Employee taxation in Greece and Europe

In recent years, both internationally and in Greece, focus is shifting to employment income taxation. In Greece, despite a series of reforms implemented between 2019 and 2025, the “tax wedge” (i.e total employment and social security cost compared to net salaries received by employees) continues to be high, despite the abolition of the solidarity contributions and some reductions in social security contributions. So far, most tax relief efforts have focused on capital-related taxes (e.g. reductions in property tax -ENFIA) and business taxation (e.g. significant cuts to the corporate income tax rate). Basic income tax brackets have remained the same, and inflation induced fiscal drag renders make the relative tax burden on employment income  even higher. 

Strengthening competitiveness also requires investment in human capital. Yet, the structure of Greece’s labour market -with high levels of self-employment and informality- limits the broadening of the tax base. Therefore, a more balanced and targeted approach to taxing dependent employment is essential.

The study focuses on the tax burden faced by a single employee with no children in Greece, compared with a selection of European countries chosen based on broader criteria. 

The analysis explores: 

• The income thresholds at which the lowest and highest tax rates apply, offering insight into the progressivity of Greece’s tax system relative to other countries. 

• The effective tax burden on salaried income in Greece compared to the other countries included to our sample, across selected income levels: €20,000, €35,000, and €50,000 (PPP-adjusted equivalent income levels). 

The analysis reveals important insights regarding the tax burden on salaried employment in Greece compared to other European countries:

Relatively higher tax burden on middle-income employees in Greece 

The effective tax burden for Greek salaried employees is above the average of the countries in the sample at taxable income levels between €20,000 and €50,000 -both in terms of nominal tax rates and when adjusted for purchasing power parity (PPP). This does not imply that Greece has the highest burden overall, but it does indicate that middle-income employees face relatively heavier taxation.

Sharp increase in tax burden despite formal progressivity 

While Greece’s tax system is formally progressive, in practice it imposes a steep tax burden due to the structure of its brackets: 

• The lowest tax rate applies from very low-income levels and is lower than in most other countries.

•  The highest tax rate is triggered at lower income levels compared to the majority of countries examined.