Taxation trends in the
EU: The weighted tax-to-GDP ratio1 (i.e. the total amount
of taxes and social security contributions) in the EU272 increased to
39.9% in 2006 from 39.3% in 2005. The EU27 tax ratio is nevertheless lower than
in 1996 (40.3%) and the peak of 41.0% in 1999. The downtrend which had started
in 1999 in most Member States stopped in 2005. In 2006, the overall tax ratio in
the Eurozone2 (EA15) was 40.5%, up from 39.8% in 2005. Since 1996,
taxes in the Eurozone have followed a similar trend to the EU27, although at a
slightly higher level.
EU tax levels remain generally high in comparison
with the rest of the world, with the EU27 tax ratio exceeding those of the USA
and Japan by some 12 percentage points. However, the tax burden varies
significantly between Member States, ranging in 2006 from less than 30% in
Romania (28.6%), Slovakia (29.3%) and Lithuania (29.7%), to almost 50% in
Denmark (49.1%) and Sweden (48.9%).
In the past decade significant
changes in tax-to-GDP ratios have taken place in several Member States. The
largest falls were recorded in Slovakia, where the overall tax burden dropped
from 39.4% in 1996 to 29.3% in 2006, and Estonia (from 35.1% to 31.0%). The
highest increases were observed in Cyprus (from 26.4% to 36.6%) and Malta (from
25.4% to 33.8%).
Labour taxes remain the largest source of tax
revenue, representing close to half of total tax receipts in the EU27. Taxes on
capital accounted for approximately 23% of total tax receipts, and consumption
taxes 28%.
This information comes from the publication
Taxation trends in the European Union: Data for the EU Member States and Norway3
issued by Eurostat, the Statistical Office of the
European Communities and the Commission’s
Directorate-General for Taxation and Customs Union. This publication
compiles tax indicators in a harmonised framework based on the European System
of Accounts (ESA 95), allowing accurate comparison of the tax systems and tax
policies between EU Member States.
Tax burden has increased more
on capital than on labour and consumption
For the EU27 as a whole, the average implicit tax
rate (ITR) on labour4 (including social contributions), the preferred
indicator for the average tax burden, amounted to 34.8% in 2006, compared with
34.6% in 2005. The decline registered since 2000 stopped in 2005, despite a wide
consensus on the desirability of reducing labour taxes. However, the tax burden
is still lower than its maximum of 36.2% in 2000. Among the Member States, in
2006 this rate ranged from 21.5% in Malta, 24.2% in Cyprus, 25.1% in Ireland and
25.5% in the United Kingdom, to 44.5% in Sweden, 43.0% in Italy, 42.8% in
Belgium and 42.1% in France. Despite the presence of a number of low taxing
countries, taxation on labour is, on average, much higher in the EU than in the
other main industrialised economies.
In line with the development over the last few
years, the average implicit tax rate on consumption4 in the EU27
increased again in 2006, though only marginally, from 22.0% to 22.1%.
Consumption was most taxed in Denmark (34.0%), Sweden (28.1%) and Finland
(27.3%), while the lowest implicit rates were registered in Spain (16.4%),
Lithuania (16.7%) and Italy (17.2%).
The average implicit tax rate on capital4
in the EU27 rose sharply from 26.8% in 2005 to 29.0% in 2006, which could be
mainly attributed to business cycle effects. There is considerable disparity in
this ratio: among the Member States for which 2006 data are available, the
highest implicit tax rates on capital were recorded in Ireland (42.5%), France
(41.5%) and Denmark (40.9%), and the lowest in Estonia (8.4%) and Lithuania
(14.1%). Latvia registered 9.6% in 2005.
