After decades of crisis and blind measures, from 2025 onward, compliant taxpayers will start to see benefits. The 12 tax cuts—and an equal number of benefits—planned for 2025 in the state budget submitted by the government are just the beginning. The additional state revenue from tax evasion crackdowns is paving the way for further tax reductions, already being planned by the economic team. This includes thoughts of greater relief for the middle class, changes in tax brackets, and indexing the tax scale from 2026 onwards.

The top priority for Minister of National Economy and Finance Kostis Hatzidakis is to find ways to alleviate and reward citizens who bore the brunt during the years of major crises.

The key to this is the additional €1.8 billion in revenue generated by measures to curb tax evasion in 2024. From now on, every euro recovered from tax evasion creates more fiscal space for tax cuts, while restoring a sense of tax and social justice.

Electronic measures to block tax evasion are crucial, but the real tool for increasing tax compliance is the visible benefit for compliant citizens. This fosters a culture of timely payments, reducing the inclination to evade taxes.

Bonuses and Incentives

The focus of these changes is the middle class, particularly compliant taxpayers. The start has already been made with a 4% tax discount for those who file their tax returns early in 2025. The discount decreases on a sliding scale or is lost entirely for last-minute filers.

The Ministry of Finance is also considering, from 2026, even larger discounts for those who pay their income taxes or potentially other taxes in full and on time.

Similarly, for vehicle registration fees, extensions relied upon by delinquent taxpayers will be abolished in 2025, and penalties—also scaled—will be imposed on late payers.

From 2026, as Prime Minister Kyriakos Mitsotakis revealed, additional revenues from annual tax evasion crackdowns will reduce other taxes and burdens on the middle class. A new tax scale is to be designed, significantly easing tax burdens for middle incomes up to €40,000.

Moreover, the scale with the new tax brackets will be updated annually based on expected wage and income increases in the coming years. This provides an incentive and ensures that those striving to increase their incomes are no longer “penalized.”

“White Register”

Overall, Hatzidakis’ plan envisages preferential treatment from the Tax Office for those who consistently pay their taxes on time and maintain a “white register” (a record of compliance). Modern digital tools will objectively and transparently evaluate each citizen’s tax data. A central system will profile taxpayers based on timely payments and the absence of tax violations.

This initiative has a dual purpose. On one hand, it aims to improve tax culture by promoting the idea that consistency is rewarded. On the other, it strengthens public trust in the state by reducing the sense of unequal treatment.

Where It Will Lead

Some proposals include offering a special relief scheme with more installments for first-time defaulters who seek to settle their debts, distinguishing them from habitual offenders. Alternatively, those selling property while in debt to the state may face significantly reduced withholdings. If a payment is missed and their bank accounts are frozen, they could have their accounts unfrozen immediately. In the future, targeted tax discounts could be offered based on the taxpayer’s compliance score in previous years.

The “white register” of the Tax Office will start materializing in 2025 to protect compliant taxpayers.

Specifically, based on the creation of a “taxpayer profile” by the Independent Authority for Public Revenue (AADE), the tax behavior history of each citizen will be recorded. For businesses, eligibility for the “white register” will consider:

• Consistent compliance with tax, labor, and insurance laws over time.
• Absence of complaints regarding tax, labor, and insurance violations, particularly undeclared or uninsured labor and tax evasion.
• Genuine business efforts to maintain or increase overall employment, etc.

Under this system, households and individuals who consistently meet their payment obligations will enjoy specific privileges, such as:

• Favorable Debt Arrangements: Taxpayers who encounter financial difficulties and accrue new debts will access more flexible repayment arrangements. For those already in arrangements and meeting payments, the “white register” could offer even better terms, such as more installments or lower repayment costs.
• Unfreezing Bank Accounts: In early 2025, a regulation will activate that increases the unseizable bank account limit of €1,250 for compliant taxpayers, which has been on hold since 2019. The unseizable amount will rise if the taxpayer has settled their debts, made two payments, declared the account to be exempt, and continues paying installments on time.
• Reduced Withholding for Debts: Compliant citizens will benefit from lower tax withholding rates on outstanding debts. The more compliant the taxpayer, the lower the percentage withheld from public payments, like tax refunds.
• Expedited Refunds: Tax or other state refunds will be processed faster for compliant taxpayers. Automated processes will ensure swift payment without manual intervention. The “golden list” will include those without recorded tax or customs violations.

Taxes Decrease, Revenue and Benefits Increase

The new state budget forecasts 12 income increases and 12 tax cuts by the end of 2025. Income hikes will benefit pensioners (2.4%), all public servants (based on a new minimum wage), law enforcement (20% increase for night shifts), doctors in remote areas, students eligible for housing allowances, military school cadets, and more.

New tax cuts include reduced social security contributions from 1/1/2025, elimination of the business tax for freelancers, permanent refund of agricultural fuel tax, income tax exemption for empty rental properties, removal of fixed-line telephony tax for fiber optic connections, and more.

These tax cuts are permanent, with additional reductions planned for 2026, as fiscal conditions now allow it. Unlike austerity times, when taxes rose but revenue fell or stagnated, now tax reductions are boosting public revenues due to growth and reduced tax evasion.

This year alone, state revenues exceeded budget forecasts by €3.7 billion, half of which came from wage and pension increases, economic activity, and inflation.

VAT Revenue

Approximately €1.8 billion in extra revenue cannot be explained solely by growth or inflation. This is purely from anti-tax evasion measures, such as:

• Corporate Income Tax: Expected revenue for 2023 was €6.7 billion, but it will reach €7.85 billion, €1.15 billion above projections. Some €800 million came from undeclared profits now monitored through myDATA.
• Additional VAT Collection: VAT revenues rose by €2 billion year-over-year, with €1 billion stemming from increased POS use, revealing previously undeclared cash transactions.

This excludes €600 million in extra income tax from professionals, showing that even contested measures are proving effective, with strong public support.