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Technological integration and tax compliance: a quantitative evaluation of fraud detection efficiency in judicial tax proceedings in EU member States

Author

Listed:
  • Emilio Abad-Segura

    (University of Almeria)

  • Francisco José Castillo-Díaz

    (University of Almeria)

  • Nathalie Hernández-Pérez

    (University of Pamplona)

  • Luis J. Belmonte-Ureña

    (University of Almeria)

Abstract

This study examines the interaction between tax compliance and tax fraud, focusing on fraud detection strategies implemented in several European Union (EU) Member States. The research highlights the significant variability in the effectiveness of anti-avoidance policies at the national level, correcting the previous confusion between avoidance and tax fraud policies. Using a quantitative approach, we develop a composite indicator based on various tax compliance metrics, which reveals significant differences in the effectiveness of tax policies across countries. This study focuses on the efficiency of judicial mechanisms in detecting, investigating, and prosecuting cases of formally documented tax fraud, drawing on data provided by the European Public Prosecutor’s Office (EPPO). Factor and cluster analysis identifies key components and groups countries according to their tax compliance characteristics. The results suggest a direct relationship between the adoption of technological solutions, specifically in tax compliance systems, and efficiency gains, indicating that countries with advanced technological infrastructures perform better. This study not only provides a detailed assessment of the current tax compliance situation in the EU but also offers valuable conclusions for the design of more effective policies specifically aimed at combating tax fraud and tailored to the socio-economic and technological realities of each Member State.

Suggested Citation

  • Emilio Abad-Segura & Francisco José Castillo-Díaz & Nathalie Hernández-Pérez & Luis J. Belmonte-Ureña, 2025. "Technological integration and tax compliance: a quantitative evaluation of fraud detection efficiency in judicial tax proceedings in EU member States," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 52(3), pages 493-522, August.
    • Handle: RePEc:kap:empiri:v:52:y:2025:i:3:d:10.1007_s10663-025-09654-2
    DOI: 10.1007/s10663-025-09654-2
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    Keywords

    Tax compliance; Composite index; Fiscal policy; Tax technology; European Union; Digital infrastructure; Institutional efficiency; Judicial data; Fraud detection;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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