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Spain's Underground Economy Reaches €253 Bln

Source: El Pais - Wed 29th Jan 2014
Spain's Underground Economy Reaches €253 Bln

The crisis has caused Spain's black market economy to grow significantly over the past few years, according to a study released Wednesday by the union of the technical staff of the Finance Ministry (GESTHA).

GESTHA's report calculates that the value of under-the-table business in 2012 amounted to €253 Bln, equivalent to 24.6% of GDP – that's 6.8 percentage points, or €60 Bln, more than at the start of the crisis in 2008.

The report, entitled "The Underground Economy Takes Its Toll. The Increase in Fraud during the Crisis," calculates that black market deals increased annually by €15 Bln in the period 2008-2012.

"The underground economy has increased particularly in the regions most affected by the problem of unemployment and the bursting of the property bubble, such as Andalusia, the Canaries, Extremadura, Castilla-La Mancha and other regions in the central belt," the report said.

The provinces with "strikingly low" levels of black market activity are those with a concentration of large national and international companies such as Madrid, Tarragona, Lleida, Barcelona and La Rioja. However, this fact is offset by the fact that such companies are more prone to use financial engineering to reduce their tax burden.

The report, drawn up by Jordi Sardΰ of the University Rovira I Virgili, does not include figures from the Basque Country, Navarre and Ceuta and Melilla, which have different tax systems.

The report highlights that almost 70% of cash transactions in black market activity use €500 notes.

Further Reading

* New Law to Ban Brits from Holiday Lettings in Spain

* Spain Nets €22.5 Bln Since 2012 Tax Fraud Laws

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