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Quantifying the shadow economy

The grey economy of corporate tax for small and medium-sized limited companies is up to 120 million euros per year 

The estimated value of the grey economy of small and medium-sized limited companies is about EUR 120 million annually. A company operating in the grey economy distorts the result of business activities, for example by concealing sales revenue or declaring unjustified expenses. 

The grey economy of corporate tax was estimated for the first time in Finland

The estimated range of the grey economy was EUR 100–140 million and its share of the collected corporate tax was 4.2–5.9% in the period 2019–2022. The information is based on a recent report by the Grey Economy Information Unit. The research covers limited companies whose turnover was less than EUR 10 million. 98% of Finnish limited companies belonged to the examined group, and they paid one third of the corporate tax collected in Finland. Corporate tax is an income tax paid by limited companies. The tax rate is 20% of the company's profit from business activities.

The grey economy of the corporate tax was estimated using various methods

The estimate of the corporate tax grey economy was calculated using a predictive machine learning model, where tax audits were used as the key data. The second comparative estimate was formed by applying the sampling method and random tax audits. According to it, the value of grey economy was approximately EUR 80 million per year. This result can be considered as the lower limit for the grey economy in euros. Similarly, the 95% confidence interval of the machine learning model, which was EUR 140 million per year, can be considered as the upper limit.

Small companies hide their sales revenues, medium-sized companies exaggerate their expenses

According to the report, the ways of avoiding corporate tax vary depending on the size of the company. 70% of the estimated value of the grey economy was caused by companies with a turnover of less than EUR 300,000 or whose turnover was unknown to the Tax Administration. A large proportion of the grey economy was caused by companies which do not report their business activities at all. Concealing income was more common among the smallest companies than their larger counterparts, which, in turn, avoided taxes with unjustified expenses. According to the estimate, the probability of the grey economy is higher than average especially in construction, food and beverage service activities and services to buildings and landscape activities.

Finnish Tax Administration is combating the grey economy

The reported value of the corporate tax grey economy is a methodically formed estimate of the grey economy. It does not consider how much of corporate tax losses are prevented by the authorities with their actions. For example, tax audits reveal operators of the grey economy, and the taxes are levied on them. Companies that fail to declare all their business profits are also found. The tax audits reveal both concealed sales revenue and unjustified expenses as well as other arrangements that have been made to evade taxes. The guidance and supervision of corporate customers also play a role in ensuring the correct collection of corporate taxes.  

More comprehensive comparative data would also enhance the combat against the grey economy

More comprehensive comparative data provided by third-party submitters, for example up-to-date information on companies’ purchases and sales, would increase the risk of fraudsters being caught. The increasing digitalisation would also enhance the combat against the grey economy in the future. For example, the vision of the Real-Time Economy project for 2030 is to build a national digital ecosystem for business actors that would be compatible with similar systems in other Nordic countries. The ecosystem would allow seamless, real-time, and secure transmission of business transactions and companies' financial information between parties. 

The grey economy is also combated with the Strategy and Action Plan for Tackling the Grey Economy and Economic Crime approved in December 2024, which includes a total of 19 projects coordinated by different authorities.

Read the full report in Finnish (PDF 1 MB)

Link to the Finnish Tax Administration’s media release 13.3.2024 [.fi]›

Action Plans - Harmaa talous & talousrikollisuus


A deficit of hundreds of millions in state funds from undeclared work 

Published 21.11.2022

The annual value of undeclared work is estimated to be €900–1,400 million in Finland. Undeclared work also causes losses of taxes and social insurance contributions totalling €300–480 million. The amount of undeclared work and the resulting losses of income for the state were now estimated for the first time in Finland. 


Page last updated 3/12/2025