Freelancer Taxation: From Shadow to Digital Light

Abstract

The recent and rapid growth of the freelance sector in economies worldwide has led to more participation in the informal, or shadow, economy. Freelance workers who operate in the shadow economy are deprived of government protections, benefits, and legitimacy. To facilitate their emergence into full legitimacy, taxation policies must be amended to incentivize these workers to file taxes. In partnership with the Federal Tax Service of the Russian Federation, our project was to provide specific recommendations for improving the tax experience for freelancers by comparing the Russian and German shadow and gig economies. We found that Russia has a more accommodating taxation structure dedicated to freelancers, while the logistics and user experience for paying taxes is smoother in Germany