Once again, the government is trying to spin revelations of extensive tax evasion linked to two major chains, Pizza Fan and ‘Choriatiko’, as a public relations ‘success’ for the tax inspection authorities, PASOK MPs P. Koukoulopoulos and G. Nikitiadis said in a statement.
They also point out that, according to information made public so far, the investigations in both cases were not triggered by the tax inspection authorities at the Independent Authority for Public Revenue (AADE) detecting tax evasion on their own initiative. Instead, they followed complaints that prompted the police and prosecutors to act, with the relevant Greek Police services playing a decisive role in the investigations.
This raises even more serious questions about the effectiveness of preventive tax inspections and the timely use of modern mechanisms to detect tax evasion.
If the information made public is confirmed, the two cases raise serious concerns about the protection of public revenues and efforts to tackle organised tax evasion that is alleged to have continued for years.
In the case of Pizza Fan, according to the police investigation, the estimated loss to the state exceeds €35 million in unpaid VAT and income tax, with the alleged activities of the ring spanning a decade.
This case, which the Prime Minister himself cites as an example of the government’s efforts to tackle the ‘big fish’ of tax evasion, would, if the investigation’s findings are confirmed, represent, in our view, the clearest evidence of institutional tolerance and inaction in the face of an organised operation alleged to have deprived public coffers of tens of millions of euros for a full decade.
The ‘Choriatiko’ case raises similar questions. Investigators are looking into an extensive corporate network that is estimated to have caused an even greater loss to the state. The key question, therefore, is not only how these cases came to light, but above all how they could have gone undetected and unaddressed for so long.
Yet, according to media reports, complaints about Pizza Fan had been submitted to the relevant authorities at an earlier date. In addition, the company’s statutory auditor had raised three material reservations about its financial statements, one of which concerned its tax liabilities, noting that the financial years from 2020 to 2025 had not been subject to tax audits.
The conversations that have come to light also raise serious questions. According to them, the company’s head was allegedly informed by people at AADE both about complaints against the company and about forthcoming tax inspections.
How is it possible that, while AADE says it uses modern algorithms and objective risk-analysis criteria to select businesses for inspection, some business owners allegedly know in advance when inspections will take place and what they will cover? How is the confidentiality of inspection plans safeguarded, and has the possibility of confidential information being leaked from within AADE been investigated?
The new tax evasion case linked to the ‘Choriatiko’ bakery chain raises equally serious questions. According to information published so far, the investigation concerns an extensive network of hundreds of companies and is examining whether there were shell companies and sham transactions, as well as unpaid taxes and social security contributions. The estimated loss to the state exceeds €100 million.
How is it possible that the alleged involvement of more than 500 companies in such an extensive tax evasion network is being investigated now, without risk indicators having been detected earlier? What inspections were carried out at the companies involved? Were data systematically cross-checked between the tax administration, GEMI and social security bodies to identify sham transactions, beneficial owners and accumulated debts?
The two cases also highlight another serious issue that cannot be ignored: unfair competition at the expense of the thousands of small and medium-sized businesses in the restaurant and bakery sectors that meet their tax and social security obligations.
Systematic non-payment of VAT,
concealment of income and non-payment of social security contributions, when proven, do more than deprive the state of valuable resources. They create the potential for an unlawful competitive advantage, whether through lower prices or higher profit margins and greater scope to expand.
How can a small pizzeria or neighbourhood bakery compete with a large chain that may be gaining such advantages through tax evasion? How many compliant businesses have come under financial pressure, lost market share or even been forced to close because they could not compete on equal terms?
At the same time, workers must not be made to bear the consequences of these revelations. Around 2,500 Pizza Fan employees face serious uncertainty over their jobs and pay, while the rights of workers at businesses linked to the ‘Choriatiko’ case must also be protected.
The cases being uncovered by law enforcement authorities is a necessary development. But it does not remove the government’s obligation to explain how effective the inspection authorities have been and whether they acted in time.
PASOK – Movement for Change is calling for:
- Immediate protection for the workers at both chains, safeguarding their wages due, social security rights and jobs, and providing financial support where necessary, without relieving employers of their obligations.
- Full transparency about the history of inspections in both cases. When were the competent authorities alerted to signs of wrongdoing, what complaints had been submitted, what action was taken, and why were the alleged violations not detected earlier? In the Pizza Fan case in particular, it must be clarified how the relevant complaints and the statutory auditor’s reservations were assessed.
- Immediate investigation of claims that Pizza Fan’s management was tipped off in advance about forthcoming tax inspections, and accountability for any wrongdoing.
- An investigation into the impact on competition, particularly for small and medium-sized businesses in the restaurant and bakery sectors, of the alleged systematic evasion of taxes and social security contributions.
- Meaningful strengthening of the tax inspection authorities through more effective use of digital data and risk-analysis criteria, systematic cross-checks between the relevant authorities and stepped-up inspections of complex corporate networks, so that the state is not left merely responding to wrongdoing after the fact.
The government must stop celebrating in public relations terms the exposure of cases that raise serious questions about how the inspection authorities operate.
New Democracy has governed the country for more than seven years and is now in its second four-year term. It can no longer invoke either a lack of time or the failings of the past. It has had the time, the tools and the political responsibility to strengthen the inspection authorities, protect public revenues and ensure fair competition.
These cases are further evidence that the government neither wants to nor can effectively tackle the systemic failings that allow tax evasion and unfair competition to persist. Instead of presenting revelations after the fact as successes, it must account for what it failed to do during its seven years in office.