Millions of Greek citizens and businesses are struggling with mounting debts owed to the tax authorities, social security funds, banks, and loan servicers. A key tool available to address these obligations is the extrajudicial settlement mechanism — a structured, out-of-court process designed to help debtors restructure their liabilities across multiple creditors. From 21 September, significant changes to this mechanism will take effect, potentially easing repayment terms for many.
The Scale of the Challenge
More than 4 million tax identification numbers (AFM) — belonging to both individuals and legal entities — currently carry outstanding public sector debts. Tax arrears alone total approximately €114 billion, while unpaid contributions to social insurance funds and KEAO (the Organization for Employment and Vocational Training) amount to roughly €52.4 billion. Meanwhile, loan servicers manage around €80 billion in non-performing or distressed loans.
Tax Authority Payment Plans
The standard tax payment plan remains available, allowing taxpayers to settle debts in up to 24 monthly instalments. For certain exceptional cases — including liabilities arising from court rulings, inheritances, or tax audits — the number of instalments may extend to 48. The minimum monthly payment is set at €30.
Additionally, until 31 December, taxpayers can still apply for the special 72-installment plan — but only for older debts that became overdue by 31 December 2023.
Extrajudicial Mechanism: Up to 420 Instalments
For those with debts across several institutions — such as the state, social security funds, banks, and servicers — the extrajudicial mechanism offers a consolidated solution. It enables coordinated restructuring of all eligible debts under one agreement.
Under this framework:
- Debts to the state and social security funds can be repaid in up to 240 instalments;
- Debts to banks and servicers may be extended up to 420 instalments.
A key eligibility requirement is that total outstanding debt must exceed €5,000. Crucially, depending on the debtor’s financial and asset position, the settlement may include partial debt write-off — commonly referred to as ‘haircut’ — alongside extended repayment terms.
Key Change from 21 September
Starting 21 September, a major update allows debtors to exclude their primary residence from the asset assessment used to calculate settlement terms. Previously, the full value of all property — including holiday homes — was factored into affordability calculations. Under the new rule, only non-primary real estate and other assets will count toward the debtor’s assessed net worth.
This adjustment could result in more favourable outcomes: lower calculated capacity to pay may translate into longer repayment periods and larger debt reductions.
Special Note on the Social Household Tariff (KOT)
Households benefiting from the Social Household Tariff — a reduced electricity pricing scheme for low-income families — should also pay close attention to upcoming deadlines. Existing beneficiaries must ensure timely renewal of their eligibility status to avoid interruption of support.