Tax evasion and underground economy in the EU-28. What is behind?

El principal objetivo de este trabajo es estudiar la evasión fiscal y la economía sumergida en los 28 países de la UE, así como analizar empíricamente los principales determinantes de la economía sumergida. A tal fin, primero, se revisa la literatura existente con el fin de clarificar la definición y medición de la economía sumergida y la evasión fiscal. Después, se exponen la información referida a su tamaño en la UE y el Reino Unido con el fin de mostrar la importancia de ambos fenómenos. Adicionalmente, se propone un modelo econométrico para analizar los determinantes de la economía sumergida para el periodo 2000-2020. Por último, se presentan una serie de políticas que podrían implementarse para reducir ambos problemas.

The main objective of this paper is to analyze the current situation of tax evasion and the underground economy in the EU-28 and perform an econometric regression to assess the determinants of the underground economy. First, a literature review is done to clarify the definition and measurement of tax evasion and the hidden economy. Then, data on the current size of the unobserved economy and tax evasion in the EU and UK is provided to show the importance of both phenomena. Furthermore, an econometric model is developed to analyze the determinants of the shadow economy in the period 2000-2020, for which a literature review on the nine identified variables as well as a general description is done. Finally, a set of policies to reduce both behavior is presented following those most commonly applied by governments, among which incentives arise as the most efficient.