The Corporate Income Tax Gap
A European approach to measuring losses in corporate tax revenues
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.
BRUN Lidia;
SPEITMANN Raffael;
STASIO Andrzej Leszek;
STOEHLKER Daniel;
2025-12-23
Publications Office of the European Union
JRC143824
978-92-68-31826-3 (online),
OP KP-01-25-055-EN-N (online),
https://taxation-customs.ec.europa.eu/document/download/74fd2415-d3d1-4e14-9aff-68a832ed396a_en?filename=The%20Corporate%20Income%20Tax%20Gap%20-%20A%20European%20Approach.pdf,
https://publications.jrc.ec.europa.eu/repository/handle/JRC143824,
10.2778/0541549 (online),
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