The European Commission has published a communication setting out proposals to be considered by the European Council to reduce tax fraud and tax evasion. The Communication contains interesting statistics on the size of the shadow economy in the EU which estimates that Ireland has a shadow economy of 12.8% of GDP, placing Ireland in the top ten states with low levels of shadow economy activity.

The UK's shadow economy activity is estimated to be 10.5% of GDP while Germany's shadow economy is estimated to stand at 13.5% of GDP.

The Communication makes recommendations to target fraudulent activity and tax evasion and also aggressive tax planning. In the Commission's view, aggressive tax planning includes the use of artificial operations or structures and the exploitation of mismatches between tax systems with the effect of undermining Member States’ tax rules and exacerbating the loss of tax revenues.

Full details of the Commission's Communication are available from http://europa.eu/rapid/pressReleasesAction.do?reference=IP/12/697&format=HTML&aged=0&language=en&guiLanguage=en