In a press release published on 11 June 2025, the Verohallinto reported on a new study by its Grey Economy Information Unit examining the effects of tax audits on companies identified as shadow economy operators. The study analysed 348 companies that had been classified as engaging in the shadow economy following a tax audit and that continued operating after the audit. According to the findings, the companies’ reported net business income subject to corporate income tax increased on average by approximately EUR 72,000 per year after the audit. This corresponds to an estimated EUR 14,500 in additional corporate income tax per company annually, or roughly EUR 5 million in total per year. By comparison, the immediate effect of tax audits, meaning taxes assessed directly on the basis of audit findings, amounted to EUR 2.7 million.
The audited companies were, on average, larger than the general business population, which partly explains the magnitude of the observed monetary effects. The study also found that companies reported significantly higher wages and fees after audits, with an average annual increase of approximately EUR 34,000. According to the Grey Economy Information Unit, this indicates a reduction in undeclared wage payments and improved compliance with employer obligations. The impact of tax audits was not limited to the audited companies themselves.
The study showed that linked companies associated with audited entities also reported higher net income after audits, with an average increase of around EUR 14,000. A notable finding was that 37% of companies identified as shadow economy operators ceased operations within six months of a tax audit.
This share is clearly higher than among all audited companies, of which approximately one quarter were no longer registered in any Tax Administration register six months after an audit. According to the Tax Administration, audits often result in the exit of companies whose non-compliance has been extensive and serious, although there remains a risk that activities may continue through proxy arrangements or foreign entities.
While the study focuses primarily on income taxation and employer obligations, the findings are also relevant from a VAT control and compliance perspective, as improved reporting of turnover, wages and business income typically correlates with more accurate VAT reporting and reduced opportunities for VAT evasion.
