The remarkable successes of the Greek economy in combating tax evasion were highlighted by Finance Minister and Eurogroup President Kyriakos Pierrakakis in an interview with German newspaper Handelsblatt. “Tax evasion was for a long time the Achilles’ heel of the Greek economy. It is considered one of the causes of the state debt crisis, which in the 2010s brought the country almost to the brink of default,” the German Handelsblatt article characteristically notes. However, as the article adds, the once problematic country now reports remarkable successes in combating the shadow economy. Artificial Intelligence (AI) plays a decisive role in this, as Mr. Pierrakakis explained: “The use of AI to combat tax evasion goes hand-in-hand with the overall digital transformation of the economy.”
The decisive step was the development of an extensive digital reporting system, Mr. Pierrakakis explained in his conversation with Handelsblatt. “Electronic invoicing, electronic books, and transaction reports produce reliable, high-quality data on a large scale. Based on this, the tax administration can use advanced data analysis and AI-guided tools to identify patterns, highlight anomalies, and prioritize cases where the risk of fraud or underreporting is highest,” the Greek minister noted.
Kyriakos Pierrakakis: We recovered 3.9 billion euros through anti-tax evasion measures in just two years
“In just the last two years, we recovered 3.9 billion euros through anti-tax evasion measures,” Mr. Pierrakakis emphasized. “This is not just a fiscal benefit, but a ‘dividend’ that we return to citizens in the form of tax reductions,” he added.
The successes in combating the shadow economy are mainly reflected in VAT revenues. The so-called “VAT gap” – the difference between VAT owed and what is actually paid – was, according to the European Commission, 34% in 2017. By 2024, it had decreased to just 9%.
The Independent Authority for Public Revenue (IAPR) plays a pivotal role. It was created in 2017 to make tax and customs administration more independent from political interference and to combat corruption. The IAPR does not report to the Finance Ministry but directly to Parliament.
Greek model becomes European prototype
The goal is “a digital ecosystem that will allow the tax authority to record economic reality in real time,” emphasized the Minister of National Economy and Finance. Greece serves as a good example of how digitization and AI use can enhance compliance with tax rules.
Mr. Pierrakakis, who was elected Eurogroup President in December, considers it a model for Europe: “A system that measures reality is not only better at collecting taxes, but is also politically and socially more acceptable, as it treats taxpayers uniformly.” He sees in this “a win for finance ministers across Europe: Greater tax compliance without escalating tension between state and citizens.”
Thus, from this Monday, electronic invoicing between businesses is mandatory, while from May, electronic delivery of dispatch notes will also be mandatory. From June, the tax authority will monitor all banking transactions – deposits, withdrawals, transfers, securities transactions – in real time.
Banking secrecy thus ceases to exist. By the end of the year, the IAPR wants to be able to monitor “live” all account movements, card payments, and electronic invoices. AI algorithms will scan these massive datasets looking for anomalies.
Machine learning models also help create risk profiles and proactively identify the likelihood of tax evasion. “AI enhances risk-based audits,” the Finance Minister explained, adding: “It improves targeting accuracy and focuses enforcement capability on areas where real risks exist.”
The potential of artificial intelligence utilization
As for the potential applications, there are many: AI is used, for example, in analyzing satellite images to identify undeclared assets such as unauthorized constructions or swimming pools. And anyone in Greece who poses on social media with their new Ferrari or uploads videos from trips around the world had better make sure their lifestyle matches their declared income. Otherwise, they may soon receive a visit from the tax police.
