Taxation trends in the European Union : data for the EU Member States and Norway : 2009 edition.
Date: 2009-06-24
Institutions: Directorate-General for Taxation and Customs Union, Eurostat
Subjects: EU Member State, EU statistics, Norway, financial statistics, fiscal policy, tax system

report2009.book  Page 3  Thursday, May 28, 2009  1:35 PM

European Commission —
European Commission —
Taxation and customs union

Taxation trends in the
European Union

Data for the EU Member States and Norway

2009 edition

report2009.book  Page 3  Thursday, May 28, 2009  1:35 PM

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Luxembourg: Office for Official Publications of the European Communities, 2009

ISBN 978-92-79-11171-6
DOI 10.2785/27822
Cat. No. KS-DU-09-001-EN-C

Theme: Economy and finance
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© European Communities, 2009
© Cover photo: Milan Pein

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report2009.book  Page 3  Thursday, May 28, 2009  1:35 PM

Preface

PREFACE

This is the third issue of Taxation trends in the European Union, an expanded and improved version of a previous
annual  publication, Structures  of  the  taxation  systems  in  the  European  Union.  The  objective  of  the  report  remains
unchanged: to present a complete view of the structure, level and trends of taxation in the Union over a medium- to
long-term period. 

Taxation is at the heart of citizens' relationship with the State. In our contacts with the general public, we regularly
receive questions about taxation levels in the EU and on how Member States compare with each other. We trust that
the statistics contained in this report provide a useful and unbiased reference in the debate on taxation in Europe;
much  effort  has  been  devoted  to  making  sure  that  the  ratios  published  here  are  computed  on  the  basis  of  a
methodology  allowing  full  cross-country  comparability.  This  methodology  has  been  developed  jointly  by
statisticians from Eurostat and economists from the Directorate-General for Taxation and the Customs Union, who
have drafted the report. They were supported in this task by the national Statistical Offices and the Ministries of
Finance of all countries covered; indeed, we would like to express our thanks for their suggestions and help, without
which it would not have been possible to produce the report.

As has been the custom over the last years, a number of additions have been made, making the report even richer.
This year's edition contains a new set of environmental data: the revenue from energy taxes has been disaggregated
to show the level of revenue raised from transport fuel taxes. Obtaining this disaggregation has required the use of a
methodology developed specifically for this purpose. Another significant improvement concerns the data on the top
rate of the personal income tax: until now, the report included only data for the current year; in this edition, thanks
to data obtained from the Ministries of Finance of the Member States, coverage has been extended backwards until
1995, revealing a remarkable time trend in this variable. Coverage of non-EU corporate income tax rates has been
improved and the geographical dimension of taxation has been made more vivid thanks to the inclusion of a number
of maps. Finally, a table synthesising, for each Member State, the measures taken in the tax domain to counteract the
global financial crisis has been added, to provide the reader with a quick overview of the policy reaction.   

Besides an analysis of revenue trends, the report includes a sketch of the main characteristics of each Member State's
tax  system.  This  information  can  be  complemented  by  visiting  the  'Taxes  in  Europe'  database,  which  contains
detailed  and  updated  information  on  the  600  most  important  taxes  in  force  in  the  EU  Member  States.  Both  the
database and an electronic version of this report can be accessed free of charge from the European Union's Europa
website1).

Walter Deffaa

Director-General

Directorate-General for Taxation and Customs Union

      Walter Radermacher

      Director-General

      Eurostat

1)

Respectively on http://ec.europa.eu/tedb and http://ec.europa.eu/taxtrends

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Origin of this report

Origin of this report

'Taxation  trends  in  the  European  Union'  is  the  result  of  cooperation  between  two  Directorates-General  of  the
European Commission: the Directorate-General for Taxation and Customs Union (DG TAXUD) and Eurostat, the
Statistical Office of the European Communities. The national accounts data collected from the national statistical
offices by Eurostat were processed and analysed by DG TAXUD staff.