Tax
revenue and implicit tax rates*
by type of economic activity
|
Tax
revenue,
% of GDP
|
Implicit tax rate
on:
|
|
Consumption
|
Labour
|
Capital
|
|
1996
|
2005
|
2006
|
1996
|
2005
|
2006
|
1996
|
2005
|
2006
|
1996
|
2005
|
2006
|
|
EU27**
|
40.3
|
39.3
|
39.9
|
21.1
|
22.0
|
22.1
|
35.7
|
34.6
|
34.8
|
24.6
|
26.8
|
29.0
|
EA15**
|
40.7
|
39.8
|
40.5
|
19.9
|
21.4
|
21.6
|
34.1
|
34.4
|
34.7
|
25.4
|
30.0
|
31.7
|
|
BE
|
44.4
|
44.9
|
44.6
|
21.3
|
22.2
|
22.4
|
43.4
|
43.9
|
42.8
|
26.7
|
32.1
|
32.3
|
|
BG
|
:
|
34.1
|
34.4
|
:
|
24.4
|
25.9
|
:
|
34.7
|
30.9
|
:
|
:
|
:
|
|
CZ
|
34.7
|
37.1
|
36.2
|
21.2
|
22.2
|
21.2
|
39.5
|
41.7
|
41.0
|
22.3
|
25.5
|
24.9
|
|
DK
|
49.2
|
50.7
|
49.1
|
31.6
|
33.6
|
34.0
|
40.2
|
37.5
|
37.0
|
30.9
|
47.7
|
40.9
|
|
DE
|
40.7
|
38.7
|
39.3
|
18.3
|
18.0
|
18.2
|
39.6
|
38.6
|
39.6
|
25.6
|
22.9
|
23.4
|
|
EE
|
35.1
|
30.6
|
31.0
|
19.1
|
22.8
|
23.6
|
39.1
|
34.1
|
33.9
|
16.0
|
7.9
|
8.4
|
|
IE
|
33.1
|
30.8
|
32.6
|
24.7
|
26.5
|
26.9
|
29.3
|
25.1
|
25.1
|
27.1
|
37.5
|
42.5
|
|
EL
|
29.4
|
31.3
|
31.4
|
17.7
|
17.0
|
17.6
|
35.7
|
37.8
|
38.1
|
11.6
|
:
|
:
|
|
ES
|
33.1
|
35.6
|
36.5
|
14.4
|
16.3
|
16.4
|
29.5
|
30.6
|
31.6
|
20.6
|
36.0
|
38.7
|
|
FR
|
43.9
|
43.8
|
44.2
|
22.1
|
20.1
|
20.0
|
41.5
|
41.7
|
42.1
|
34.7
|
40.0
|
41.5
|
|
IT
|
41.8
|
40.6
|
42.3
|
17.1
|
16.8
|
17.2
|
41.5
|
42.8
|
43.0
|
28.2
|
30.4
|
34.4
|
|
CY
|
26.4
|
35.5
|
36.6
|
12.3
|
20.0
|
20.4
|
22.3
|
24.5
|
24.2
|
:
|
31.0
|
36.6
|
|
LV
|
30.8
|
29.0
|
30.1
|
17.9
|
20.2
|
20.0
|
34.6
|
33.2
|
33.5
|
15.7
|
9.6
|
:
|
|
LT
|
27.9
|
28.8
|
29.7
|
16.4
|
16.5
|
16.7
|
35.0
|
34.9
|
34.1
|
15.4
|
11.5
|
14.1
|
|
LU
|
37.6
|
37.8
|
35.6
|
20.8
|
25.5
|
25.1
|
29.6
|
30.0
|
29.6
|
:
|
:
|
:
|
|
HU
|
40.6
|
37.4
|
37.2
|
29.5
|
26.4
|
25.8
|
43.1
|
37.8
|
39.0
|
:
|
:
|
:
|
|
MT
|
25.4
|
33.7
|
33.8
|
14.0
|
19.1
|
19.8
|
17.8
|
21.9
|
21.5
|
:
|
:
|
:
|
|
NL
|
40.2
|
37.9
|
39.5
|
23.3
|
25.3
|
26.9
|
33.3
|
30.5
|
33.5
|
23.2
|
20.7
|
20.0
|
|
AT
|
42.6
|
42.0
|
41.8
|
20.7
|
21.2
|
20.9
|
39.5
|
41.0
|
41.2
|
28.0
|
23.2
|
23.4
|
|
PL
|
37.2
|
32.8
|
33.8
|
21.2
|
19.6
|
20.2
|
36.3
|
33.1
|
34.4
|
21.3
|
22.2
|
:
|
|
PT
|
32.8
|
35.1
|
35.9
|
19.5
|
20.6
|
21.1
|
26.5
|
28.4
|
28.5
|
23.0
|
28.1
|
:
|
|
RO
|
:
|
27.9
|
28.6
|
:
|
18.0
|
17.7
|
:
|
29.1
|
:
|
:
|
:
|
:
|
|
SI
|
39.1
|
39.3
|
39.1
|
24.7
|
24.2
|
24.2
|
37.1
|
37.5
|
37.6
|
:
|
:
|
:
|
|
SK
|
39.4
|
31.5
|
29.3
|
24.2
|
22.2
|
20.2
|
39.4
|
32.9
|
30.3
|
33.3
|
19.1
|
18.1
|
|
FI
|
47.0
|
44.0
|
43.5
|
27.4
|
27.6
|
27.3
|
45.3
|
41.5
|
41.5
|
30.9
|
27.5
|
24.6
|
|
SE
|
50.3
|
49.5
|
48.9
|
27.2
|
28.1
|
28.1
|
48.0
|
44.7
|
44.5
|
26.6
|
:
|
:
|
|
UK
|
35.0
|
36.6
|
37.4
|
19.9
|
18.7
|
18.5
|
24.8
|
25.3
|
25.5
|
31.8
|
36.8
|
39.7
|
NO
|
42.4
|
43.5
|
44.0
|
31.0
|
29.7
|
31.1
|
38.2
|
38.5
|
38.0
|
:
|
:
|
:
|
Source: European Commission Services.
