Serbia’s Hidden Economy: A 21% of GDP and the Impact of Consumption Tax Collection

A recent study published by Bloomberg Adria on June 19 revealed that more than a fifth of Serbia’s economic activity is unregistered, representing 21.1% of GDP or approximately 14.7 billion euros. Despite a gradual decline over the past decade, unregistered economic activity continues to significantly impact the country’s financial landscape, with the state’s approach to consumption tax collection playing a significant role.

The study entitled “Assessment of the height and dynamics of the gray economy in Serbia” was conducted by professors of the Faculty of Economics in Belgrade. It showed a fluctuating trend in the shadow economy, averaging 23.6% of GDP from 2009 to 2023, peaking at 29.1% in 2013 and reaching a low of 17.9% in 2021. In recent years, there has been a resurgence of the gray economy, but it remains smaller in spending compared to its peak in 2013.

In terms of income, undeclared earnings accounted for about 6.8% of GDP, or 4.7 billion euros in 2023, which is one of the lowest levels in the last fifteen years. The growth of the underground economy until