Mef

In 2022 the shadow economy is worth 182.6 billion, stable in relation to GDP

This is what emerges from the latest Report on the Unobserved Economy and Tax and Tax Evasion just published

by Rome Editorial Staff

8 November 2025

4' min read

Translated by AI

Versione italiana

4' min read

Translated by AI

Versione italiana

"The data for 2022 (the last year for which the relevant information is available) confirm the medium- to long-term trend of a significant contraction in the levels of the unobserved economy's impact on gross domestic product and in the ratio of the total revenue subtracted from public finance due to evasion (the so-called tax gap) to potential revenue. And this despite the fact that the General National Accounts Review that took place in 2024 resulted in a significant adjustment of the levels of the same magnitudes. This trend, far from being taken for granted, must invite us to continue our efforts to prevent and combat the phenomenon'. The analysis emerges from the latest Report on the Unobserved Economy and Tax and Tax Evasion - Year 2025, published by the Ministry of the Economy.

The added value generated by the underground

In 2022, the value added generated by the the economic undeclared accounted for 9.1 per cent of GDP, a reduction of about 2.5 percentage points from its peak in 2014. Over the last decade, the share of the economic undeclared in GDP would thus have shrunk by just over a fifth. Also in 2022, the ratio of the revenue shortfall from tax non-compliance to potential revenue was between 16.9% and 17.0% (depending on the different hypotheses adopted for estimation purposes), a reduction of about one-third compared to the peak observed in the early years of the century and just under 3 percentage points over the last five years.

Reduction of VAT, IRES and IRAP evasion

The trend appears to be attributable, firstly, to the reduction of VAT, IRES and IRAP evasion (more than halved over the last twenty years). The reduction in the evasion of IRPEF on self-employed and business income is more limited (and close to 5% over the last two decades). Although over a more limited time horizon (the last five years), the significant reduction in the gap concerning excise duties on energy products (petrol and diesel) and the more contained reduction observed in the case of local taxes (IMU and TASI) should also be noted.

Distance to the European average is reduced

Over the last decade," continues the report, "the reduction in the propensity to evasion appears to be entirely concentrated in the omitted or unfaithful declaration (the omitted payment being relatively stable). Compared to the European environment of which Italy is part, and with reference only to the value added tax for which homogeneous evaluations are available from official sources, the trend towards a reduction of the tax gap - albeit temporarily interrupted by the events of 2008 - characterises the entire supranational context in which Italy is placed. It is accompanied by a clearly observable reduction in the degree of dispersion between countries of the VAT gaps. Against this backdrop, Italy has seen its distance from the European average fall noticeably.

Significant catch-up with the EU on VAT

Compared to the peak recorded in the last twenty years, Italy has reduced its VAT gap by approximately 22 percentage points: one of the most significant results recorded in the Union, which has allowed the distance, in terms of VAT gap, with respect to the European average to be considerably reduced, from approximately 16 percentage points in 2005 to the 2 percentage points or slightly more observed in 2022. Overall, these positive indications make it clear that preventing and countering tax evasion is not only possible but also, to a large extent, already in place.

The tax and contribution gap widens

In 2022, the overall gap (tax and social security contributions) - i.e. the portion that still remains unaccounted for with respect to what the tax authorities and the social security authorities expect to collect, ed. - was between €98.1 billion and €102.5 billion, depending on the two different working hypotheses adopted in the course of the estimate with regard to the employee sector, with an increase with respect to 2021, in both cases considered, at €3.5 billion. With reference to the contribution obligation, the gap in 2022 was in a range between EUR 8.4 billion and EUR 11.6 billion, depending on the different working assumptions adopted in the estimation. Compared to 2021, the increase is between EUR 0.5 and 0.7 billion. With reference to the tax obligation alone, however, the gap amounted to between EUR 89.7 and EUR 90.9 billion in lost tax revenue.

The potential tax

In terms of potential tax, in 2022, the propensity to evade stood at 16.9-17.0%. Compared to 2021 there was therefore an increase of EUR 2.9 billion in absolute value (regardless of the working hypothesis adopted). An increase, however, less than proportional to the potential tax, so that the propensity to evade tax liability recorded a decrease of close to 0.4 percentage points.

The analysis of different taxes

This reduction was mainly due to the IRAP and excise tax gap (-4.4 and -4.3 percentage points, respectively), the IVA gap (-1.4 percentage points) and the IRPEF gap on self-employment and business income (-1.1 percentage points). Only partly offset by an increase in the propensity to gap on rents (2.3 percentage points) and the IRES gap (1.4 percentage points). Although the nature of the tax gap and the economic black economy are different, it is interesting to note that the trend of these two variables appears, in the medium term, rather similar.

The shadow economy

Based on the National Accounts published in March 2025, the value added generated by the shadow economy in 2022 stood at EUR 182.6 billion, marking a growth of 10.4% compared to the previous year (when it was 165.5 billion). This trend made it possible to recover pre-crisis levels in 2020. The incidence of the shadow economy on GDP, which increased by 8.4% at current prices in 2022 compared to the previous year, remained essentially stable, rising to 9.1% from 9.0% in 2021.

The incidence of undeclared work

In comparison with previous years, the incidence of undeclared work on GDP in 2022 is 0.6 percentage points lower than in 2019 (9.7%), the last year before the pandemic, and 1.7 percentage points lower than in 2011 (10.8%), the first available year of the historical series (see Table II.2.2 and refer to the Statistical Appendix for the entire historical series).