Increasing revenues pave way for tax cuts
PM says crackdown on evasion creates scope for financial relief for middle-income households
Prime Minister Kyriakos Mitsotakis announced forthcoming tax cuts as Greece’s economy stabilizes, with an eye on reducing VAT and income tax rates by the end of his term in 2027.
Speaking at the unveiling of the new headquarters of Greece’s Independent Public Revenue Authority (AADE), Mitsotakis underscored his administration’s commitment to fighting tax evasion, which is expected to fund these cuts.
“The more the VAT gap is narrowed and reduced and tax fraud is detected, the more revenue will be added to the state so that we can reduce taxes, which is our intention until the end of the government’s term in 2027,” Mitsotakis said.
The anticipated tax relief aligns with reforms delayed since 2019 due to the pandemic and energy crises.
The proposed changes include lowering VAT and easing the tax burden on middle-income earners – groups previously overlooked in recent tax cuts. The government also aims to tackle disparities in the “living standards” tax assessment, a method that uses imputed income values rather than actual income. Over 1.4 million Greek taxpayers, especially employees and pensioners, have been affected by this calculation, with additional tax obligations reaching €4.4 billion, according to the latest budget data.
The VAT reform remains a central policy goal, including potential reductions from 24% to 22% and from 13% to 11% for the lower bracket in line with pledges made by ND back in 2019 – a significant step, as Greece maintains one of the highest VAT rates in the EU. Additionally, the government has pledged a further decrease in social security contributions, totaling a cumulative reduction of six percentage points by 2027.
Addressing the ongoing modernization of AADE, Finance Minister Kostis Hatzidakis praised the new facilities, which are set to improve tax collection and reduce operational delays. Over 1,100 staff members will occupy this state-of-the-art building, which includes specialized spaces for audit and revenue collection operations, supporting Greece’s move toward full digitalization of its tax services.
AADE Director Giorgos Pitsilis highlighted the building’s role in energy efficiency, as Greece’s first public sector building with gold-class energy certification. This initiative falls within a broader government effort to streamline AADE operations, with over 4,000 employees now working in modern facilities nationwide, optimizing government expenditure while enhancing service efficiency.
The Finance Ministry also conveyed a zero-tolerance stance on internal corruption, with Hatzidakis promising continued stringent audits within AADE.
