Learning Center
As Italy’s Tax Gap Swells, Minister Calls Evasion “Terrorism” and Pushes New Crackdown
Italy’s tax evasion problem — long infamous across Europe — is worse than anyone thought. A new government report reviewed by Reuters reveals that unpaid taxes and social contributions surged to €102.5 billion ($119 billion) in 2022, up from €99 billion just a year earlier.
The finding reverses what had been hailed as a slow, steady improvement. Instead, the data show that the problem began climbing again in 2020 and has been accelerating ever since.
A Political Flashpoint
For Prime Minister Giorgia Meloni, the revelation is politically explosive. Her administration has argued that harsh enforcement and “anti-evasion crackdowns” were ineffective, opting instead to ease the rules — including raising the cash-payment limit from €1,000 to €5,000 and offering tax amnesties for debts dating back to 2023.
Critics say those changes effectively rewarded rule-breakers. Economists warn that the new leniency risks undoing a decade of progress toward cleaner, more transparent financial systems.
“Tax evasion is like terrorism,” said Deputy Economy Minister Maurizio Leo [Reuters] during a parliamentary debate in January 2024, as Italy stepped up online tracking of undeclared income.
Why the Numbers Changed
The updated figures come from the national statistics agency ISTAT, which overhauled its methodology in 2024. The revision uncovered deeper non-compliance than previously reported. Between 2018 and 2022, Italy’s total improvement in curbing evasion was just €5.9 billion — not the €26 billion claimed in earlier reports
The numbers matter not only for political optics but also for EU fiscal negotiations. Rome is under pressure from Brussels to reduce its debt-to-GDP ratio, which still hovers around 137%. The more money lost to evasion, the harder that becomes.
The Broader European Context
Across Europe, Italy remains a standout for its “shadow economy.” Eurostat data shows Italians use cash more frequently than any other major eurozone nation, despite incentives to adopt traceable digital payments. Spain, France, and Germany have all reduced their shadow-sector shares since the pandemic, while Italy’s has remained stubbornly high.
Meloni’s government insists that easing penalties and encouraging voluntary compliance will eventually boost collections. But early indicators suggest otherwise. A 2025 study from the University of Bologna found that voluntary settlement programs recoup, on average, only 35–40% of the taxes owed.
What Comes Next
The government’s 2026 budget includes another broad tax amnesty, allowing individuals and businesses to pay outstanding liabilities without penalties or interest — a move the European Commission has already flagged as “fiscally risky.”
Still, Italy’s challenge runs deeper than political philosophy. It’s cultural, structural, and decades in the making. From cash-heavy tradesmen in Naples to under-declared hospitality revenue in Rome, evasion has become a habit that reforms rarely break for long.
Italy’s new €100-billion tax gap isn’t just a financial statistic — it’s a warning sign. The country that once promised to close its shadow economy by modernizing enforcement now faces a regression that could strain its budget, shake investor confidence, and reignite EU tensions over fiscal credibility.
Unless new measures reverse the trend, Italy’s shadow economy may once again cast a long shadow over Europe’s fourth-largest economy.
NEVER MISS A STORY.
Sign up for our newsletters and get our articles delivered right to your inbox.
Rose Tax & Financial
Cedar Crest, New Mexico 87008
Sat: 10:00am to 2:00pm
Check the background of your financial professional on FINRA's BrokerCheck
Avantax affiliated Financial Professionals may only conduct business with residents of the states for which they are properly registered. Please note that not all of the investments and services mentioned are available in every state. Securities offered through Avantax Investment Services℠, Member FINRA, SIPC, Investment Advisory services offered through Avantax Advisory ServicesSM, Insurance services offered through an Avantax affiliated insurance agency. 3200 Olympus Blvd., Suite 100, Dallas, TX 75019. 972-870-6000.
The Avantax family of companies exclusively provide financial products and services through its financial representatives. Although Avantax Wealth Management® does not provide or supervise tax or accounting services, Avantax representatives may offer these services through their independent outside business. Content, links, and some material within this website may have been created by a third party for use by an Avantax affiliated representative. This content is for educational and informational purposes only and does not represent the views and opinions of Avantax Wealth Management® or its subsidiaries. Avantax Wealth Management® is not responsible for and does not control, adopt, or endorse any content contained on any third party website.
This information is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.
The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. We make no representation as to the completeness or accuracy of information provided at these web sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences.
For Important Information and Form CRS please visit https://www.avantax.com/disclosures.