Tax evasion reached 13.8 percent of GDP last year in Romania, a figure of EUR 19 billion (RON 84.14 billion), according to estimations made by the country’s Fiscal Council.

More than half of this amount came from the VAT evasion, which represented 8.3 percent of GDP in 2011 -2012, down from the peak of 9.6 percent recorded in 2010 - the year when the legal VAT rate went up from 19 percent to 24 percent.

Social security contributions generated around a quarter of the total tax evasion, mainly through black labor, which is without an employment contract.

In 2012, there were some 1.4 million workers on the “black” labor market, representing around 23 percent of the total employees in the economy.

“If it would collect taxes at its maximum, Romania would have budgetary revenues, as a percentage of GDP, over the European average,” reads the Fiscal Council's report.

The council's estimation was on the data provided by the National Statistics Institute.

In Romania, budgetary revenues represented only 33.5 percent of GDP in 2012, 11.9 percent lower than the European average.

Irina Popescu, irina.popescu@romania-insider.com