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  • Publication | 2019

The fiscal and social cost of tax evasion: the impact of underreporting of income by the self-employed

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The fiscal and social cost of tax evasion: the impact of underreporting of income by the self-employed
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Headlines

  • Recent analysis shows that underreporting of income by the self-employed may be relatively high, ranging from 10% to 43% of the income reported by the employed, in a sample of European countries.
  • JRC work suggests that such levels of income underreporting by the self-employed may produce budgetary losses of up to 1.6% of GDP.
  • This form of tax evasion typically also has negative distributional implications, due to the high concentration of self-employment income in the higher income groups and the progressivity of tax systems.