The overall tax-to-GDP ratio, as the sum of taxes and net social contributions in a percentage of GDP, stood at 40.0% in the EU in 2014, compared with 39.9% in 2013. In the euro area, tax revenue accounted in 2014 for 41.5% of GDP, up from 41.2% in 2013.

Over recent years, the tax-to-GDP ratio in both zones has increased continuously since its low point in 2010.

According to Eurostat, the EU statistical office, tax indicators are compiled in a harmonised framework based on the European System of Accounts (ESA 2010), enabling an accurate comparison of the tax systems and tax policies between EU states.

Significant variations

The tax-to-GDP ratio varies significantly between EU member states, with the highest share of taxes and social contributions in percentage of GDP in 2014 being recorded in Denmark (50.8%), followed by Belgium and France (both 47.9%), Finland (44.0%), Austria (43.8%), Italy and Sweden (both 43.7%).

At the opposite end of the scale, Romania (27.7%), Bulgaria (27.8%), Lithuania (28.0%) and Latvia (29.2%) registered the lowest ratios.

Total revenue from taxes and social contributions in the EU in 2014 (as % of GDP) has shown that below 30% there are 4 states (with Lithuania and Latvia included). Within the range of 30 to 40% there are17 member states, including two Baltic area states (Germany with 39% and Estonia with 32%).

Increase in taxation

Largest growth of tax-to-GDP ratio has been in Denmark, while the largest fall is noticed in the Czech Republic. Compared with 2013, the tax-to-GDP ratio increased in 2014 in a majority of EU states, with the largest rise being observed in Denmark (from 48.1% in 2013 to 50.8% in 2014), ahead of Cyprus (from 31.6% to 34.2%) and Malta (from 33.6% to 35.0%).

In contrast, decreases were recorded in eight EU states, notably in the Czech Republic (from 34.8% in 2013 to 34.1% in 2014) and the United Kingdom (from 34.9% to 34.4%).

Table: Total revenue from taxes and social contributions in the EU, euro area and seven Baltic Sea states, % of GDP

                                                        2005      2010      2013      2014

EU                                                    39.0        38.5      39.9       40.0

Euro area                                          39.4        39.2      41.2       41.5

Denmark                                          49.4        46.6      48.1      50.8

Germany                                          38.5        38.2      39.4      39.5

Latvia                                               28.1          28.0     28.7      29.2

Lithuania                                         29.5          28.7      27.4     28.0

Poland                                              34.0          32.0      32.8     33.0

Finland                                             42.3         40.9       43.9    44.0

Sweden                                             47.5         44.1      43.8     43.7

Present level in main tax categories

Highest ratio of taxes on production and imports is registered in Sweden; of taxes on income and wealth – in Denmark and of net social contributions – in France.

In the main tax categories, a clear diversity prevails across the EU-28 states. Thus taxes on production and imports were the most significant tax category in thirteen EU states, net social contribution in nine and taxes on income and wealth in six states.

In 2014, the share of taxes on production and imports was highest in Sweden (where they accounted for 22.1% of GDP), Croatia (18.8%) and Hungary (18.6%), while they were lowest in Slovakia (10.8%) and Germany (10.9%).

For income and wealth related taxes, the highest share by far was registered in Denmark (33.4% of GDP), ahead of Sweden (17.9%), Belgium (16.8%) and Finland (16.5%). In contrast, Lithuania (5.1%) and Bulgaria (5.3%) recorded the lowest taxes on income and wealth as a percentage of GDP.

Net social contributions accounted for a significant proportion of GDP in France (19.2%), Belgium (16.9%) and Germany (16.5%), while the lowest shares were observed in Denmark (1.1% of GDP), Sweden (3.7%) and Ireland (5.8%).

In 2014, 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 (13.4%) and taxes on income and wealth (12.8%).

The ordering of tax categories was slightly different in the euro area. The largest part of tax revenue came from net social contributions (15.5%), ahead of taxes on production and imports (13.3%) and taxes on income and wealth (12.5%).

Reference: Eurostat publication “Taxation in the EU member states: tax-to-GDP ratio in 2014”.

Brussels, 15 January 2016. In:  

http://europa.eu/rapid/press-release_STAT-16-83_en.htm?locale=en;  

Full text is available on EUROSTAT website.