* Implicit tax rates (ITR) measure the effective
average tax burden on different types of economic income or activities, i.e. on
labour, consumption and capital. ITR express aggregate tax revenues as a
percentage of the potential tax base for each field (see footnote 4).
** EU27 and EA15 overall tax ratios are computed
on the basis of a GDP-weighted average. For all other indicators the aggregates
are calculated as arithmetic averages of the Member States for which the
respective annual data are available.
: Data not available
Environmental tax revenues
declined to lowest level in a decade
Despite intense public interest in environmental
issues, environmental tax revenues in the EU27 have been declining since 1999;
their 2006 level, 2.6% of GDP, is the lowest in a decade. This drop is due to
lower energy taxation, as revenues from the other environmental taxes have
remained broadly stable.
Environmental
tax revenue, % of GDP
|
1996
|
1997
|
1998
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
|
Environmental
taxes
|
|
EU27*
|
2.8
|
2.8
|
2.8
|
2.9
|
2.8
|
2.7
|
2.7
|
2.7
|
2.7
|
2.6
|
2.6
|
|
EA15*
|
2.7
|
2.7
|
2.7
|
2.8
|
2.6
|
2.6
|
2.6
|
2.7
|
2.6
|
2.6
|
2.5
|
|
Energy taxes
|
|
EU27*
|
2.1
|
2.1
|
2.1
|
2.2
|
2.1
|
2.0
|
2.0
|
2.0
|
2.0
|
1.9
|
1.9
|
|
EA15*
|
2.1
|
2.1
|
2.0
|
2.1
|
2.0
|
2.0
|
2.0
|
2.0
|
1.9
|
1.9
|
1.8
|
* GDP-weighted averages.
Top personal and corporate
income tax rates on average lower in the new Member States
The top personal income tax rate differs
substantially within the EU. The highest top rates5 on 2007 personal
income were found in Denmark (59.0%), Sweden (56.6%), the Netherlands (52.0%)
and Finland (50.5%), and the lowest in Romania (16.0%), Slovakia (19.0%),
Estonia (22.0%) and Bulgaria (24.0%).
For corporate income tax, the highest adjusted
top statutory tax rates6 on 2008 income were recorded in Malta
(35.0%), France (34.4%), Belgium (34.0%) and Italy (31.4%), and the lowest in
Bulgaria and Cyprus (both 10.0%), Ireland (12.5%), Latvia and Lithuania (both
15.0%).
Over recent years, top rates have shown a clear
downward trend in the whole of the EU, particularly in the corporate area. In
2008, Germany (-8.9 percentage points), Italy (-5.9), the Czech Republic (-3.0),
and Lithuania (-3.0) decreased their top rates most significantly. On average,
the new Member States display markedly lower top rates.
Top statutory
personal income tax rate on 2007 income, %
|
RO
|
SK
|
EE
|
BG
|
LV
|
LT
|
CY
|
CZ
|
MT
|
EU27*
|
LU
|
HU
|
EL
|
FR
|
PL
|
|
16.0
|
19.0
|
22.0
|
24.0
|
25.0
|
27.0
|
30.0
|
32.0
|
35.0
|
38.7
|
39.0
|
40.0
|
40.0
|
40.0
|
40.0
|
|
UK
|
EA15*
|
IE
|
SI
|
PT
|
IT
|
ES
|
DE
|
BE
|
AT
|
FI
|
NL
|
SE
|
DK
|
|
40.0
|
40.2
|
41.0
|
41.0
|
42.0
|
43.0
|
43.0
|
47.5
|
50.0
|
50.0
|
50.5
|
52.0
|
56.6
|
59.0
|
Source: European Commission Services.
* Arithmetic average.
