Easy come, easy go – Non-compliance, overwithholding, and income tax revenue in Germany, June 2025.
This paper examines tax non-compliance among individuals in Germany who were legally required to file a tax return but failed to do so. Using administrative tax data and simulation-based analysis, we quantify the financial implications of non-compliance for approximately 1.5 million affected individuals. Findings suggest that over 690,000 non-filers would have been financially better off had they complied with their obligation to file a tax return. Tax revenue is about 100 million Euro higher than it would be under full compliance. Using a control group of comparable compliers, a probit model indicates a statistically significant and positive relationship between (potential) gains from non-compliance and non-compliant behavior. The study offers new evidence on non-filers based on large-scale administrative data rather than audits or surveys.