For some tax indicators, additional estimates provided by experts from national tax departments, consulted in the
context of the Working Group on the Structures of the Taxation System run by DG TAXUD, have been used. The
Commission staff wishes to thank the Working Group experts for their very helpful oral and written contributions.
Nevertheless, the Commission services bear sole responsibility for this publication and its content. This report does
not necessarily reflect the views of the tax departments in the Member States.

Any questions or suggestions relating to the analysis should be addressed to:

Jean-Pierre De Laet
Head of the unit 'Economic Aspects of Taxation'
European Commission, DG Taxation and Customs Union
1049 Brussels, Belgium
taxud-structures@ec.europa.eu

Language and dissemination

'Taxation trends in the European Union' is available only in English. The publication can be downloaded  from the
websites of the Directorate-General for Taxation and Customs Union (http://ec.europa.eu/taxtrends) or Eurostat
(http://ec.europa.eu/eurostat). The printed version of the report may be purchased from any of the outlets listed on
the website of the Office for Official Publications of the European Communities (http://publications.europa.eu). 

Additional information

The National Tax Lists for almost all EU countries, showing tax revenues for all major taxes, has now been published
online, replacing and augmenting the List of Taxes contained in previous editions of this report (see the new NTL at:
http://ec.europa.eu/taxtrends). Readers interested in taxation may also find detailed information on the legal form
and revenue of the taxes currently in force in the EU Member States in the ‘Taxes in Europe' database, available free
of charge at: http://ec.europa.eu/tedb.

Acknowledgements

<@>origin.pdf

Directorate-General for Taxation and Customs Union
Editor:
Deputy editor:
Authors: 

Country chapters:

Marco Fantini 
Florian Wöhlbier
Marco Fantini (parts I, II.1), Tatjana Lapunova (II.2), Florian Wöhlbier (II.3), Gaëtan 
Nicodème (II.4), Katri Kosonen and Doris Prammer (breakdown of energy taxes) (II.5), Mayya 
Hristova and Florian Wöhlbier (Annex B)
Marco Fantini, Beata Heimann, Thomas Hemmelgarn, Mayya Hristova, Katri Kosonen, Tatjana 
Lapunova, Gaëtan Nicodème, Milán Pein, Doris Prammer, Werner Vanborren, Florian 
Wöhlbier
Mayya Hristova

Statistician:
Data management and layout: Milán Pein, Freddy De Buysscher (tables II-2.2, II-3.2, II-4.1)
Editorial assistance:
Eurostat
ESA95:
Printing:

Alessandro Lupi, Monika Wozowczyk 
Pavel Borkovec

Seija Nevala

4

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Main results

TAXATION TRENDS IN THE EUROPEAN UNION 
2009 EDITION

Main results

Introduction

This year's edition of the Taxation trends in the European Union appears at a time of upheaval. The effects of the
global economic and financial crisis have hit the EU with increasing force from the second half of 2008. Given that
the last year for which detailed data are available is 2007, this year's report cannot yet analyse the consequences of the
recession on tax revenues. Nevertheless, the report takes stock of the tax policy measures taken by EU governments
in  response  to  the  crisis  up  to  spring  2009.  These  measures  are  described  in  detail  in  the  Country  Chapters;  in
addition, an overview is annexed as a Box at the end of this section. 

The EU is a high tax area — on average

The European Union is, taken as a whole, a high tax area. In 2007, the overall tax ratio, i.e. the sum of taxes and social
security contributions in the 27 Member States (EU-27) amounted to 39.8 % of GDP (in the weighted average); this
value is about 12 percentage points above those recorded in the United States and Japan. The EU tax-to-GDP ratio is
high not only compared with these two countries but in general; amongst the major non-European OECD members,
only New Zealand has a ratio that exceeds 35 per cent of GDP. 

