Electronic Transactions: The Bank of Greece’s Proposal to Curb Tax Evasion

Summary

The introduction of more and stronger incentives for consumers to continue requesting and making payments via electronic means —particularly in sectors where freelancers and the self-employed are prevalent and transactions continue to be conducted largely in cash—is what the Bank of Greece is recommending to the government.

In the 2026 Monetary Policy Report, which was submitted to Parliament yesterday, there is a clear reference to the need to strengthen electronic transactions as a tool for combating tax evasion.

While it acknowledges that progress has been made in recent years in tax compliance and in reducing the VAT gap (the difference between theoretical and actual revenue collected), due to the increase in card payments, the expansion of POS terminals, and the gradual decline in cash usage, however, the Bank of Greece notes that efforts must continue by providing incentives (primarily tax-related) to consumers, as these help bring to light transactions that would otherwise remain undeclared.

“Despite significant progress, efforts to further reduce the VAT gap as well as the discrepancy between actual consumption and declared income must continue. This can be achieved through the even wider promotion of electronic transactions, combined with intensified audits, especially in sectors with a high proportion of freelancers and the self-employed, where transactions are largely conducted in cash,” he notes.

What’s Changing Now

Undeclared Transactions

Given that payments made through the banking system are traceable, thereby limiting the scope for concealing income and failing to issue receipts, the Central Bank supports expanding tax incentives for consumers so that they continue to request and make payments via electronic means.

It explains that the further expansion of electronic transactions and POS terminals can improve VAT revenue collection, precisely because it limits the possibility of undeclared transactions.

Increase in Electronic Transactions

According to bank data, the number of cards and electronic transactions is rising sharply year after year.

At the end of March, the number of active payment cards in Greece stood at nearly 23.6 million, up 6% compared to the same period in 2025. The majority—about 85%—are debit cards, while prepaid cards are also showing significant growth.

At the same time, nearly 658.3 million card transactions were processed in the first quarter of 2026, an increase of 11.7% year-over-year, while their value rose to 18.45 billion euros, up from 16.7 billion euros in the corresponding quarter of 2025.

This trend reflects the economy’s steady shift toward digital payments. According to the latest data from the ECB (European Central Bank) for the first half of 2025, 73% of electronic transactions in Greece are made with cards, a percentage that places the country among the top in Europe, behind only Portugal and Cyprus.

The VAT Gap

This progress is also reflected in the so-called VAT “gap.” According to European Commission data, in 2023 the VAT gap in Greece fell to 11.4% of the theoretical tax liability, down from 24% in 2019, while the European average stood at approximately 9.5%.

However, while the gap has narrowed significantly, it has not been eliminated. For this reason, the Bank of Greece links the further growth of electronic transactions to more targeted audits of professions and activities where it remains easier to conceal income.

Investments

In its report, the Bank of Greece also revisits the broader issue of tax policy. Alongside support measures, it calls for a stable and investment-friendly tax framework. This includes tax credits for research and development expenses, as well as the introduction of accelerated depreciation for fixed-asset investments in industry. The goal is to strengthen the economy’s productive base through incentives for investment, innovation, and the development of public finances.

Emergency Measures

Regarding the new energy crisis and the emergency measures being taken to address it, the Bank of Greece emphasizes that rising inflation due to high energy and food costs is creating pressure to adopt additional fiscal measures.

It notes in particular:

• Given that inflation has significant redistributive effects, hitting low-income households—which have a higher propensity to consume—the hardest, the measures should be targeted at the most vulnerable income groups. Support for businesses should be similarly targeted, depending on their exposure to rising energy prices and disruptions in energy supply.
• Any reductions in tax rates, given the high dependence of tax revenues on indirect taxes, should be combined with structural reforms to broaden the tax base and improve tax collection, in order to ensure fiscal balance.
• Horizontal measures should be avoided, as, although they curb inflationary pressures, they entail high fiscal costs and are therefore less effective than targeted income-related measures. Furthermore, it is crucial that measures be designed with a clear time frame and exit clauses, so as not to entrench structural pressures on public finances and to limit the risk of demand-side inflationary pressures.
• In any case, the decision to adopt emergency measures should take into account the availability of sufficient fiscal space. Targeting, proportionality to the scale of the shock, and flexibility in implementation are key prerequisites for effectively mitigating the impact of the crisis without undermining the medium-term sustainability of public finances. The relevant measures taken by the government so far generally meet the above conditions.

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