The Corporate Income Tax Gap

Lidia Brun (), Raffael Speitmann, Andrzej Leszek Stasio () and Daniel Stoehlker ()
Additional contact information
Lidia Brun: European Commission - JRC, https://joint-research-centre.ec.europa.eu/index_en
Andrzej Leszek Stasio: European Commission - JRC, https://joint-research-centre.ec.europa.eu/index_en
Daniel Stoehlker: European Commission - JRC, https://joint-research-centre.ec.europa.eu/index_en

No JRC143824, JRC Research Reports from Joint Research Centre

Abstract: This report presents new estimates of the Corporate Income Tax (CIT) compliance gap for 23 EU Member States, Norway, and Iceland, using a harmonised top-down methodology developed by the Joint Research Centre (JRC). The CIT compliance gap reflects the shortfall in revenue due to non-compliance with tax laws, including tax evasion and certain forms of tax avoidance. Recognising the limitations of existing methods—particularly the data demands of the IMF’s RA-GAP approach—the JRC proposes a simplified, scalable methodology based on Eurostat’s Tabular Approach to Exhaustiveness. This method leverages adjustments for undeclared economic activity in national accounts to estimate the gap in a transparent and comparable way. The results highlight substantial variation across countries, with compliance gaps ranging from under 3% to over 35%, and an average shortfall of 10.9% of potential CIT revenues in 2017. Sectoral analysis for selected countries reveals systematic differences in compliance across industries. The approach offers a feasible and replicable tool for regular monitoring of corporate tax compliance, supporting evidence-based policymaking and cross-country comparison.

Date: 2025-12
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https://publications.jrc.ec.europa.eu/repository/handle/JRC143824 (application/pdf)

Related works:
Working Paper: The Corporate Income Tax Gap (2025)
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