The high EU overall tax ratio is not new, dating back essentially to the last third of the 20th century. In those years,
the role of the public sector became more extensive, leading to a strong upward trend in the tax ratio in the 1970s,
and to a lesser extent also in the 1980s and early 1990s. In the later 1990s, first the Maastricht Treaty and then the
Stability and Growth Pact encouraged EU Member States to adopt a series of fiscal consolidation packages. In some
Member  States,  the  consolidation  process  relied  primarily  on  restricting  or  scaling  back  primary  public
expenditures,  in  others  the  focus  was  rather  on  increasing  taxes  (in  some  cases  temporarily).  At  the  end  of  that
decade, a number of countries took advantage of buoyant tax revenues to reduce the tax burden, through cuts in the
personal income tax, social contributions, but also in the corporate income tax. 

The  overall  tax  burden  decreased  from  2000,  but  usually  only  for  a  couple  of  years.  Efforts  to  reduce  taxes
permanently petered out gradually; reductions in tax ratios, fairly aggressive in 2001, lost importance in subsequent
years and mostly stopped altogether in 2005. Cyclical factors contributed to this development; growth slowed in the
years immediately after 2000, reducing tax revenue, whereas from 2004 onwards, growth in the EU accelerated again.
In addition, the need, in several countries, to reduce the general government deficit also made it more difficult to cut
taxes. The high general average by no means implies that every EU Member State displays a high tax ratio; on the
contrary,  ten  Member  States  display  ratios  below  the  35 %  mark.  On  the  whole,  the  differences  in  taxation  levels
across the Union are quite marked; the overall tax ratio ranges over almost twenty points of GDP, from 29.4 % in
Romania  to  48.7 %  in  Denmark.  These  differences  do  not  only  reflect  social  policy  choices  like  public  or  private
provision of services such as old age pensions and health insurance, but also technical factors: some Member States
provide  social  or  economic  assistance  via  tax  reductions  rather  than  direct  government  spending,  while  social
transfers are exempted from taxes and social contributions in some Member States but not in others. It should also
be  mentioned  that  the  GDP  value  that  constitutes  the  denominator  of  the  overall  tax  ratio  includes  estimates  of
production by the informal sector (the 'grey' and 'black' economy); so that a low overall tax ratio may reflect not only
low taxes, but also high tax evasion. As a general rule, tax-to-GDP ratios tend to be significantly higher in the old
EU-15 Member States (i.e. the 15 Member States that joined the Union before 2004) than in the 12 new members:
the first seven positions in terms of overall tax ratio are indeed occupied by old Member States. There are exceptions,
however;  for  example,  Ireland's  and  Greece's  tax  ratios  are  amongst  the  lowest  in  the  EU.  The  euro  area  (EA-16)

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Main results

shows a slightly higher overall tax ratio than the EU-27, which is not surprising given that it is mostly composed of
old Member States. 

Compared  with  the  2000  base  year,  however,  there  has  been  a  perceptible  trend  towards  convergence:  the  ratio
between the standard deviation and the mean of the overall tax ratios has been declining for since 2001 and the value
for  2007  is  the  lowest  on  record;  also  the  gap  between  the  highest  and  the  lowest  overall  tax  ratio,  though  still
elevated, hit its minimum in 2007 at 19.3 %.

Overall tax ratios rose markedly in 2007

Compared with the previous year, in 2007 the overall tax ratio increased by a strong 0.5 percentage points in the
arithmetic average. This is the third consecutive increase. In many countries, the increase of the last two years has
been strong enough to push the ratio to above its 1999 peak, although earlier reductions in the tax level in some large
economies offset this effect in the GDP-weighted average, which remains below 1999 levels. 

The year 2007, like 2006, was characterised by a satisfactory growth level (in both years, GDP expanded by around
3 %), boosting tax revenue. As in the previous year, the 2007 increase in the tax ratio was not limited to a narrow
majority  of  countries  but  was  quite  broad:  only  in  nine  Member  States  out  of  27  did  the  tax  ratio  decline.  The
strongest  declines  took  place  in  Denmark  and  Ireland,  whereas  the  most  sizeable  increases  in  the  tax  ratio  were
recorded in Cyprus and Hungary. The euro area followed a similar trend as the EU as a whole.

