Tax as a tool for economic resilience in Greece 

The taxation landscape in Greece presents a complex mix of challenges and opportunities. The findings of the recent EY Attractiveness Survey Greece 2024, reveal that, while there are areas of positivity for the tax environment of the country, such as tax certainty and stability (59%) and the availability of R&D tax credits (58%), areas of improvement yet remain. The availability of the impatriate tax regime (48%) and the risk of litigation over tax (46%) highlight critical areas that need attention, coupled with the involvement of litigation in tax disputes and slow judicial processes.  

Each year, participants in our survey are asked to identify areas where Greece should focus to maintain its competitive edge in the global economy. Reducing taxation consistently emerges as a top priority; in the top three since 2020, this year it ranks as the second highest priority (27%). However, Greece, like many European countries, faces the dual challenge of reducing public debt while also needing to increase tax revenues to secure future fiscal surpluses. This fiscal reality poses a limiting factor to immediate tax reductions.  
 
External developments, such as the adoption of a global minimum tax rate of 15% by Europe for companies with revenues over €750 million, may reduce some markets’ ability to attract investments through extremely low rates. In this new landscape, economies will compete for investments through other means, such as tax credits, grants, and subsidies. The survey also highlights other tax-related factors influencing investment decisions across Europe, which Greece must take under serious consideration. These include the availability of R&D tax credits (40%), the degree of pragmatism and flexibility of tax authorities (32%), tax certainty and stability (29%), and the degree of digitization of tax authority systems (28%).

Greece has made significant strides in recent years in modernizing, digitalizing and stabilizing its tax system. This is a major accomplishment given the country’s history of frequent tax framework changes and the tumultuous 15-year period it leaves behind.  

However, the journey is far from over. To enhance the attractiveness of its tax system, Greece must continue to reduce the tax and social security burden on employees. This will lower labor costs for companies investing in Greece and can help retain and attract high-level talent as part of the “Brain Regain” strategy to repatriate highly skilled Greeks living abroad. Accordingly, enhancing tax incentives for R&D investments and significantly improving access to these incentives for SMEs is also crucial. The impressive progress in the digitalization of the tax system must continue as well, focusing on effectively serving taxpayers through technological tools and leveraging AI to combat tax evasion. Measures should also aim at modernizing and simplifying the tax framework, rationally interpreting existing laws, and revising outdated tax legislation while correctly incorporating European regulations and directives into national law. For example, the recent abolition of the Stamp Duty for over 600 types of transactions and its replacement with the Digital Transaction Fee is a significant step in the right direction. Finally, introducing “green taxes” and integrating environmental goals into tax policy by establishing incentives and disincentives aligned with environmental objectives is essential for a successful green transition.  
 
Today, Greece stands at a crossroads, where targeted tax reforms and incentives can pave the way for economic resilience and sustainable growth. The path forward requires a balanced approach, addressing immediate fiscal needs while laying the groundwork for a more attractive and competitive tax environment.