Greece Taxes Labor More Than Any Other EU Country

Greece imposes the highest tax burden on labor among all European Union member states, according to the 2026 annual taxation report from the European Commission's Directorate-General for Taxation and Customs Union.

The implicit tax rate on labor in Greece reached 44.8% in 2024, significantly higher than the EU average of 37.1%. This rate reflects the total tax cost of employment, including income tax, employee and employer social security contributions, and other labor-related charges. Essentially, nearly half of an employee's labor cost goes to public coffers through taxes and contributions.

While Greece has made progress in modernizing its tax administration and improving collection through digitalization, including electronic books and enhanced audits, the fundamental structure of its tax system remains problematic. The report identifies three chronic weaknesses: the heavy taxation of labor, an excessive reliance on indirect taxes, and a high contribution of environmental taxes to public revenue.

The report also notes that the progressive increase in marginal tax rates for higher incomes may discourage employment and wage growth, although the government did implement changes to tax scales for higher incomes this year. Furthermore, Greece stands out for its continued reliance on indirect taxation, with VAT's share in the overall tax mix increasing by 3.1 percentage points since 2014. This trend indicates a growing dependence of public revenue on consumption. Unlike the general European trend, Greece is one of only three EU countries where the proportion of excise duties has not decreased in recent years.