Overall, despite a trend towards lower tax rates, particularly in the corporate income tax, the successive increases in
the tax-to-GDP ratio recorded in the years after 2004 suggest that, despite the rhetoric, in the majority of cases there
is a limited appetite for a radical reduction in the overall burden of taxes and social contributions. Indeed, the most
aggressive tax cuts took place in the Central and Eastern European new Member States in the 1990s, when the need
to restructure these economies was particularly stringent; in the old Member States, the tax burden was not reduced
significantly.

As for the development of the tax ratio after 2007, the autumn 2008 EU Commission forecasts project the EU-27
general government revenue as a percentage of GDP, a different but related measure, to keep declining until 2010 as
a result of the global recession, with the ratio dropping most significantly in 2008, by some 0.6 points of GDP.

Weight of direct taxation usually lower in the new Member States

Taxes are traditionally classified as direct or indirect; the first group as a rule allows greater redistribution as it is
impractical  to  introduce  progressivity  in  indirect  taxes.  Therefore,  the  recourse  to  direct  taxes,  which  are  more
'visible'  to  the  electorate,  tends  to  be  greater  in  the  countries  where  tax  redistribution  objectives  are  more
pronounced; this usually results also in higher top personal income tax rates. Social security contributions are, as a
rule,  directly  linked  with  a  right  to  benefits  such  as  old  age  pensions  or  unemployment  and  health  insurance;  in
theory, a strict application of actuarial equivalence would preclude redistribution, but in practice the modalities for
calculating contributions and benefits allow considerable leeway in this respect and the situation is quite diversified
among Member States. 

Generally, the new Member States have a different structure compared with the old Member States; in particular,
while most old Member States raise roughly equal shares of revenues from direct taxes, indirect taxes, and social
contributions, the new Member States often display a substantially lower share of direct taxes in the total. The lowest
shares of direct taxes are recorded in Slovakia (only 20.8 % of the total), Bulgaria (20.9 %) and Romania (23.0 %).
One of the reasons for the low direct tax revenue can be found in the generally more moderate tax rates applied in
the new Member States to the corporate income tax and the personal income tax. Several of these countries have
adopted flat rate systems, which typically induce a stronger reduction in direct than indirect tax rates. 

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Main results

Also among the old Member States (EU-15) there are some noticeable differences. The Nordic countries as well as
the United Kingdom and Ireland have relatively high shares of direct taxes in total tax revenues. In Denmark and, to
a lesser extent, also in Ireland and the United Kingdom the shares of social contributions to total tax revenues are
low. There is a specific reason for the extremely low share of social contributions in Denmark: most welfare spending
is financed out of general taxation. This requires high direct tax levels and indeed the share of direct taxation to total
tax  revenues  in  Denmark  is  by  far  the  highest  in  the  Union.  Among  the  old  Member  States,  Germany's  system
represents in a sense the opposite of Denmark's; Germany shows the highest share of social contributions in the total
tax revenues, while its share of direct tax revenues in the total is among the lowest in the EU-15. 

Clear downward trend in top personal income tax rates since 1995

Currently, the top personal income rate amounts to 37.8 %, on average, in the EU. This rate varies very substantially
within the Union, ranging from a minimum of 10 %in Bulgaria to a maximum of 59 % in Denmark. As a rule, the
new  Member  States  display  lower  top  rates,  while  the  highest  rates  are  typical  of  Member  States  with  the  most
elevated  overall  tax  ratios,  such  as  the  Nordic  countries,  although  the  Netherlands  show  the  fourth  highest  top
personal  income  rate  while  ranking  15th  in  terms  of  the  tax  ratio  (excluding  social  security  contributions).  The
lowest rates are found in Bulgaria and Cyprus, where the tax ratio (excluding SSCs) is respectively the lowest and the
second lowest in the Union. 

