2017 Taxation in the EU Member States

EU-REPORT – By Pierre V. Costa

For the aerosol industries, it is always interesting to know the tax to GDP in the twenty-eight different EU member states. This article analyses the tax to GDP in the year 2017.

The overall tax-to-GDP ratio, meaning the sum of taxes and net social contributions as a percentage of GDP (Gross Domestic Product), stood at 40.2% in the European Union) in 2O17, an increase compared with the year 2016 (39.9%).

In the euro area, tax revenue accounted for 41.4% of GDP in 2017, slightly up from 41.2% in 2016.

This information comes from a publication issued by EUROSTAT, the statistical Office of the European Union. Tax indicators are compiled in a harmonized framework based on the European System of Accounts, enabling an accurate comparison of the tax systems and tax policies between the different EU member states.

The tax-to-GDP ratio varies significantly between the member states. The highest share of taxes and social contributions in percentage of GDP in 2017 was recorded in France (48.4%), Belgium (47.3%) and Denmark (46.5%), followed by Sweden (44.9%), Finland (43.4%), Austria and Italy (both 42.4%) as well as Greece (41.8%). At the opposite end of the scale, Ireland (23.5%) and Romania (25.8%), ahead of Bulgaria (29.5%), Lithuania (29.8%) and Latvia (31.4%) registered the lowest ratios.

Compared with 2016, the tax-to-GDP ratio increased in 15 member states in 2017, with the largest rise being observed in Cyprus (from 32.9% in 2016 to 34,0% in 2017), ahead of Luxemburg (from 39.4 to 40.3%) and Slovakia (from 32.4% to 33.2%). In contrast, decreases were recorded in 13 member states, notably in Hungary (from 39.3% in 2016 to 38.4% in 2017), Romania (from 26.5% to 25.8%) and Estonia (from 33.8% to 33.O%).

Today taxes on production and imports made up the largest part of tax revenue in the EU (accounting for 13.6% of GDP), closely followed by net social contributions (13.3%) and taxes on income and wealth (13,1%).

The ordering of tax categories was slightly different in the euro area. The largest part of tax revenue came from net social contributions (15,2%), ahead of taxes on production and imports (13.2%) and taxes on income and wealth (12,8%).

Looking at the main tax categories, a clear diversity prevails across the EU member states. In 2017, the share of taxes on production and imports was highest in Sweden (where they accounted to 22.7% of GDP), Croatia (19,6%) and Hungary (18,2%), while they were lowest in Ireland (8,5%), Germany (10,7%) and (11,1%).

For taxes related to income and wealth, the highest share by far was registered in Denmark (29.7%) ahead of Sweden (18.9%), Belgium (16.9%) and Finland (16.6%). In contrast, Lithuania (5.4%), Bulgaria (5.7%), Romania (6.1%) and Croatia (6.3%) recorded the lowest taxes on income and wealth as a percentage of GDP.

Net contributions accounted for a large proportion of GDP in France (18.8%), Germany (16.7%) and Belgium (16.1%), while the lowest shares were observed in Denmark (0,9% of GDP) and Sweden (3.3% of GDP).

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