The European Tax Gap.

A decade after the collapse of 2008 the European Union is only slowly getting back to economic recovery. Across the member states, whether within or outside the Eurozone, the constraints of tight fiscal rules, austerity and a shortage of tax revenues continue to limit the scope for action by governments needing to stimulate their economies. Many are frustrated at the consequent constraints on innovation, including those necessary to tackle climate change.

The announced and long awaited economic recovery risks benefiting only the most powerful; while the distribution of the potential economic growth will be critically monitored by EU citizens. In the same decade that these issues have changed the nature of European politics awareness of tax injustice has grown, considerably. Much of this attention has rightly focussed on the actions of the multinational corporations that have used international tax rules to avoid their obligations to many of the countries that host their operations. 

Another tax issue has received less attention but is of large-scale and great impact on European Union member states. This is the tax loss – or tax gap – arising from the non-payment of tax within the domestic economies of EU member states. This illegal tax evasion is the focus of this report. The evidence now available suggests that the EU tax gap resulting from largely domestic tax evasion might be €825 billion a year, based on data for 2015. It is harder to estimate.

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Published 23/01/2019
The European Tax Gap

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