Glossary

A demand-side incentive which offers purchasers of household services a reduction in their direct taxes owed by reclaiming the costs of the help or expenses for household services as a means of reducing the cost of declared work and transforming undeclared work into declared work.

The intrinsic motivation to willingly pay taxes owed. It is a measurement of a positive attitude and commitment to the payment of tax, and often measured by assessing citizens’ views of the unacceptability of engaging in undeclared work.

[Eurofound (2013), op cit.]

Any natural or legal person who, in compliance with national law, concludes contracts of employment or employment relationships with temporary agency workers in order to assign them to user undertakings to work there temporarily under their supervision.

[Directive 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on temporary agency work, article 3 para 1b.]

A company that acts as an employer to workers who work under a fixed-term contractual assignment with an external client. The worker is not employed by the external client, but by the umbrella company. The umbrella company allows workers to work as an ‘employee’ rather than having to register as a business/self-employed. The umbrella company provides payroll for work carried out by the worker.

Paid activity conducted by the self-employed where income is not declared for the purpose of evading either tax and/or social insurance contributions owed. The self-employed may not declare either some or all their income. 

Any paid activities that are lawful as regards their nature but not declared to public authorities, taking account of differences in the regulatory systems of the Member States. Member States have adopted a variety of different definitions focusing upon non-compliance with either labour, tax and/or social security legislation or regulations.

When formal employers pursue the illegal practice of reducing their tax and social security payments, and therefore labour costs, by under-declaring the remuneration of employees. This occurs when employers pay their formal employees two salaries: an official declared salary and an additional undeclared (‘envelope’) wage which is hidden from the authorities for tax and social security purposes. Alternatively, an employer can under-declare the number of hours an employee works, such as to evade paying the minimum wage. 

An employment relationship which is not registered with the authorities when it should be registered. Such employees often do not have written contracts or terms of employment and their remuneration is most probably undeclared in nature.