Nearly half of all businesses surveyed described corruption as an obstacle to doing business in Europe and almost all respondents said they thought close links between business and politics lead to corruption.
The report's findings have thrown into doubt long-held beliefs that the European Union is one of the world's safest regions in which to do business, with political connections and under-the-table dealings perceived to account for a large proportion of business being 'won'.
The conservatively estimated 120bn euro cost of corruption is equivalent to one per cent of Europe's annual economic output, the entire EU annual budget or 100 per cent of Romania's economy. Romania's former Prime Minister, Adrian Nastase, was even imprisoned for four years for graft in January, becoming the first premier to be convicted since communism collapsed in Europe.
The EU Home Affairs Commissioner called the extent of corruption across Europe "breath-taking", while the report found governments broadly lacked the political commitment to root out corruption.
Cecilia Malmstroem singled out Bulgaria and Romania as being particularly problematic. Both of these countries are blocked by other EU members from joining the passport-free Schengen zone, over failures to tackle domestic corruption.
The EU average showed nearly three out of four people surveyed across all 28 EU member states thought corruption was endemic across the entire region. More than half believed corruption was widespread and that the problem was worsening.
Bulgaria, Croatia, the Czech Republic, Greece, Lithuania and Romania showed figures of between six and 29 per cent of respondents reporting they had been asked for a bribe in the past 12 months. Hungary, Poland and Slovakia ranged from 13 to 15 per cent, where bribery was shown to be most prevalent within healthcare.
Public bodies procuring goods and services - which forms around 20 per cent of the EU's total output - was shown to be particularly vulnerable to corruption.
Corruption risks were shown to be highest at the local and regional level.
Construction companies that tender for government contracts were also shown to be high-risk, with eight in ten respondents in this area complaining they had experienced corruption.
Denmark, Finland and Sweden were held up by the report as examples of countries where instances of corruption were reported as being rare, according to respondents.
While the UK was praised for having "the best result in all Europe" where less than one per cent said they had been expected to pay a bribe, conversely nearly two thirds of respondents said they believed corruption to be widespread in the UK.
Anti-corruption rules in Britain - including a business corruption check and business fraud check - were among the first to be introduced into legislation by an EU member state via its Bribery Act 2010.
Proposed amendments to this Act, announced just this week, could soon see vast fines on British corporates and blacklisting from European contracts being imposed if they fail to prevent financial crime by their staff.
Countries own governments are supposed to be individually responsible for tackling corruption within their borders, rather than central EU institutions. There is one EU agency that combats fraud affecting the EU budget - OLAF - but it is reported to be seriously underfunded.
The Commission put off releasing its first corruption report for some months amidst controversy over its content, and criticism by featured countries that it was interfering in areas outside of its remit.
One tabled section of the report, on corruption within EU institutions and member states, was removed prior to its publication, axing questions on the European Commission's own record in this area.
Findings by Transparency International, a non-governmental organisation that monitors corporate and political corruption in international development, broadly reflect the EC report's data.
They recently named Greece as the worst corruption performer in the EU, sharing 80th place with China, while Denmark was seen as the least corrupt.
(The image shows fraud and corruption levels as presented in Transparency International's Corruption Perceptions Index 2013, country-by-country.)
