Greece Achieves Additional €1 Billion for Social Benefits by Reducing VAT Gap

Greece’s achievements in reducing the VAT gap are among the best in Europe, paving the way for broader fiscal space to be utilized in the coming years. Specifically, Greece managed to reduce the so-called VAT gap from 25.4% in 2018 to 13.7% in 2022—a decrease of 11.7 percentage points over four years. Projections suggest a further drop below 10% by 2024 and potentially aligning with the EU average by 2025. According to estimates from the Parliamentary Budget Office, the VAT gap could reach 4-7% of GDP by 2025 due to new measures against tax evasion, such as digital shipping invoices and customer logs. This would save Greece approximately €1 billion, adding to the €2 billion already accumulated by reducing tax evasion in 2024. This additional €1 billion is expected to be realized by the end of 2025 and incorporated into the 2026 budget for use in 2027. Importantly, these savings do not count against the Stability and Growth Pact spending limits, as they represent permanent tax revenues resulting from structural reforms, allowing Greece to allocate more resources toward social measures without risking excessive deficit procedures.