Greece’s Shadow Economy Persists Despite Optimistic Claims

Of the €23 billion in property sales, only €1.5 billion was financed through mortgage loans. In other words, over 90% of these purchases occurred without bank financing, raising serious questions about the origin of the funds.

Greece’s National Economy and Finance Minister, Kyriakos Pierrakakis, announced on Monday that the country’s shadow economy has shrunk to below 15% of GDP - a claim he attributed to a study by the International Monetary Fund. Yet this optimistic declaration appears at odds with what is actually unfolding in the Greek economy, particularly in the real estate sector, which continues to serve as a major channel for undeclared transactions and tax evasion.

According to data from Greece’s Independent Authority for Public Revenue, property sales in 2024 reached a declared value of €23 billion. These values are based on state-assessed “objective prices,” which often significantly underestimate actual market prices. In many areas, the market value of properties exceeds the declared price by 30% to 50%, creating a systemic loophole that allows large sums of money to change hands unofficially. This is more than a technicality - it is a structural feature that facilitates tax evasion and sustains the informal economy.

Perhaps most telling is the source of funding for these transactions. Of the €23 billion in property sales, only €1.5 billion was financed through mortgage loans. In other words, over 90% of these purchases occurred without bank financing, raising serious questions about the origin of the funds. The widespread use of cash suggests that a large portion of these deals are conducted off the books.

The government’s refusal to update the state-assessed “objective prices” of real estate - frozen since 2021 - has quietly become a cornerstone of Greece’s shadow economy. As property values have soared in recent years, tax assessments remain tethered to outdated figures that no longer reflect market realities. This gap creates fertile ground for under-the-table deals: buyers and sellers officially record only the lower, state-set value, while the real price is settled off the books. The result is a dual-market system where official records tell one story, and the money tells another-one that not only drains public revenues but also legitimizes opaque financial practices. In effect, the state isn’t just overlooking the problem; it’s sustaining the very conditions that allow it to thrive.

The IMF study cited by Pierrakakis does show a decline in informality - from 30% of GDP in 2013 to roughly 16% in 2021 - due to increased digitalization, more electronic transactions, and improvements in tax administration. However, the study makes no mention of the real estate sector, nor does it examine the use of undeclared cash in property deals. Moreover, the findings are based on data that predates recent market developments and rely on indirect methods like satellite imagery and Google Trends to estimate economic informality.

In truth, Greece’s real estate market has long functioned as a safe haven for untraceable money - a space where cash flows freely, far from the scrutiny of banks and tax authorities. Despite the government’s efforts to modernize the economy through digital reforms and increased electronic oversight, these measures have barely touched the deeply rooted culture of off-the-record property transactions. And it’s hard to imagine that Greece’s National Economy and Finance Minister, Kyriakos Pierrakakis, isn’t aware of this.