Eastern, central and southern European countries have larger shadow economies than the ‘old’ western European Union countries, a study by the Policy Department for Economic, Scientific and Quality of Life Policies commissioned by the European Parliament’s Subcommittee on Tax Matters (FISC), published on Friday 25 November, has revealed.
For example, countries such as Bulgaria, Cyprus, the Czech Republic, Latvia, Lithuania and Poland are estimated to have a much stronger shadow economy than Austria, Germany, France and the Netherlands. And, on average, southern European countries have a much larger shadow economy than central and western European countries.
The case study, which focuses on six countries - Austria, Denmark, Germany, Greece, Italy and Romania - analysed the main policies that have been implemented over the years to combat tax evasion, undeclared work and the shadow economy in general. These policies were in line with the policy options recommended by the authors of the study, most of which were prevention, monitoring, enforcement, deterrence, incentive and tax policy measures.
In addition, a sharp increase in the shadow economy was noted between 2019 and 2020, with its proportion of the total economy rising from 15 to 16.5% over this period. This estimate represents the largest increase in the last 20 years. The main factors explaining this phenomenon are: - the global Covid-19 pandemic and the severe recession that followed; - the rising cost of living; - the severe energy shortage.
To view the study: https://aeur.eu/f/4ca (Original version in French by Anne Damiani)