Taxation trends in the

European Union

Main results

2012 edition

Kata Prolic

1. About publication
2. Introduction
3. Taxation of consumption
4. Taxation of labour
5. Corporate income taxes
6. Environmental taxation
7. Taxation of property
8. Conclusion

Agenda

About publication

•

The objective of the report - to present a
complete view of the structure, level and trends
of taxation in the Union over a medium to long-
term period

•

Issued by the Directorate-General for Taxation
and Customs Union and Eurostat

•

Available only in English

•

Download: http://ec.europa.eu/taxtrends or

http://ec.europa.eu/eurostat

•

Covers each EU Member State + Iceland and
Norway

Introduction

•

EU - a high tax area

•

38,4% in the GDP-weighted average

•

Among developed countries only Canada and
New Zealand have tax ratios that exceed 30%
of GDP

•

Less developed countries - relatively low tax
ratios

Overall tax-to-GDP ratio in the EU,
US and Japan, 2010

Source: Commission Service and Eurostat (ESA95) for the EU, OECD

(SNA2008) for the US and Japan

Trends from 1970 until 2010

•

Increasing trend from the 1970s

•

Decreasing trend from 2000 - lasted only
few years

•

Tax ratios picked up again until 2007

•

Tax revenues dropped as a result of the
crisis, but stabilised already in 2010

Total taxes as % of GDP,

2010

Taxation of consumption

1. VAT (Value added tax)

2. Non-VAT taxes:

•

Taxes on energy (motor fuels and
heating fuels, such as petrol and
gasoline, electricity, natural gas, coal
and coke)

•

Taxes on tobacco

•

Taxes on alcohol

Implicit tax rate on consumption

1995-2010, in % (arithmetic averages)

VAT rates (standard rates)

Highest rates:

1. Hungary 27%
2. Sweden & Denmark 25%
3. Romania 24%

Lowest rates:

1. Luxembourg 15%
2. Cyprus 17%
3. Malta 18%

Development of average

standard VAT rate, EU-27

Distribution of standard

VAT rate, 2012

Taxation of labour

1. Personal income taxes (PIT)
2. Social security contributions (SSC)

•

About 2/3 of the overall ITR on labour
consists of non-wage labour costs

•

Exceptions: Denmark, Ireland and the UK

•

Poland, Greece and Slovakia: less than 20%
of the ITR on labour consists of the PIT

Implicit tax rate on labour

1995-2010, in % (arithmetic averages)

Implicit tax rate on labour

•

Highest reduction in the ITR on labour since
2000 have taken place in Bulgaria and
Lithuania (all above 8 percentage points)

•

Nordic Member States brought the tax
burden closer to the EU average in recent
years

•

The highest ITR on labour: Italy (42%) and
Belgium (42,5%)

•

The lowest ITR on labour: Malta, Portugal
and Bulgaria

PIT rates

•

38,1% on average

•

Lowest:

Bulgaria (10%),
the Czech Republic,
Lithuania and
Romania

•

Highest:

Nordic countries
(55,4%)

Top personal income tax

rates, 2012 (%)

Development of top personal

income tax rate

1995-2012, in % (arithmetic averages)

Corporate Income Taxes

(CIT)

•

The most important tax on capital income

•

Bulgaria & Cyprus: 10%

•

France: 36,1%

•

Denmark & Sweden display corporate tax
rates that are not much above the average!

Development of adjusted top statutory

tax rate on corporate income

1995-2012, in % (arithmetic averages)

Distribution of top

corporate tax rates, 2012 in %

Implicit tax rate on capital

1995-2010, in % (arithmetic averages)

Environmental taxation

1. Excise duties on energy products
2. Taxes on transport vehicles
3. Pollution taxes

•

Tax base is a physical unit of something that
has a proven negative impact on the
environment

•

Environmental taxation raises on average
3% of GDP

Environmental tax revenue

2000-2010 in % of GDP

Energy tax revenues in relation to final

energy consumption (real ITR on energy)

Euro per tonne of oil equivalent, deflated with

cumulative % change in final demand deflator
(2000=100)

Fuel taxes

•

Importance varies across Member States

•

Above 90%: Latvia, Lithuania, Bulgaria,
Luxembourg

•

About 50%: Denmark, Sweden

•

Some Member States apply the EU required
minimum rate and others 200 times the
minimum

Taxation of property in the

EU

1. Recurrent taxes on immovable property
2. Transaction taxes

Taxes on property-total:

•

3,6% of total taxation

•

1,3% of GDP

Recurrent taxes on immovable property:
0,7% of GDP
Transaction taxes on property in general:
0,6% of GDP

Conclusion (1)

•

EU-15: raise equal shares of revenues from
direct, indirect taxes and social security
contributions

•

NMS-12: display a lower share of direct taxes
in the total (except for Malta)

•

Labour income taxes: 50% of receipts

•

Consumption: 1/3

•

Capital: 1/5

Conclusion (2)

•

Tax revenues stabilised in 2010 and expected
to grow in the future

•

Ongoing strong increase in VAT rates,
spreading to more countries

•

Environmental taxes up on excise tax hikes

•

Other tax rates have stopped declining and
show signs of increasing

•

Growth-friendly taxation: mixed picture -
increase in consumption taxes but no cut in
labour taxes

Thank you for your

attention!