The importance of the primary sector to the Greek economy is critical; it has long been and still is a driving force in rural development. This study quantifies the VAT gap in the agricultural sector through an empirical analysis of consumption data at the micro level and a comparison of the potential VAT revenues with the actual ones. The model is applied to thirteen Greek regions over the period 2017-2024 and makes a clear distinction between agricultural and non-agricultural households; it allows the use of differentiated compliance factors for different categories of consumption. The methodology relies upon the international best practice for estimating a VAT gap, tailored to the Greek circumstances, and it is based on data from EL.STAT., Eurostat, FAO, and the World Bank. In addition to VAT compliance, the paper discusses mechanisms whereby tax evasion is related to distortions in the agriculture subsidy regime. Particular attention is given to the impact of the Covid-19 pandemic, which has increased fiscal pressure and widened compliance disparities among regions. Results show large regional disparities in compliance and a positive relationship between high informality and areas with large subsidies.

JEL Codes: H26, H71, Q14, E62, R11.