Journal of Money Laundering Control, Volume 18, Issue 1, January 2015.
Purpose The main purpose of this paper is to explore size of the shadow economy of 31 European Countries in 2014 and size of the shadow economy of 28 European Union countries over 2003 – 2014 (in % of off. GDP). An additional objective is to identify tax evasion, as the problem of all the EU countries, answering the questions how better combat the tax fraud. Design/methodology/approach Estimates of the shadow economy for all 28European Union countries and other three countries from Europe, i.e. Norway, Switzerland and Turkey– MIMIC method was applied. Findings The average size of the shadow economy in 28 EU-Countries was 22.6% in 2003 and decreased to 18.6% (of official GDP) in 2014. We also consider the most important driving forces of the shadow economy. The biggest ones are with 14.6% unemployment and self-employment, followed by tax morale with 14.5% and GDP growth with 14.3%. The proportion of tax evasion (accounting for indirect taxation and self-employment activities) was on average 4.2% (of official GDP) in Poland, 1.9% in Germany and 2.9% in the Czech Republic. Research limitations/implications The MIMIC statistics do not address a large part of the wholly illegal economy (of typically criminal nature) and, accordingly, it is not an absolute magnitude of the whole unofficial economy. However, it does not seem that other, alternative, methods of measuring the unofficial economy are better in individual terms. Practical implications current statistical research should lead to practical acceptance in the framework of need for developing better organizational & legal ways for multi-level governance within the European Union, leading to effective methods of counteracting – in particular intra-Union fraud. In addition, the presentation a review of typology of the main theories and studies regarding the unofficial economy aspects relating to tax evasion constitutes a practical review of the pursued research areas. Originality/value both regarding presentation of the latest shadow economy calculation and the typology of its main studies and theories.
Purpose The main purpose of this paper is to explore size of the shadow economy of 31 European Countries in 2014 and size of the shadow economy of 28 European Union countries over 2003 – 2014 (in % of off. GDP). An additional objective is to identify tax evasion, as the problem of all the EU countries, answering the questions how better combat the tax fraud. Design/methodology/approach Estimates of the shadow economy for all 28European Union countries and other three countries from Europe, i.e. Norway, Switzerland and Turkey– MIMIC method was applied. Findings The average size of the shadow economy in 28 EU-Countries was 22.6% in 2003 and decreased to 18.6% (of official GDP) in 2014. We also consider the most important driving forces of the shadow economy. The biggest ones are with 14.6% unemployment and self-employment, followed by tax morale with 14.5% and GDP growth with 14.3%. The proportion of tax evasion (accounting for indirect taxation and self-employment activities) was on average 4.2% (of official GDP) in Poland, 1.9% in Germany and 2.9% in the Czech Republic. Research limitations/implications The MIMIC statistics do not address a large part of the wholly illegal economy (of typically criminal nature) and, accordingly, it is not an absolute magnitude of the whole unofficial economy. However, it does not seem that other, alternative, methods of measuring the unofficial economy are better in individual terms. Practical implications current statistical research should lead to practical acceptance in the framework of need for developing better organizational & legal ways for multi-level governance within the European Union, leading to effective methods of counteracting – in particular intra-Union fraud. In addition, the presentation a review of typology of the main theories and studies regarding the unofficial economy aspects relating to tax evasion constitutes a practical review of the pursued research areas. Originality/value both regarding presentation of the latest shadow economy calculation and the typology of its main studies and theories.