Netherlands second top in EU for undeclared work

According to the latest survey from the European Commission’s Eurobarometer, the Netherlands has the EU’s second highest rate of people who purchased undeclared goods or services in the past year: nearly a third of the population.

The actual figure is 29 per cent, only one per cent below top country for undeclared work Greece, which had 30 per cent, and one per cent above third-place Latvia.

In contrast, Spain and the UK recorded only eight per cent of people as having knowingly purchased undeclared goods and services in 2013.

The estimated size of the shadow economy (economic activities and the income derived thereof that circumvent or avoid government regulation or taxation) in the Netherlands is not high: just less than 10 per cent of GDP in 2012, one of the lowest figures in the EU.

When compared to Bulgaria (31 per cent), Lithuania or Estonia (both 28 per cent), the figure is obviously quite small. Yet the amount of money is not so much the issue, rather the prevalence of the behaviour.

Undeclared work in the Netherlands

The most common kind of service purchased "off the books" in the Netherlands is gardening and cleaning work (31 per cent), followed by repairs or renovations to a home (25 per cent).

The Netherlands also had particularly high proportions of respondents who have undertaken undeclared paid activities in the past year: 11 per cent, the same as Latvia and Estonia. Countries with the lowest proportions included Germany, Portugal and Italy, with only two per cent.

People living here were also more likely to know someone who carries out undeclared work: 55 per cent, with only Denmark higher at 59 per cent. That can be seen in the fact that most (70 per cent) Dutch people buy their undeclared goods and services from firstly friends, colleagues and acquaintances, or secondly other private persons.

That may also account for the Netherlands having one of the lowest rates for purchasing undeclared goods or service from firms or businesses, at only 10 per cent. That’s four times less than people in Finland (43 per cent) and Sweden (41 per cent).

All in all, the median amount of money spent by Europeans on all undeclared goods or services in 2013 was 200 euros. In the Netherlands, people spend twice that amount (400 euros), the second highest after Luxembourg (500 euros). Hungary, by contrast, has the lowest: only 68 euros a year. The average cost per hour in the Netherlands was 13 euros.

Evasion: acceptable or unacceptable

Despite having such high rates of buying services "tax free," people in the Netherlands are quite strict when it comes to other sorts of payment evasion.

Nearly all (95 per cent) of Dutch people find it "unacceptable" for someone to receive welfare payments without entitlement, the third highest rate in the EU.

Dutch people also generally find it unacceptable for someone to use public transport without a valid ticket: 84 per cent of people, again the third highest rate among the nations.

When it comes to hiring someone to do your housework, however, that is an entirely different story. Here the Netherlands had the fourth highest rate for finding such evasion acceptable: 27 per cent, behind Estonia, Lithuania and Latvia.

The Netherlands also has high rates of thinking that the risk of being detected in doing undeclared work is very small: 64 per cent.

Undeclared work in the EU

The European Commission defines undeclared work as "paid activities that are lawful as regards their nature but not declared to public authorities". This excludes crime and tax fraud, which are outside the scope of employment policy.

According to the commission, undeclared economic activities create considerable costs on several levels, as tax authorities receive less revenue (in the form of income tax or value added taxes), while social security institutions do not obtain contributions. Also, undeclared activities partly inhibit the creation of normal jobs with full social protection.

For more details, see the full report here.