The Taxation Trends report for the first time this year presents data on the development of PIT top rates since 1995.
Over this period, there has been a clear and very steady downward trend in the top rate, which became even stronger
after the turn of the century. Twenty-two EU Member States have cut the rate whereas only one country (Portugal)
increased it slightly. In just four cases the rate never changed (in Austria, Latvia, Malta and the United Kingdom).
Hence, the EU-27 average went down by 10.6 percentage points since 1995 and 7.3 percentage points since 2000. The
reduction since 2000 is most noticeable in the Central and Eastern European countries, with the biggest cuts having
taken place in four countries that adopted flat rate systems, Bulgaria (– 40.0 percentage points), the Czech Republic
(– 28.0), Romania (– 24.0) and Slovakia (– 23.0). On average, these countries have reduced the top PIT rate by more
then eleven percentage points since 2000, whereas the former EU-15 countries have reduced the top rate by a mere
3.5 points. 

Lower PIT top rates do not necessarily imply a trend towards lower PIT revenues, because in systems with several tax
brackets,  the  percentage  of  taxpayers  taxed  under  the  highest  rate  is  typically  quite  limited.  Several  countries,
however, have moved towards systems with fewer brackets, and flat rate systems, which have been adopted in several
Central  and  Eastern  European  countries,  are  characterised  by  a  single  PIT  tax  rate,  so  that  any  reduction  is
immediately reflected in the tax revenue. Furthermore, cuts in the top PIT rate typically do not occur in isolation,
but are part of balanced packages which include tax reductions for lower-income taxpayers. Indeed, in most Member
States where large cuts in the top PIT rate were introduced, total PIT revenue declined perceptibly.

Corporate income tax rates continue their rapid decline throughout the EU

Since the second half of the 1990s, CIT rates in Europe have been cut forcefully, from a 35.3 % average in 1995 to
23.5 % now. This trend has not stopped, as five Member States countries cut the rate in 2009, although a relatively
sharp  increase  (5  percentage  points)  in  Lithuania  offset  almost  completely  the  impact  of  the  cuts  on  the  EU-27
average.  

Although the downward trend has been quite general, corporate tax rates still vary substantially within the Union.
The adjusted statutory tax rate on corporate income varies between a minimum of 10 % (in Bulgaria and Cyprus) to
a maximum of 35.0 % in Malta, although the gap between the minimum and the maximum has shrunk since 1995.
As  in  the  case  of  the  personal  income  tax,  the  lowest  rates  are  typical  of  countries  with  low  overall  tax  ratios;
consequently, the new Member States generally figure as having low rates (with the noteworthy exception of Malta,

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Main results

which is also the only Member State that has not changed its CIT rate since 1995). The reverse is, however, not true:
unlike  the  case  of  the  personal  income  tax,  the  two  Member  States  with  the  highest  tax  burden,  Denmark  and
Sweden,  display  corporate  tax  rates  that  are  not  much  above  the  average.  This  is  linked  to  the  adoption  by  these
countries of Dual Income Tax systems, which by their very nature tax capital income at a moderate rate. 

Trend towards more funding to local and regional authorities continues, while social security receives a shrinking 
share of total revenue

In 2007 about 59 % of the 'ultimately received' aggregate tax revenue in the EU-27 (including social contributions)
was claimed by the central or federal government, roughly 29 % accrued to the social security funds, and around
11 % to local government. Less than 1 % of tax revenue is paid to the institutions of the European Union. There are
considerable  differences  in  structure  from  one  Member  State  to  another;  for  instance,  some  Member  States  are
federal or grant regions a very high degree of fiscal autonomy (Belgium, Germany, Austria, Spain). In the United
Kingdom and Malta, the social security system is not separate from the central government level from an accounting
viewpoint, whereas in Denmark most social security is financed through general taxation. 

The share of sub-federal revenue (defined as municipalities plus the state level where it exists) varies from less than
1 % to almost one third of the total. Sweden, Germany, Spain and Belgium in particular show high shares of total
taxes received by the non-central authorities. At the other end, this share is just around 1 % in Greece and Cyprus,
while  in  Malta  local  government  does  not  receive  directly  any  tax  funds.  As  for  the  share  of  revenue  accruing  to
social  security  funds,  the  highest  values  in  the  EU  are  reported  by  France  and  Slovakia.  It  should  be  stressed,
however,  that  the  amount  of  the  ultimately  received  shares  of  revenue  is  a  very  imperfect  indicator  of  fiscal
autonomy, as a given government level may be assigned revenue streams which it has little legal authority to increase
or decrease.

