Europe is expanding again, but unity remains elusive. While Brussels prepares the next enlargement toward the Balkans and Eastern Europe, the Union is confronting an internal erosion of cohesion. The silent culprit is tax inequality—a gap that cuts deep across member states. Discussions about common defense or digital and green transitions dominate EU summits, yet the essential issue of a fair tax system remains unresolved.

New data from the European Commission and the EU Tax Observatory for 2025 reveal a staggering 220 billion euros annual “tax gap” between expected and collected revenues. Some 54 billion euros is lost through VAT fraud, while 70 billion euros slips away via corporate tax avoidance—often using transfer pricing and offshore schemes.

The Fiscal Policy Update 2025 highlights that the EU’s average corporate tax rate stands at 19.6%, but the differences are striking: 12.5% in Ireland, 13% in Cyprus, and 26.5% in France. Almost 40% of multinational profits generated in Europe are declared in just five low-tax jurisdictions.

The Enlargement Paradox

The European Parliament predicts that bringing in Serbia, North Macedonia, and Ukraine could lift EU GDP by up to 8% by 2035. Yet studies warn that, without tax harmonization, income inequality between core and periphery may widen further.

Candidate countries’ average corporate tax rate—around 15%—could attract investment away from existing members. The IMF warns of a potential “race to the bottom,” where tax competition becomes a political survival strategy rather than an economic one.

Greece’s Double Challenge

Greece finds itself caught between two truths. It collects tax revenues of about 40% of GDP but suffers from chronic evasion. Heavy reliance on indirect taxes shifts the burden onto households, leaving higher incomes relatively unscathed. This imbalance reflects the Union’s own structural flaws.

Brussels’ current debates on a 15% minimum corporate tax and public profit reporting for multinationals are first steps toward fairness. But without deeper fiscal convergence, enlargement risks creating not a stronger Europe, but a larger—and more divided—one.