We conduct a field experiment with sellers of home improvement services on two German online markets. We take the role of consumers and vary whether we request an invoice for the delivery of the service. In a market that allows anyone to sell anonymously, a willingness to evade is prevalent. In a market that keeps track of credentials, sellers are only willing to evade when a willingness to collude is signaled. The evasion discount is in most estimates not larger than the tax subsidy for legal

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... emand. Evasion is unlikely to be beneficial for many consumers in our setting. (JEL C93, H25, H26, L84) W hen consumers demand products or services, the incentives to report the transaction to tax authorities are often weak. Consumers usually do not benefit financially from asking for an invoice (Pomeranz 2015, Naritomi 2019). They may even receive a price discount if they agree to proceed without a paper trail (e.g., Chang and Lai 2004, European Commission 2014). The incentives to evade are particularly high when a product or service requires a direct interaction between seller and consumer. Collaborative tax evasion implies that governments lose substantial amounts of tax revenue (Slemrod 2007, Kleven et al. 2011) and that it induces market inefficiencies (Strand 2005, Balafoutas et al. 2015). However, while several studies model the interaction between buyers and sellers theoretically (e.g., Yaniv 1992, Kleven et al. 2011) or provide indirect evidence of collaborative tax evasion (e.g., Pomeranz 2015; Bjørneby, Alstadsaeter, and Telle 2018; Naritomi 2019), to our knowledge, there is no direct evidence from the field on collaborative tax evasion.