The Independent Authority for Public Revenue is launching an ambitious operational plan with ten innovative measures to combat VAT tax evasion. This strategic plan aims to drastically reduce losses and substantially boost public revenues, which will form the basis for September’s social package.
Technological revolution in tax administration
The new operational plan of the tax authority is primarily based on leveraging advanced technologies to reduce the gap between expected and actual VAT collections. The ambitious goal is convergence with the European average, with the rate approaching 5% by 2029.
The progress recorded in this sector is already impressive. 2024 marked a historic performance, as for the first time the VAT revenue deficit dropped to a single-digit percentage, reaching 9%. Forecasts for the current year are even more encouraging, with the head of the State Budget Office in Parliament, Giannis Tsoukalas, estimating a further reduction to 7%.
Additional revenue of 1 billion euros
In such an improvement scenario, the state is expected to secure additional tax revenues worth 1 billion euros. These extra funds will form a significant basis for planning future tax cuts, provided Brussels gives its approval to the government beforehand.
According to the most recent European Commission report, in 2020 the VAT gap in Greece reached 19.7%, while in 2022 it had already decreased to 13.7%, with the downward trend continuing. Characteristic of this change of course is that in 2019 Greece ranked among the top countries with the largest VAT losses in the European Union, alongside Romania and Malta.
Rapid improvement in Greek performance
From 2020 onwards the picture changed radically and now the country records one of the fastest rates of VAT gap reduction, alongside Germany and Hungary. According to official data from the General Accounting Office of the State, tax collections reached 25.56 billion euros in 2024, increased by 2.1 billion euros or 9.3% compared to 2023.
This development was partly contributed by inflation, but not exclusively. This strengthening is largely attributed to limiting tax evasion through the expansion of digital transactions and the utilization of innovative technologies.
Digital reforms that changed the landscape
Specific digital innovations played a catalytic role in this transformation: the mandatory implementation of electronic books myDATA, the connection of cash registers with POS systems and state information systems, electronic invoicing, digital customer registry, digital work card, and extensive use of electronic payments.
These reforms have drastically limited the margins for illegal transactions, especially in sectors with historically high tax evasion tendencies, such as restaurants, retail, and construction.
Ten strategic actions against tax evasion
The operational plan of the tax authority for limiting VAT theft and fraud phenomena includes the following innovative actions:
• Utilization of artificial intelligence and complete digitization of audit procedures to uncover fraud networks using the missing trader scheme
• Detection of concealed taxable material from tax evasion investigations exceeding 500 million euros
• Cross-referencing to identify taxpayers who submitted zero VAT returns for 2024 while having activity
• Conducting at least 155 investigation cases for VAT fraud in intra-community transactions
• Submission of VAT returns by active taxpayers at a rate of at least 98%
• Automation of penalty imposition acts upon return submission
• Review of monthly reports within three working days of their submission
• Analysis and preparation of monthly sector performance reports regarding VAT
• Blocking ghost companies with the new monthly VAT return system
• Automatic transfer of data from myDATA to VAT returns to prevent data manipulation
Targeting missing traders
Particular emphasis is placed on combating missing traders, who are usually newly established or dormant businesses that revive for a short period and engage in fictitious transactions. According to planning, in 2025 the tax administration will proceed to deactivate at least 115 tax numbers of missing traders.
Data shows significant improvement in the tax audit mechanism’s action, as Greece is among the 4 European Union countries with the lowest VAT gap from missing traders, with a rate ranging from 1% to 2%.
End to data manipulation
From this year, revenue and expense data is automatically transferred from myDATA to VAT returns, putting an end to data manipulation practices such as fictitious transactions, over-invoicing, and revenue concealment. With the locking of codes, businesses will no longer be able to manipulate numbers, as deviations are zeroed out and absolute matching of declared amounts with electronic books becomes mandatory.
*Published in Sunday’s Afternoon Edition
