Explosive growth of overdue tax debt: Half of Greek residents are in debt!

Overdue debts to the Greek tax authorities reached approximately €114.5 billion, and the number registered debtors approached 4.8 million AFM.

It’s already not just accounting statistics and not a set of numbers for the next report ΑΑΔΕ. When the number of people and businesses with debt grows on such a scale, the inevitable question arises: what exactly in the country’s economic policy has stopped working? According to ΑΑΔΕthe total amount of overdue obligations remains about €114.5 billion, and the number of debtors is measured in the millions.

The state has the right to demand payment of taxes. Without this, hospitals, schools, transport, social programs and the public service system itself do not work. But if millions of citizens and businesses become debtors, the problem can no longer be explained only by “poor tax discipline.” This means more people are struggling with a combination of tax burdens, cost of living, low incomes, expensive rent, energy bills, insurance premiums and overall rising costs.

Growing debts are an indicator, not just a reason for arrests

When overdue debt increases, authorities usually respond with the usual range of measures: reminders, fines, blocking of bank accounts, collection of funds from third parties, seizure of property and electronic auctions. Formally, this is logical. But if the number of debtors grows faster than people’s ability to pay, the problem does not go away. It is simply transferred from the tax base to families, small businesses, rental housing and the gray economy.

That’s why the increase in the number of debtors should give the government pause not only about how to more effectively collect old debts, but also about why they appear. Either taxes and mandatory payments turn out to be too high for real incomes, or incomes are too low for the current cost of living, or the state continues to simultaneously put pressure on both consumption and small businesses, hoping that someone else will be able to stay afloat.

VAT shows exactly where the system breaks down

The largest portion of actually collected tax debt remains VAT: about €24.74 billion, or almost half of the corresponding volume of tax debt. Next comes income tax. This structure is important because VAT is not paid from future profits or abstract capital. It arises in the current turnover of the economy.

When a cafe, shop, workshop, small hotel or family business is late in paying VAT, this often means that the money has already been spent on rent, salaries, electricity, goods, fuel or servicing old obligations. For ΑΑΔΕ this is a delay. For a business owner, this may be an attempt to stay open until the end of the season.

If such cases increase, the government must ask itself: is it really collecting sustainable taxes, or is it simply forcing the economy to temporarily lend to the budget at the cost of future bankruptcies?

Seizure of accounts and property: quick effect, severe consequences

ΑΑΔΕ’s annual report for 2025 indicated that enforcement measures could be applied to more than 2.3 million debtors. Over 1.66 million AFMs were already under such measures. We are mainly talking about seizures of funds in bank accounts and collections from third parties, but also about orders to seize property and procedures related to auctions. ΑΑΔΕ report for 2025

In 2025 alone, the tax office recorded more than 500 thousand collections from third parties, about 12.6 thousand orders to seize property and more than a hundred procedures related to auctions. On paper, this looks like enforcement of the law. In real life, a frozen account can mean that a family cannot pay rent, or a small business cannot pay suppliers or pay salaries.

The paradox is that enforcement often reduces the debtor’s ability to continue paying. If a company’s working account is blocked, it loses the opportunity to purchase goods and work. If a family’s last asset is taken away, it does not become any more solvent. She becomes poorer and more dependent.

When debt takes over a home, land or family business

In Greece, real estate has traditionally been more than just an investment asset. An apartment, a house in a village, a plot of land, a store premises or a small workshop often served as the family’s last reserve. Even with a low income, owning one’s own home meant that one was not completely dependent on rising rent.

If debt policy gradually causes people to lose these assets, the consequences go far beyond a single tax procedure. The former owner turns into a tenant, the owner of a small business becomes an employee or closes the business, the family loses the opportunity to transfer at least some material support to the children.

Given the rise in housing prices, this is especially dangerous. Forced sales can accelerate the concentration of real estate among funds, investors and those with spare capital. And people who have lost their homes or businesses will be forced to pay rent at a time when the housing market is becoming increasingly less affordable for local residents. IMF analysis of the Greek housing market

From owners to dependent people

The danger is not that the government collects taxes. The danger arises when foreclosure turns into a mechanism that step by step deprives a significant part of society of property, independence and the ability to plan for the future.

This will not necessarily lead to an immediate social explosion. History rarely works so theatrically, although humanity always tries to give it a reason. Another process is much more likely: people begin to move into the gray economy, do not register income, do not open new businesses, do not invest, try to keep less money in the banking system, or simply leave the country.

This is how a layer of people is formed for whom it is increasingly difficult to lose anything in the economic sense. Not because they suddenly no longer want to work or pay taxes, but because they no longer have housing, savings, a sustainable business and confidence that following the rules will save at least something.

Why authorities must respond now

If the number of debtors is growing at a rapid rate, this should be an alarming signal for the government. You cannot endlessly explain the situation by saying that citizens and entrepreneurs “don’t want to pay.” Some people actually avoid obligations, hide assets, or exploit weaknesses in the system. But millions of new debts are not created just because of bad taxpayer character.

They appear where incomes do not keep up with expenses, where indirect taxes put pressure on consumption, where small businesses operate with a minimum margin of safety, and any delay in payment turns into fines, penalties and the threat of arrest. If the state does not see this connection, then it does not treat the cause of the disease, but only its symptoms.

Already today, a significant part of debts is recognized as difficult to collect. In 2025, about €8.5 billion was classified in this category, and in 2026 ΑΑΔΕ plans to add another approximately €6 billion. The total volume of such obligations could exceed €41 billion. Kathimerini about ΑΑΔΕ plans

This means that the state already admits that a significant part of the debt exists in the reports, but practically cannot be collected. It is all the more important not to finish off those from whom you can still recover several hundred or thousand euros, but to build a clear system of distinguishing between malicious evasion and real insolvency.

We need not only toughness, but also reasonable policies

The tax system must be tough on those who hide income, withdraw assets and deliberately fail to pay when funds are available. But for families and small businesses that find themselves in a debt trap due to falling incomes and rising costs, we need workable restructuring mechanisms, minimum income protection, clear rules for single housing and realistic payment terms.

If the government instead relies solely on electronic arrests, solvency assessment algorithms, and massive repossessions, it could see a short-term increase in collections. But in the long run, the country will end up with fewer independent owners, fewer small businesses, more tenants, more of a shadow economy, and even less trust in institutions.

The state itself found itself in a debt trap

The current government has the ability to change tax and social policies, but this ability is limited not only by political decisions. Greece remains the country with the highest public debt in the European Union: by the end of 2025 it stood at 146.1% of GDP. Although debt is gradually falling, Athens is under pressure to maintain budget surpluses and prove to creditors, markets and European institutions that it will not return to a pattern of constant deficits.

This is why the state often acts as a hostage to its own financial history. It cannot easily abandon VAT, sharply reduce the tax burden, or massively write off the debts of citizens and enterprises without risking a new hole in the budget. Money that could go toward relief for families and small businesses is also needed for debt servicing, social spending, defense, infrastructure and European fiscal rules.

But limited freedom of action does not mean lack of responsibility. Even so, authorities can choose where to bear the brunt: low-debt families and small businesses, or large avoidance schemes, assets that remain out of reach for years, and ineffective tax breaks. The question is not only about the amount of available money. The question is a political choice of whom the state decides to protect first.

A strong state is not a state that can quickly withdraw money from a citizen’s account. A strong state knows how to build an economy in which a person is able to earn money, pay taxes, keep a home, develop his business and not live in constant anticipation of the next notification from the tax office.

Sources: ΑΑΔΕ, Kathimerini, IMF. Figures refer to 2026, the latest available data.

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