TAX AVOIDANCE AND TAX EVASION IN EU: TRENDS AND EFFECTS

Abstract

The main purpose of this article is to study the concept and aspects of tax avoidance and tax evasion, their causes, trends and effects in the European Union(EU). In recent years, the debate on international tax policy has focused on tax avoidance strategies and tax evasion. Cases of tax evasion and tax evasion have become increasingly common. These phenomena were triggered by several factors. Some of them relate to European principles such as those relating to the free movement of persons, goods and capital, which led to the diversification and complexity of trade, under conditions of imperfect legislation. Other factors are the social and economic ones generated by the onset of the economic crisis. Another set of factors that have been favorable circumstances for the development, the phenomenon of tax avoidance and tax evasion, are those related to the degree of taxation that differs from one-member country to another and different tax systems. This expansion of the phenomenon of tax avoidance and tax evasion generates negative effects on the European economy, which are making their mark on the economy. In this context, concerns have arisen at EU level to create a legislative framework to mitigate these phenomena. As these two phenomena (tax avoidance and tax evasion) cannot be completely eradicated, it is very important to find the most efficient measures to combat them. Another element specific to the European Union that generates tax evasion and tax avoidance is Value Added Tax (VAT). As with any tax, Value Added Tax presents opportunities for tax avoidance and evasion. European Union experts believe that tax avoidance and tax evasion are important factors limiting revenue mobilization. Tax evasion and tax avoidance affect us all. ese phenomena occur both within a country and within the European Union, but also globally. That is why one country cannot solve the problem alone. The European Union and the Member States must work more together and at international level to combat the problem in the country within the Union but also outside the borders of the European Union. Thus, in principle, legislators can affect the decisions of the subjects by defining the boundary between legality and illegality. The purpose of this paper is to investigate the trends and effects resulting from tax avoidance and tax evasion behavior.

Keywords

• tax avoidance, tax evasion, tax fraud, VAT evasion, underground economy