During his recent presentation Medium-term Program of the Ministry of National Economy and Finance, the competent minister Kostis Hatzidakis he emphasized that any future tax relief will be inextricably linked to effectively curbing tax evasion.

Contrary to what was the case in recent years, when the excess in tax collection was an important factor for financial decisions, especially during the period of the memorandums, the new strategy of the ministry is based on the strengthening of tax compliance. He noted that tax evasion will be the main area the government will focus on to achieve long-term tax relief.

Around the same period, the commander of the AADE, George Pitsiliscommunicated the Strategic Plan of AADE for the period 2025-2029, inviting the competent bodies to submit their own proposals and opinions regarding the Authority’s strategic goals. This plan is directly linked to the government’s effort for tax relief, as it depends on whether the country’s tax collection mechanism will achieve its set goals.

In addition, in his speech to the Parliament, Kostis Hatzidakis noted that the limitation of tax evasion will gradually allow the reduction of direct taxes in the coming years. He even emphasized that the greater the success achieved on this front, the more dynamically the tax rates will be able to be reduced. This strategy, as he pointed out, does not only concern Greece but also all EU member states, which face similar issues with tax evasion.

Increase in tax revenue

According to sources from the Ministry of Finance, in order for the new tax reductions to be implemented, an increase in permanent revenue from the fight against tax evasion must be recorded. The government’s target is for revenue from tax compliance to reach €2.5bn per year by 2027, creating a solid base for tax relief. This income should not be considered as one-off or temporary, but should be permanent and sustainable.

In addition, the financial staff calculates that from 2026 onwards, approximately 1.5 billion euros (i.e. 500 million euros per year) can be directed to income support, with the main recipients being the most vulnerable social strata. At the same time, it is worth noting that defense spending and pensions significantly limit the possibility for greater benefits in the coming years, as recorded in the Medium-Term Program. However, the government remains committed to finding ways to manage fiscal constraints.

This framework is directly linked to the Strategic Plan 2025-2029 of AADE, which aims to effectively reduce tax evasion. The aim is to achieve revenues of €2.5 billion per year by 2027, reduce arrears and strengthen tax compliance. The governor of AADE, Giorgos Pitsilis, underlined that the Authority is called upon to adapt continuously, integrating modern technological tools and predictive models to identify new risks emerging in the tax environment.

Strategic moves for the period 2026-2028:

The ministry has drawn up a plan for the coming years, which includes the following important strategies:

1. Reduction of social security contributions: The government plans an additional 0.5% reduction in social security contributions in 2027, in addition to the one announced in the TIF, which concerns a reduction of one percentage point.

2. Reduction of subsistence allowances: From 2026, a 30% reduction of subsistence allowances is planned, while the long-term goal is their complete abolition. This change is based on the implementation of digital tools to more accurately determine incomes and assets, with the aim of eliminating injustices against low-income citizens.

3. Abolition of pretense fee: From 2025, the pretense fee will be abolished for freelancers and sole proprietorships. However, it will remain for some categories, such as companies and the self-employed who are paid on a ‘block’ basis.

4. VAT reduction: The government’s pre-election program foresees a reduction of the standard VAT rate from 24% to 22% and the reduced rate from 13% to 11%.

5. Changes in income tax: Plans for reductions in personal income tax, especially for middle income earners, are on the table, with the aim of providing relief to citizens.

The Strategic Plan of AADE 2025-2029

The AADE Strategic Plan is in public consultation, with the governor Giorgos Pitsilis inviting the representatives of the most important economic sectors to participate actively, submitting proposals and opinions until October 14, 2024. The agencies were also invited to highlight short-term planning issues to be incorporated in the 2025 annual Business Plan.

The main axes of the interventions included in the AADE plan are:

  • Utilization of modern technologies to identify risks of non-compliance and identify hidden taxable material.
  • Central coordination of tax and customs audits to ensure efficiency and transparency in the process.
  • Reorganization of control structures and processes to improve staff performance.
  • Digitization of processes and strengthening of predictive models for early detection of criminal behavior.

Overall, the Strategic Plan 2025-2029 lays the foundations for a more modern and fairer tax mechanism. Its success will be key to achieving the government’s fiscal targets and delivering the tax relief it seeks.