers.
According to IOBE’s special analysis, Greece continues to show underperformance in VAT efficiency. The problem is linked both to the compliance gap – although it is gradually decreasing – and to the numerous exemptions and exceptions that limit the tax base and reduce potential revenues. As noted, reduced rates or special arrangements often have social or developmental objectives, such as supporting vulnerable groups or enhancing specific goods. However, these policies are accompanied by significant revenue losses for the budget.
In the field of compliance, however, progress is being recorded. The VAT gap was significantly reduced in 2023 compared to 2019, marking one of the largest improvements among EU member states. The expansion of electronic payments played a decisive role, which limited “black” transactions and brought more revenue into state coffers. It is characteristic that only from connecting cash registers with POS systems, the revenues that flowed into state coffers amounted to €8.3 billion from 2024, when the measure’s implementation began.
VAT rates: Greece at the top of European rankings
At the same time, a Tax Foundation study reminds us that Greece remains at the top of European rankings regarding VAT rates. The standard rate of 24% and the reduced rate of 13% place the country in the highest positions on the list. However, beyond the percentages, the range of products included in reduced or super-reduced rates also matters. The super-reduced rate of 6% applies to a limited spectrum of goods and services, such as books, press, cultural events, medicines, medical supplies, energy, and certain hygiene products. Basic foods are absent from the list, which intensifies burdens for households.
At the European level, the highest standard rates are found in Hungary (27%), followed by countries like Finland, Croatia, Denmark, and Sweden. Conversely, Luxembourg and Malta apply the lowest rates. The EU average moves close to 22%. At the same time, several states are proceeding with revisions of their tax policy, as some countries increase rates to feed state revenues, while others proceed with reductions or special exemptions within the framework of social policy.
Simultaneously, according to the OECD’s latest report, our country ranks in the top five member states with the highest indirect taxation percentages, as in 2023 the corresponding revenues reached 40.1% of the total, significantly higher than the Organization’s average (31.2%). High rates in VAT and excise duties strengthen public revenues, but at the same time maintain high prices and disproportionately burden family budgets, affecting the economically weaker strata more.
The discussion about VAT in Greece remains open. New Democracy’s 2019 electoral program provided for a reduction of rates by two percentage points (to 11% and 22%), something that was not implemented. In the past, Prime Minister Kyriakos Mitsotakis has left open the possibility of further reductions in indirect taxes, provided fiscal margins arise.
