Italy's shadow economy saps nearly 200 billion euros yearly, depriving 2.7 million workers of fair income
Executive summary: A Censis‑Confcooperative report released on 25 September 2026 shows Italy’s shadow economy worth nearly €200 billion per year, equivalent to 9.2 % of GDP, and estimates that 2.7 million workers are impoverished by the informal sector. The hidden economy deprives the state of substantial tax revenues, distorts labor markets, and leaves millions without adequate pay or social protections, putting pressure on public budgets and social cohesion.
Who is involved: Italian government and tax authorities (Agenzia delle Entrate), workers in informal sectors, businesses operating outside the formal register, and the research bodies Censis and Confcooperative.
Likely next: Policy debate on tax reform and possible new voluntary disclosure or amnesty measures; increased labor‑inspection funding; EU monitoring of Italy’s tax gap under its economic‑governance framework.
The Censis‑Confcooperative study estimates that the informal economy equals 9.2 % of Italy’s GDP, amounting to almost €200 billion in unreported activity. This translates to an average loss of €3 350 per person, including newborns, and leaves roughly 2.7 million workers without proper wages, social security coverage or labor protections. The finding highlights a persistent fiscal leak that strains public finances and exacerbates inequality.
What's next — scenarios
Base: moderate enforcement (40%)
Shadow economy shrinks by about 5 % over the next two years as audit activity rises modestly.
- Tax authority launches new audit programme Q1 2027
- Government allocates extra €200 million to combat evasion
- EU monitors Italy’s tax gap in its 2027 country‑specific recommendations
Upside: strong crackdown (30%)
Coordinated tax‑amnesty and electronic‑invoicing measures cut the shadow economy by roughly 15 % by 2028.
- Parliament passes a tax‑amnesty bill with strict compliance requirements by Dec 2026
- Mandatory electronic invoicing extended to all businesses from Jan 2027
- Italy receives EU recovery‑fund tranches conditional on demonstrable tax‑gap reduction
Downside: evasion persists (30%)
Informal activity grows by about 5 % as reform stalls and inspection resources shrink.
- Tax‑reform legislation delayed beyond mid‑2027
- Budget cuts reduce tax‑agency staff by 10 % in 2027
- Economic slowdown pushes more workers into informal jobs
What to watch
- Italian tax authority releases quarterly tax‑gap report Q4 2026 (Oct‑Dec)
- Parliamentary committee vote on tax‑reform bill scheduled 15 Oct 2026
- Eurostat publishes informal‑employment data for Italy Q1 2027 (Jan‑Mar)
- Government announces budget increase for labor‑inspection units in the 2027 finance law (expected Sep 2026)
- EU Commission issues country‑specific recommendation on Italy’s tax gap by Mar 2027
Timeline
- — L’economia sommersa vale quasi 200 miliardi l’anno, e impoverisce 2,7 milioni di lavoratori (la Repubblica — Economia)
Analysis — what this means
Likely next events
- Italian tax authority to publish Q4 2026 tax‑gap estimate by 15 Dec 2026
- Parliament to debate voluntary‑disclosure amendment in early Nov 2026
- Eurostat to release Italy’s informal‑employment share for Q1 2027 by 20 Feb 2027
- Government to decide on extra funding for tax‑agency in the 2027 budget law (Sep 2026)
Sectors affected
- Construction
- Retail trade
- Personal services (e.g., cleaning, repair)
- Agriculture and agro‑food processing
Regulatory implications
- Increase in tax audits and investigations by Agenzia delle Entrate
- Tightening of labor‑inspection rules to curb undeclared work
Historical parallels
- 2002 Italian tax amnesty that recovered roughly €30 billion
- 2015 voluntary disclosure scheme (known as “voluntary disclosure 2015”) that brought in about €10 billion
- 2019 “rottamazione‑ter” tax‑settlement program that collected approximately €12 billion
Sources
- L’economia sommersa vale quasi 200 miliardi l’anno, e impoverisce 2,7 milioni di lavoratori — la Repubblica — Economia