More than half of Spain’s landlords are dodging taxes as the rental market expands, depriving the financially strapped government of more revenue each year.

Owners are asking for payment in cash from tenants to avoid tax on €2.5bn ($3.5bn) of earnings annually, the Gestha union of tax inspectors estimates. An increase in rental properties nationwide hasn’t generated any more tax revenue.

The Spanish government, seeking to pull the country out of its deepest recession in 60 years, needs all the money it can get right now. The slump was triggered by a crash in the housing market and has left Spain with the highest budget deficit since at least 1980. Taxes go unpaid on income equal to about a quarter of gross domestic product, Gestha estimates.

bloomberg.com