Spyros Theodoropoulos, president of the Hellenic Federation of Enterprises (SEV), attributed the inability to support major productive investments to a lack of political will and a general lack of strategy for increasing productivity.
As he noted during the presentation of a study by the National Technical University of Athens (NTUA) commissioned by the Federation of Industries of Northern Greece on accelerated depreciation for productive investments in Greek industry, “the fiscal cost of such a mechanism is equivalent to two fuel passes or the support package for vulnerable groups during the rise in energy costs.” The study shows that this incentive not only does not constitute a fiscal cost but ultimately increases tax revenues through the liquidity it frees up, the investments it generates, and the creation of new jobs.
According to the study, the implementation of accelerated depreciation can lead to a significant boost in economic activity, with positive effects of approximately 504 million euros on GDP from new investments, over 158 million euros in public revenue, as well as a significant impact on employment growth.
At the same time, the study emphasizes that accelerated depreciation does not constitute a cost to the state budget, but rather deferred revenue, the loss of which is fully offset by increased investment and the multiplier effects on the economy.
The study’s conclusions
According to Mr. Angelos Tsakanikas, Professor of Economic Evaluation of Technology, Innovation, and Entrepreneurship Systems at the School of Chemical Engineering, National Technical University of Athens (NTUA), and Director of the Hellenic Chamber of Commerce and Industry (EBEO), “the study shows that accelerated depreciation can serve as an effective mechanism for boosting productive investments.”
“Their significance,” he added, “lies in the fact that they boost companies’ liquidity at the beginning of the investment cycle—that is, at the very moment when critical decisions are made regarding new equipment, technological upgrades, and increased production capacity. The dynamic boost to businesses’ cash flow may enable them, in the medium term, to undertake further investment initiatives. In other words, this is a measure that can serve as a powerful incentive for investment in mechanical equipment while also creating faster investment cycles—a key issue for the country’s industrial sector.”
Spyros Theodoropoulos
The president of the Hellenic Federation of Enterprises (SEV), Mr. Spyros Theodoropoulos, emphasized the need for investment in industry. “Greece,” he said, “stands at 17% in terms of investment, but we are still quite far from the European average of 21%. The 17% refers to total investment in the country; however, it is industrial investments that create the greatest added value. Within the framework of the new production model, tools are needed to boost productive investments, and accelerated depreciation is one such tool. The horizontal nature of the measure provides industries with much-needed flexibility, as it does not require multiple levels of approval from the public administration.”
Fiscal Cost
For his part, the Secretary General for Industry, Eleftherios Kritikos, explained that the government is following a specific fiscal policy and the recommendations of the General Accounting Office, which takes into account the mix of one-time and recurring revenues and expenditures in order to achieve the budget targets. As he noted, a tax cut of 300 million or 500 million euros in a single year must be offset by corresponding recurring revenue or by creating a corresponding counterbalancing measure (spending cuts or tax increases).
However, this approach does not take into account the “cost of inaction”—that is, the lack of liquidity needed for investments that would generate new public revenue and create new jobs. As Ms. Ioanna Mitrogianni, Deputy Director-General of the Directorate-General for Taxation and Customs Union (TAXUD), argued, accelerated depreciation is essential for generating liquidity that would support major investments in the green transition. She pointed out that 20 of the 27 member states have implemented such mechanisms, a fact that demonstrates that accelerating the recovery of investment costs has now become a key lever for supporting industrial competitiveness in Europe.
Mr. Panos Lolos, President of the Association of Industries of Central Greece, stated: “Greek industry needs tools that turn investment intentions into actual investments. Accelerated depreciation is not merely a technical tax mechanism. It is a practical way to support business liquidity, accelerate the modernization of production equipment, and strengthen the competitiveness of the Greek economy. “If we want more productive investments, we must create the framework that will unlock them.”
The Scenarios
According to the study’s baseline scenarios, it appears that:
- In the first year of applying higher depreciation rates, tax revenue declines (compared to applying a flat depreciation rate) by €377 million.
- In the second year, government revenue will decrease by 200 to 295 million euros, while in subsequent years the decline will be smaller and will approach zero by the fifth to seventh year (depending on the scenario regarding the level of depreciation rates).
- Starting in the 5th or 7th year (depending on the scenario), there is an increase in public revenue (tax revenue) of 169 to 182 million euros per year resulting from the investments that were made.
Liquidity Tool
The study notes that at a time when Europe is repositioning industry at the center of economic resilience, the green transition, and strategic autonomy, the discussion highlighted that boosting productive investment cannot be limited to general policy guidelines. It requires practical tools that reduce the burden of investment decisions, strengthen business liquidity, and create the conditions for a faster upgrade of production equipment.
Currently, in Greece, depreciation for machinery and mechanical equipment is calculated using a fixed annual rate, with the result that an industrial investment can take up to 10 years to be fully depreciated, while in some cases the equipment’s useful life may have already expired. This framework, as highlighted in the study, can act as a deterrent for businesses with high capital expenditures, particularly in an environment of rising financing costs, energy pressures, and international competition.
Accelerated depreciation allows businesses to recoup the cost of investments in fixed assets more quickly, thereby boosting available liquidity during the early and most critical years of the investment cycle. In this way, it is not merely a tax measure, but an essential tool of development and industrial policy.
Thus, a comparison with other countries highlights the need for Greece to consider more flexible and competitive policy tools in order to effectively support its productive base, as the current legal framework constitutes a competitive disadvantage relative to the European Union.