FEDEA (the Foundation for Applied Economic Studies) has today published a study by Jaime Vallés and Anabel Zárate (University of Zaragoza) quantifying the tax gap, defined as undeclared income in the Personal Income Tax (IRPF) across the 15 Common Regime autonomous communities between 2003 and 2022.
The results show a sustained improvement in aggregate tax compliance throughout the analyzed period. In the early 2000s, declared income represented around 70-75% of actual income, while in recent years it has reached levels close to 80-85%. Despite this favorable trend, the tax gap remains high: in 2022, undeclared income amounted to nearly €112 billion.
It is estimated that the gross revenue cost associated with the IRPF tax gap in 2022 ranged between €21 billion and €51 billion. This is equivalent to approximately 19-47% of the total IRPF tax liability and 1.5-3.7% of GDP. Income from business activities and real estate capital accounts for the bulk of this cost, while income from movable capital (investments) has the smallest impact. After deducting the nearly €10 billion in IRPF recovered in 2022 through Tax Agency enforcement actions, the net revenue cost stood between €11.3 billion and €41.3 billion, representing 0.8–3% of GDP.
The estimated gap should be interpreted as an approximation of the upper limit of fraud, as it may include other concepts—such as tax avoidance or conceptual and statistical discrepancies between sources—in addition to the deliberate concealment of income. It should not be confused with the underground economy, which also encompasses illegal activities or unregistered employment and involves other taxes. In Spain, by contrast, there are no official estimates for this indicator.
The methodology used consists of comparing the income declared in the Personal Income Tax (IRPF)—obtained from fiscal microdata of both filers and non-filers—with the actual household income from Spain’s Regional Accounts. Since both sources are not fully comparable, it has been necessary to make a series of adjustments based on additional information. The percentage of actual income that is declared constitutes the degree of tax compliance, and the difference from 100% constitutes the tax gap. The analysis focuses on income categories where the correspondence between both information sources is reliable: labor income, income from economic activities and real estate capital, and income from movable capital.
By income type, labor income exhibits the highest levels of tax compliance, reaching or exceeding 90%. This is due to the withholding tax system, which effectively limits the possibilities for concealment. In contrast, non-labor income—which has significantly less administrative traceability—shows much lower compliance levels: although it has improved significantly, a tax gap of nearly half of these earnings persisted in 2022.
The territorial analysis reveals a widespread improvement in aggregate tax compliance across all autonomous communities and a reduction in regional disparities. The most significant improvements were recorded in the Canary Islands, the Balearic Islands, Andalusia, and Castilla-La Mancha, while the most moderate progress was seen in Asturias and Aragon.