In several EU Member States decentralisation has been an important feature for several years already. Accordingly,
data show that the share of total tax revenue accruing to state and local government have been gradually increased.
In contrast, social security funds, possibly owing to pension system reforms or efforts made to shift the tax burden
away from labour, have received a shrinking portion of revenue. 

The 'tax mix' receives renewed policy attention

The  tax  mix,  or  distribution  of  revenue  by  type  of  tax,  is  a  structural  variable  that  generally  evolves  only  slowly.
Nevertheless, it has been receiving renewed policy attention recently, in light of the worries that increased capital
mobility and the accession to the EU of a group of low-tax countries might lead to even greater reliance on taxation
of  immobile  factors  (such  as  labour)  than  has  been  the  case  so  far.  Given  that,  owing  to  budgetary  constraints,
relatively few Member States have succeeded in decreasing rapidly the overall tax ratio, it has been argued that the
only way to achieve quick reductions in the overall tax burden on labour is to shift the tax burden onto other bases,
and in particular consumption. In fact, in the majority of countries, the tax burden on consumption has increased,
although this has not generally been the case for the larger Member States. As for labour taxation, the trend towards
a  lower  tax  burden  is  slow  and  mainly  concentrated  in  the  Central  and  Eastern  European  Member  States.  As  for
capital  taxation,  the  picture  is  not  clear-cut;  despite  significantly  lower  corporate  tax  rates,  partly  influenced  by
cyclical factors, the revenues from taxes on capital have been growing again in importance during the years 2003-
2007, both in terms of GDP and as a share of total taxation. 

Consumption taxes: on the rise in most Member States

Data for the ITR on consumption, our preferred measure of the effective tax burden, show that, despite stagnant
revenue, effective taxation of consumption is, in most EU countries, on an uptrend since 2001. The EU-27 arithmetic
average went up by 1.8 percentage points since that year and by two tenths of a point in 2007. 

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Main results

The upward trend is quite broad; compared with the 2000 base year, the ITR has increased in 17 countries. Moreover,
the only sizeable decline in the ITR took place in Finland (2.1 percentage points since 2000), while several Member
States report increases of three points or more. The new Member States have experienced the greatest increase.

A decomposition of the ITR on consumption in its constituent elements reveals that the role played by taxes other
than VAT is usually quite important; taxes on energy (typically, excise duties on mineral oils) and on tobacco and
alcohol together make up, on average, around one quarter of the revenue from consumption taxes. The differences in
consumption of excisable goods are such that their revenue effects go well beyond the spread in tax rates: Bulgaria
raises from alcohol and tobacco excises almost five times as much revenue as the Netherlands.

The comparison between the standard VAT rate and the VAT component of the ITR on consumption also highlights
the significant differences amongst Member States in the extent of exemptions (either in the form of base reductions
or of reduced rates) from VAT; in some Member States, their impact on the ITR is only equivalent to a couple of
percentage points, but at the other extreme the impact reaches 10 percentage points.

Labour taxes: slight decline since the turn of the century, but mostly concentrated in the new Member States

Despite a wide consensus on the desirability of lower taxes on labour, the levels of the ITR on labour confirm the
widespread difficulty in achieving this aim. Although the tax burden on labour is off the peaks reached around the
turn of the century, the downward trend essentially came to a halt in the euro area as several countries witnessed
increases in the last few years.  However, in the Central and Eastern European Member States, the decline in the ITR
on labour is more pronounced; the average in these Member States has gone down by more than three percentage
points since 2000, while the EU-27 average decreased by only 1.5 percentage points. The three Nordic Member States
also reduced somewhat their ITRs on labour in 2007, albeit from rather high levels. The new Member States do not
always display low ITRs on labour: in three of them the ratio lies above the EU-27 average. The lowest overall ITRs
on labour are found in Malta and Cyprus; this might perhaps be linked to their historical ties to Britain, given that
the United Kingdom, as well as Ireland, displays a markedly low ITR on labour. Nevertheless, despite the presence of
a number of low taxing Member States, taxation on labour can be said to be much higher in the EU than in the main
other industrialised economies. 

