The European Commission has published the 2019 edition of its report Taxation trends in the EU.
The report provides analysis of Europe-wide trends, together with a series of country chapters covering the 28 EU member states, Iceland and Norway. For each country, key taxation indicators are provided on tax revenues as a percentage of GDP for the years 2005 to 2017.
In 2017, taxes and compulsory social contributions in the EU-28 accounted for 39% of GDP, up 0.3% on 2016. This overall EU average tax-to-GDP ratio is almost identical to that of Norway. It is almost 12% above the US and 8.5% above Japan. It is also higher than New Zealand (32%), Canada (32.2%), Australia (27.8% in 2016), Switzerland (28.5%) and South Korea (26.9%).
Denmark had the highest share of direct taxes in total tax revenues (65.4%), followed by Ireland, Malta, Sweden and the UK. In general, the shares of social contributions to total tax revenues are correspondingly low in these countries.
A number of member states, among them those with flat-rate systems, had a much lower share of direct taxes. This was counterbalanced either by relatively higher proportions of indirect taxes, such as Croatia (52%), Bulgaria (51.3%) and Hungary (47.4%), or by relatively larger shares of social contributions, such as Slovakia (44.1%), Czechia (42.5%) and Lithuania (41.5%).
In terms of the tax base, the share of labour taxes has fallen slightly since the financial crisis, while capital and consumption taxes have increased. Overall, labour taxes provided the largest share of revenues (49.7% in 2017), followed by consumption taxes (28.3%) and then capital taxes (21.9%).
As a percentage of GDP, revenue from labour taxes rose slightly in 2017 to 19.4%, compared with 19.2% in 2016.
The EU-28 average top personal income tax rate increased slightly at the start of 2019 to 39.4%, as against 39% in 2017 (compared with a high of 47.2% in 1995 and 38% in 2009).
The overall tax burden on labour reached a new high in 2017, at 36.3% for the EU-28 (up 0.3% on 2016). The figure for the Euro area was higher, at 38.6%.
The ‘tax wedge’ (an indicator of the burden of taxation across different categories of household) fell to an average of 32.4% for low earners across the EU-28 in 2017 (down from 32.5% the previous year). This reflects efforts made in recent years to target labour tax cuts on the bottom end of the wage scale in order to boost the employability of low-skilled workers.
The average top rate of corporate income tax at the beginning of 2019 remained 21.9%, the same as 2018. Corporate income tax revenues rose to 2.8% of GDP in 2017 compared with 2.7% in the previous year. Although increasing gradually, these revenues have not yet recovered their pre-financial crisis levels.
Environmental tax revenues as a share of GDP, at 2.4% in 2017, have changed little since 2012. More than two thirds of energy tax revenues come from transport fuel.
Property taxes have increased their share of total tax revenues from 5.6% in 2009 to 6.6% in 2017 (representing 2.6% of GDP). Recurrent taxes on real-estate property (i.e. those linked to some measure of the value of the property and paid annually) are seen in many countries as a potential source for increasing revenue, while being the least detrimental to economic growth, given the immobility of the tax base.
The European Commission has published the 2019 edition of its report Taxation trends in the EU.
The report provides analysis of Europe-wide trends, together with a series of country chapters covering the 28 EU member states, Iceland and Norway. For each country, key taxation indicators are provided on tax revenues as a percentage of GDP for the years 2005 to 2017.
In 2017, taxes and compulsory social contributions in the EU-28 accounted for 39% of GDP, up 0.3% on 2016. This overall EU average tax-to-GDP ratio is almost identical to that of Norway. It is almost 12% above the US and 8.5% above Japan. It is also higher than New Zealand (32%), Canada (32.2%), Australia (27.8% in 2016), Switzerland (28.5%) and South Korea (26.9%).
Denmark had the highest share of direct taxes in total tax revenues (65.4%), followed by Ireland, Malta, Sweden and the UK. In general, the shares of social contributions to total tax revenues are correspondingly low in these countries.
A number of member states, among them those with flat-rate systems, had a much lower share of direct taxes. This was counterbalanced either by relatively higher proportions of indirect taxes, such as Croatia (52%), Bulgaria (51.3%) and Hungary (47.4%), or by relatively larger shares of social contributions, such as Slovakia (44.1%), Czechia (42.5%) and Lithuania (41.5%).
In terms of the tax base, the share of labour taxes has fallen slightly since the financial crisis, while capital and consumption taxes have increased. Overall, labour taxes provided the largest share of revenues (49.7% in 2017), followed by consumption taxes (28.3%) and then capital taxes (21.9%).
As a percentage of GDP, revenue from labour taxes rose slightly in 2017 to 19.4%, compared with 19.2% in 2016.
The EU-28 average top personal income tax rate increased slightly at the start of 2019 to 39.4%, as against 39% in 2017 (compared with a high of 47.2% in 1995 and 38% in 2009).
The overall tax burden on labour reached a new high in 2017, at 36.3% for the EU-28 (up 0.3% on 2016). The figure for the Euro area was higher, at 38.6%.
The ‘tax wedge’ (an indicator of the burden of taxation across different categories of household) fell to an average of 32.4% for low earners across the EU-28 in 2017 (down from 32.5% the previous year). This reflects efforts made in recent years to target labour tax cuts on the bottom end of the wage scale in order to boost the employability of low-skilled workers.
The average top rate of corporate income tax at the beginning of 2019 remained 21.9%, the same as 2018. Corporate income tax revenues rose to 2.8% of GDP in 2017 compared with 2.7% in the previous year. Although increasing gradually, these revenues have not yet recovered their pre-financial crisis levels.
Environmental tax revenues as a share of GDP, at 2.4% in 2017, have changed little since 2012. More than two thirds of energy tax revenues come from transport fuel.
Property taxes have increased their share of total tax revenues from 5.6% in 2009 to 6.6% in 2017 (representing 2.6% of GDP). Recurrent taxes on real-estate property (i.e. those linked to some measure of the value of the property and paid annually) are seen in many countries as a potential source for increasing revenue, while being the least detrimental to economic growth, given the immobility of the tax base.
