Although some aspects of tax administration reform in Greece are unique, the experience offers a particularly valuable lesson that can be applied more broadly, says a report by the International Monetary Fund, entitled: “How Tax Administration Supported Greece’s Economic Recovery.”
“Sustained effort – based on good governance, a careful sequence of actions, and investment in people – can turn crisis response into lasting institutional strength,” it adds.
Greece, the IMF notes, was once Europe’s example to avoid – excluded from markets, dependent on external financial aid and collecting too little tax revenue to finance public services and support economic growth – while today it is one of only five European Union countries with a primary budget surplus.
“This development,” it adds, “is an impressive turnaround that underlines how much its public finances have improved.” The turnaround largely reflects a transformed tax administration that is continually closing compliance gaps and has restored fiscal credibility, one of the quiet engines p behind Greece’s broader economic recovery.
The IMF’s latest annual assessment of the performance of the Greek economy, in the context of the Article IV consultation, found that Greece is well placed to deal with external shocks, such as that from the war in the Middle East, reflecting its enhanced fiscal sustainability and financial stability.
The primary surplus has increased to almost 5% of GDP in 2024-25, while the public debt-to-GDP ratio has declined by about 65 percentage points from its 2020 high. Financing conditions have improved alongside a return of sovereign bond spreads (spreads in yields) to levels last seen before the 2008 global financial crisis.
“The reform agenda is not complete. But the scale – and order – of Greece’s recovery offers valuable lessons for other countries pursuing tax reform New IMF work in this area highlights two key findings.
First, governments cannot meet their fiscal reform objectives if taxes are not fair, reliable, and transparent.
Second, developing these capabilities may take time. In Greece, reform has evolved in three mutually reinforcing phases — stabilization (2010-12), institution building (2013-17), and digital transformation (2018-25) — supported throughout by IMF capacity building,” the Fund notes.
2018-2025: digital transformation
Although digital tools were introduced earlier, the decisive push came after the institutional foundations were firmly established, the Fund notes. “At this stage, the tax administration had the governance, skills and credibility required to establish digitalisation,” the report notes, adding that after 2020, partly due to the pandemic, Greece introduced a comprehensive set of digital systems.
“These reforms made compliance easier for taxpayers and provided auditors with more accurate tools to identify risks and target enforcement where it mattered most.
The results were clear VAT compliance improved significantly, with VAT revenues increasing by 2.4 percentage points of GDP over 15 years – from 7.1% in 2010 to around 9.5% in 2025.
A virtuous circle
Overall, Greece’s reforms have created a virtuous cycle as better governance has enabled digitization, which in turn has improved tax compliance, and higher and more reliable revenues have strengthened public confidence and fiscal credibility, the IMF finds.
In 2025, Greece’s tax revenue-to-GDP ratio had reached 28%, up from 20.5% in 2009. Although the revenue growth also reflects broader economic and political changes, improvements in tax administration have played a central role, broadening the tax base, strengthening enforcement, and increasing confidence in the system.
“The journey continues. The next challenge is to make recent gains sustainable by integrating new ways of working deeply into daily processes. Priorities include more systematic use of analytical tools and artificial intelligence to manage compliance risks, further improving taxpayer services and trust, and ensuring that skills and staff keep up with rapid technological changes,”
