Corruption in Greece

Commentators both within and outside Greece have attributed this flaw in Greek culture to a mismanagement of Ottoman Greece by the Ottoman Empire. In Ottoman-occupied Greece tax resistance became a form of patriotism,[12][13] and sometimes a condition for survival, while the corruption was widespread among the officials of the empire, especially during its later centuries. Property and commercial tax systems were left in shambles.[14]

Greece became independent in 1830, but the corruption in modern Greece and the resistance to pay taxes to the Ottoman Empire is connected also by the fact that part of the ethnic Greek officials of the empire (kodjabashis) kept their positions after Greek independence and established the way the Greek state was run. Immediately after independence, Greeks were subjected to a heavy tax burden caused by the debt accumulated during the independence war, which was combined with the poverty and devastation caused by the war. Tax evasion was, however, a larger problem among the high-ranking officials, who were accustomed to being unchecked by the Ottomans and sought to preserve that status in the Greek state.

Vatopedi monastery, which dates from the 10th century. The leadership of the monastery allegedly was involved in corrupt activities, working in collusion with corrupt Greek government officials to embezzle government funds.[15]

Before the crisis, Greece was one of EU's worst performers according to Transparency International's Corruption Perception Index [16](see table); by 2017, the respective score remained near the bottom of the EU.[17]

Data for 2012 indicated that the Greek "shadow economy" or "underground economy", from which little or no tax was collected, was a full 24.3% of GDP - compared with 28.6% for Estonia, 26.5% for Latvia, 21.6% for Italy, 17.1% for Belgium, 14.7% for Sweden, 13.7% for Finland, and 13.5% for Germany [19][20] (the situation had improved for Greece, along with most EU countries, by 2017[18]). For Greece, where the percentage of self-employed was more than double the EU average in 2013, a well known pattern is followed, where tax evasion is correlated with the percentage of working population that is self-employed.[20]

Several successive Greek governments had in the past attempted to improve the situation. A rapid increase in government revenues through implementing a more effective tax collecting system has been recommended. Implementing the proper reforms, is however estimated to be a slow process, requiring at least two legislative periods before they start to work.[21]

In the last quarter of 2005, 49% of the companies inspected by the tax authorities were found to have committed tax offences while in January 2006 it fell to 41.6%.[2] A study by researchers from the University of Chicago concluded that tax evasion in 2009 by self-employed professionals alone in Greece (accountants, dentists, lawyers, doctors, personal tutors and independent financial advisers) was €28 billion or 31% of the budget deficit that year.[1]

The Tax Justice Network has said that there are over €20 billion in Swiss bank accounts held by Greeks.[22] The former Finance Minister of Greece, Evangelos Venizelos, was quoted as saying "Around 15,000 individuals and companies owe the taxman 37 billion euros".[23] Additionally, the TJN puts the number of Greek-owned off-shore companies to over 10,000.[24]

A mid-2017 report indicated Greeks have been "taxed to the hilt" and many believed that the risk of penalties for tax evasion were less serious than the risk of bankruptcy. One method of evasion is the so-called black market, grey economy or shadow economy: work is done for cash payment which is not declared as income; as well, VAT is not collected and remitted.[25] A January 2017 report[8] by the DiaNEOsis think-tank indicated that unpaid taxes in Greece at the time totaled approximately 95 billion euros, up from 76 billion euros in 2015, much of it was expected to be uncollectable. Another early 2017 study estimated that the loss to the government as a result of tax evasion was between 6% and 9% of the country's GDP, or roughly between 11 billion and 16 billion euros per annum.[6]

The shortfall in the collection of VAT (sales tax) is also significant. In 2014, the government collected 28% less than was owed to it; this shortfall was about double the average for the EU. The uncollected amount that year was about 4.9 billion euros.[26] The DiaNEOsis study estimated that 3.5% of GDP is lost due to VAT fraud, while losses due to smuggling of alcohol, tobacco and petrol amounted to approximately another 0.5% of the country's GDP.[6]

Following similar actions by the United Kingdom and Germany, the Greek government is in talks with Switzerland to tax bank accounts in Switzerland owned by Greek citizens.[29] In late 2011 the Ministry of Finance revealed that Greek Swiss bank account holders will either have to pay a tax or reveal information such as the identity of the bank account holder to the Greek internal revenue services.[29] The Greek and Swiss governments were hoping to reach a deal on the matter by the end of 2011[29] but that deadline was not met.

Estimates in 2015 indicated that the amount of Greeks' evaded taxes stored in Swiss banks was around 80 billion euros. By then, a tax treaty to address this issue was finally under serious negotiation between the Greek and Swiss governments.[30][31] An agreement was ratified by Switzerland on 1 March 2016 creating a new tax transparency law that would allow for a more effective battle against tax evasion. Starting in 2018, banks in both Greece and Switzerland will exchange information about the bank accounts of citizens of the other country to minimize the possibility of hiding untaxed income.[32]

The Greek government has not completed an investigation of a list of 1,991 persons purported to hold accounts with Swiss bank HSBC that it received in 2010 from former French finance minister Christine Lagarde. Initially, officials claimed at various times to have lost or misplaced the information. On 29 October 2012 the government changed its position saying it would not use stolen information to prosecute suspected offenders. Instead, Greek authorities arrested Kostas Vaxevanis, journalist and editor of the weekly magazine Hot Doc, who published the "Lagarde list".[49] He was charged for breaching privacy laws that could have seen him sentenced to two years in prison.[50] However, after a trial lasting only a day, he was acquitted.[51] Another trial, in 2015 found the former minister of economy Giorgos Papakonstantinou guilty for document distortion.[52]

The list includes an advisor to former Greek prime minister Antonis Samaras, as well as a former minister and a member of Samaras' New Democracy political party. The list also contains the names of officials in the finance ministry.[53]

Mr Vaxevanis said he thought the government had not acted on the list because it included friends of ministers, businessmen and powerful publishers.[54] He also accused much of the Greek media of ignoring the story.[54] "The Greek press is muzzled", he said. "There is a closed system of power in Greece, wielded by the political elite, businessmen and journalists."[54]

• Hellenic Statistical Authority
• Paradikastiko scandal
• Siemens Greek bribery scandal
• Paranga (football)
• Koriopolis, match fixing in football
• Greek Financial Audit, 2004
• Greek financial audits, 2009–2010
• Novartis scandal
• Media corruption

• Police corruption in Greece
• Taxation in Greece
• Greek government-debt crisis
• Crime in Greece

• Greece Corruption Profile from the Business Anti-Corruption Portal
• Michael Lewis, "Beware of Greeks Bearing Bonds." Vanity Fair, 1 October 2010.
• http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_05/11/2013_526451
• Income tax#Transparency and public disclosure
• https://www.nytimes.com/2010/02/14/business/yourtaxes/14disclose.html
• http://usatoday30.usatoday.com/news/world/2008-06-18-salaries_N.htm