Greece's Tax Evaders Aren't Going to Jail Soon

ATHENS – A much-vaunted crackdown on tax evaders recently in which more than 100 were arrested has run into a common obstacle in the Greece justice system: court backlogs and bureaucratic delays have prevented prosecution with the prospect that decisions against many alleged tax cheats could be delayed for years and that others will be able to make deals for far less than they owe. The newspaper Kathimerini reported that the work of the special Financial Crimes Squad (SDOE) and another division which targets the tax evaders who owe the country more than $60 billion as it struggles to survive an economic crisis has been undermined by the notorious inefficiency of the Greek courts, which operate only a few hours a day and a system in which defendants can stall cases almost indefinitely.
The debtors first must go to an administrative court, which decides how much is owed, although those figures have already been compiled by tax inspectors. There, the defendants have to pay a percentage of what is owed but can get it waived, and then go onto a First Instance Court, but the waiting time there now is three to four years, and rulings take another three years or so. Appeals can also be made to the state’s highest Administrative Court, the Council of State, which typically takes as long as two years to render a verdict, and it’s not uncommon for some cases to take 10 years, meaning Greece could see little of what is owed depending on the judgment, and long after it is needed.
Under intense pressure from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB,) which is loaning Greece $152 billion in a first bailout and arranging a second for $172 billion, Greece in recent months began rounding up tax evaders and publicizing the effort in an attempt to show it is serious about a crime which had rarely been prosecuted because so many people in Greece don’t pay taxes, apart from those who have them deducted from their salaries .
Kathimerini noted that those with debts to the state in the form of unpaid social security and other such payments cannot be imprisoned, while tax evasion is considered a criminal offense and tax dodgers face criminal courts. And unpaid taxes only above 75,000 euros, or $100,000 is considered a felony while less than that is a misdemeanor in most cases. According to the law, prison time begins at one year for people owing more than 5,000 euros ($6,730) and reaches three years for those owing more than 150,000 euros ($202,000.) Debtors, however, can buy off their prison time if they have received a sentence of three years or less on misdemeanor charges so it’s possible that someone who owes the state more than 150,000 euros and receives the minimum sentence from a sympathetic judge can buy off his or her incarceration time, the newspaper noted.
When debtors are arrested on felony charges their case is presented to a prosecutor who decides whether send them directly on to the relevant court, which is a three-member criminal appeals court. If that court is not in session at that particular moment, then the prosecutor has to let the suspects go after they have paid a part of the money owed. A court date is set around 6-10 months later. If the offender’s lawyer can’t make it to court on that day, then the trial is suspended for another year. The law does not allow trials to be suspended twice, but this is often overlooked. When the trial does take place and the suspect is found guilty, the sentence could be five years or more.
“If, however, they manage to prove mitigating circumstances, as is usually the case, the sentence is reduced to below five years,” law expert Takis Kousais told Kathimerini. “And most importantly, if the accused has no criminal record, the sentence is suspended. On a practical level this means no criminal punishment, just payment of court expenses. The court does have the right to impose a monetary sentence, which is usually quite small and is not paid at once, but is passed on for collection from the tax authority, where it is paid, if it’s paid, in installments.” In most cases, debtors come to an agreement with the tax authority, they pay the first installment agreed and then they are let out of prison conditionally. If they do not pay subsequent installments, the tax office is supposed to inform the authorities, which can initiate another criminal case.
The government has just signed an international agreement on cooperation in tax issues that will help it crack down on evasion, the Organization for Economic Cooperation and Development said.
“This signing is a step towards Greece’s efforts to restore the longer-term sustainability of its public finances,” said Angel Gurria, the OECD’s Secretary General. “The Convention will help Greece improve its internal tax collection system and pursue the tax revenues lost to tax avoidance and evasion. This will ensure that individuals and multinational enterprises pay the right amount of tax, at the right time and in the right place.”