Wednesday, December 15, 2010

Spain's counter economy is gaining approval

Spain's underground economy generated 205.2 billion euros ($275 billion) in 2009, equivalent to a fifth of the country's gross domestic product, consultants A.T. Kearney say in a study commissioned by VISA Europe and released Tuesday.

Spain and neighboring Portugal are tied for third place in the ranking of Western European nations in terms of the ratio of off-the-books economic activity to total GDP.

Factors encouraging the underground economy in Spain include relatively high taxes and social security levies and the large number of small businesses and the self-employed, the study's authors say.

They also note that Spanish tax authorities lack the resources to vigorously pursue people and firms who evade taxes by hiding income.

In terms of value, the bulk of Spain's underground economic activity takes the form of transactions among companies with annual sales of less than 6 million euros ($8 million), according to A.T. Kearney.

The study expressed concern that a widespread Spanish view of off-the-books economic activity as something normal leads to greater acceptance of a counter economy.


  1. That's fine. If more people in Spain would participate in the underground economy, the state would crash and there would be a chance for a free and selfgoverned society.

  2. It takes more than participation, it takes education.