Adjusted
top statutory tax rate* on
corporate income in 2008, %
|
BG
|
CY
|
IE
|
LV
|
LT
|
RO
|
PL
|
SK
|
EE
|
CZ
|
HU
|
SI
|
EU27**
|
EL
|
AT
|
|
10.0
|
10.0
|
12.5
|
15.0
|
15.0
|
16.0
|
19.0
|
19.0
|
21.0
|
21.0
|
21.3
|
22.0
|
23.6
|
25.0
|
25.0
|
|
DK
|
NL
|
FI
|
PT
|
EA15**
|
SE
|
LU
|
DE
|
UK
|
ES
|
IT
|
BE
|
FR
|
MT
|
|
25.0
|
25.5
|
26.0
|
26.5
|
26.5
|
28.0
|
29.6
|
29.8
|
30.0
|
30.0
|
31.4
|
34.0
|
34.4
|
35.0
|
Source: European Commission Services.
* Adjusted top statutory tax rate on corporate
income takes into account corporate income tax (CIT) and, if they exist,
surcharges, local taxes, or even additional taxes levied on tax bases that are
similar but often not identical to the CIT. In order to take these features into
account, the simple CIT rate has been adjusted for comparison purposes.
** Arithmetic average.
- The tax-to-GDP ratio measures the
overall tax burden as the total amount
of taxes and compulsory actual social security contributions as a percentage
of GDP. This indicator is widely used to measure the overall tax burden but
includes the taxes that are raised on social transfers. Because social
transfer recipients often receive directly a net payment they do not feel
the burden of paying taxes. This definition differs slightly from the one
used in the Statistics in Focus, Economy and Finance, 47/2008, "Tax revenue
in the EU", which includes the voluntary and imputed social contributions.
The difference between the two measures amounts to around 1½% of GDP for the
EU and Eurozone aggregates.
- EU27:
Belgium (BE), Bulgaria (BG), the Czech Republic (CZ), Denmark (DK), Germany
(DE), Estonia (EE), Ireland (IE), Greece (EL), Spain (ES), France (FR),
Italy (IT), Cyprus (CY), Latvia (LV), Lithuania (LT), Luxembourg (LU),
Hungary (HU), Malta (MT), the Netherlands (NL), Austria (AT), Poland (PL),
Portugal (PT), Romania (RO), Slovenia (SI), Slovakia (SK), Finland (FI),
Sweden (SE) and the United Kingdom (UK). Eurozone
(EA15): Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus,
Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia and Finland.
- "Taxation trends in
the European Union: 1995-2006", EUR 40 (excl. VAT), only
available in English. This publication is based on data available on 19
February 2008. It can be purchased from authorised sales agents or
downloaded free of charge in PDF format from the Eurostat or the DG TAXUD
website:
http://ec.europa.eu/taxtrends
- Implicit tax
rates (ITR)
measure the effective average tax burden on different types of economic
income or activities, i.e. on labour, consumption and capital. ITR express
aggregate tax revenues as a percentage of the potential tax base for each
field.
The ITR on labour is the ratio between
taxes and social contributions paid on earned income and the cost of labour. The
numerator includes all direct and indirect taxes and employees' and employers'
social contributions levied on employed labour income, while the denominator
amounts to the total compensation of employees working in the economic territory
increased by taxes on wage bill and payroll. It is calculated for employed
labour only (so excluding the tax burden falling on social transfers, including
pensions). The average may conceal important variations in the tax burden across
the income distribution.
The ITR on consumption is the ratio
between the revenue from consumption taxes and the final consumption expenditure
of households on the economic territory.
The ITR on capital includes, in the
numerator, the taxes levied on the income earned from savings and investments by
households and corporations and taxes related to stocks of capital stemming from
savings and investment in previous periods. The denominator of the capital ITR
is a proxy of the world-wide capital and business income of Member States'
residents for domestic tax purposes. Trends in the capital ITR reflect a wide
range of factors and it should be interpreted with caution.
All ITRs for the EU and the Eurozone are
calculated as arithmetic averages.
- The top statutory personal income tax
rate reflects the tax rate for the highest income bracket. For Denmark,
Finland and Sweden the municipal income tax is also included. German data
include the solidarity surcharge. The Hungarian rate includes the solidarity
tax.
- The adjusted top statutory tax rate on
corporate income takes into account corporate income tax (CIT) and, if
they exist, surcharges, local taxes, or even additional taxes levied on tax
bases that are similar but often not identical to the CIT. In order to take
these features into account, the simple CIT rate has been adjusted for
comparison purposes.
