The “shadow economy” is having a party in Europe. It includes all economic activities that are not declared and therefore avoid taxes.
In Spain, it is estimated that this represents around 17% of GDP, reaching 230-240 billion euros. The tax office in the Iberian country also tries to combat this phenomenon by monitoring monetary transactions, especially those over 3,000 euros in cash. Suspicious banking activities are automatically reported to the authorities, while self-employed professionals are more strictly controlled in areas where payments are made in cash. The main method of avoiding taxes is through cash, known as “black money”.
The Spanish Tax Agency (Agencia Tributaria) closely monitors transactions involving large cash deposits or withdrawals, as well as the use of payment methods that may avoid reporting obligations. These transactions can trigger investigations if they are deemed suspicious. Self-employed professionals are particularly targeted, especially in sectors where the use of cash is common practice, such as services, hospitality and retail. The Tax Office also applies checks on international transactions, especially those using electronic means of payment, in order to identify tax evasion attempts.
Suspicious transactions mainly include cash payments or withdrawals of more than €3,000, as well as transactions with payment documents (e.g. cheques) exceeding this amount. However, the reporting by the banks does not mean that there will necessarily be an investigation by the Tax Office for every transaction. The authorities focus on specific sectors and cases where there is a greater risk of tax evasion.
Spain continues efforts to control the shadow economy through a program of audits and tax mechanisms aimed at reducing tax evasion and ensuring compliance with tax obligations.
The shadow economy is a global phenomenon observed in many countries, not only in Spain. In Greece, according to various reports, the black economy represents a large percentage of GDP, with estimates ranging from 20% to 25%. In Greece, the use of cash for tax evasion is particularly prevalent in sectors such as catering, tourism services, and construction. The Greek government is taking measures, such as promoting electronic payments and tightening tax controls, to combat the shadow economy.
In Germany and Italy, for example, the shadow economy is estimated at around 10-15% of GDP, while in countries such as Bulgaria and Romania the figures can be higher, reaching 30%. The governments of these countries, as in Spain and Greece, are promoting measures to combat tax evasion, such as the mandatory use of electronic payments and increased controls.
The size of the shadow economy varies significantly between European countries. According to estimates, in the developed economies of Europe, the shadow economy ranges around 10-15% of GDP, such as in Germany and France. In Southern and Eastern European countries, such as Italy, Greece, Bulgaria and Romania, this percentage can reach or exceed 20-30%. The differences are due to various factors, such as the effectiveness of tax authorities, the use of cash, and the level of tax compliance.
Countries with a more developed tax system, such as the Scandinavian ones, show lower percentages of black economy, around 8-10%. At the other end, Eastern European countries face higher rates, due to more limited transaction transparency and increased cash transactions. Overall, Europe faces an average shadow economy rate of around 15-20% of GDP, with large variations between states.