In most Member States, social contributions account for a greater share of labour taxes than the personal income tax.
On average, about two thirds of the overall ITR on labour consists of non-wage labour costs paid by both employees
and employers. Only in Denmark, Ireland and the United Kingdom do personal income taxes form a relatively large
part of the total charges paid on labour income. 

Capital taxation: base broadening and cyclical factors have so far offset the impact on revenue from the cuts in 
corporate tax rates

Despite the sizeable cuts in rates, revenues from the corporate income tax, the most important tax on capital income,
have been growing since 2003; a similar rebound is visible also in other related indicators such as revenue from taxes
on capital and business income taxes. Also in a longer time frame, i.e. the comparison with 1995, the ITR on capital
does not show a decline, as would be expected given the cuts in the corporate tax rates. 

The  timing  of  the  pick-up  in  revenue  suggests  that  cyclical  effects,  to  which  the  ITR  on  capital  is  much  more
susceptible  than  the  ITRs  on  consumption  and  labour,  are  playing  an  important  role.  The  EU-25  ITR  on  capital
reached  a  peak  between  1999  and  2000,  then  declined,  and  picked  up  again,  in  line  with  the  business  cycle.
Nevertheless, the extent by which the ITR has been diverging from the statutory rates suggests that the measures to
broaden  the  corporate  tax  base,  which  have  very  frequently  accompanied  the  rate  cuts,  have  been  playing  an
important role in sustaining the ITRs; the measures taken at EU level to limit harmful tax competition may also have
resulted in less erosion of the base for capital taxes. Eventually, however, cyclical effects fade out (as they depend
largely on the existence of carry-over provisions for losses incurred in previous years and on capital gains) and base

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Main results

broadening  has  its  limits.  Another  possibility  is  that,  stimulated  by  the  steep  fall  in  corporate  tax  rates,  growing
incorporatisation is deceptively boosting revenues at the expense of the personal income tax.

The  absolute  levels  of  the  ITRs  on  capital  differ  widely  within  the  EU,  ranging  from  50.5 %  in  Cyprus  to  a  mere
10.3 % in Estonia. A breakdown of the ITR on capital shows that in most cases, the ITRs on capital and business
income cluster around 20 %; the variation in the tax burden on capital derives largely from wide differences in the
taxation of capital stocks/wealth. Their revenue is very limited in some Member States, but contributes a significant
amount of revenue in several others, depending not only on the tax rates but also on the size and profitability of the
capital stock. In five Member States, taxation of capital stocks/wealth yielded in 2007 at least 3.5 % of GDP, i.e. as
much as the average revenue from the corporate income tax. In France, taxation of capital stocks/wealth yields over
50 % more than the corporate income tax itself. 

Environmental taxes declining in the EU-15 but increasing in the newly acceded Member States

The  development  of  environmental  tax  revenue  is  currently  subject  to  opposite  forces;  on  the  one  hand,
policymakers  give  high  priority  to  environmental  protection,  a  trend  which  may  grow  even  stronger  as  attention
focuses on the threat from global warning; on the other, greater reliance on policy instruments other than taxes, such
as emissions trading, and growing political pressure to accommodate the strong increases in the oil price recorded in
the last few years by reducing taxation of energy. 

Currently, roughly one euro out of every sixteen in revenue is raised from environmental taxes. Data, however, show
that, as a percentage of GDP, environmental tax revenues have been on the decline, in the weighted average, since
1999,  particularly  in  the  euro  area.  This  trend  continued  in  2007.  In  the  12  new  Member  States,  which  before
accession to the EU typically levied low environmental taxes, revenues from this kind of taxes have instead shown a
strong progression over time, so that by now there is practically no difference vis-à-vis the EU-15 in this respect; this
was, however, not enough to offset the decline in the EU-15.

Equal revenue does not mean equal tax rates. Countries with higher energy intensity may display the same revenue
although the tax rates are lower. This is, indeed, what happens in the domain of energy taxation, which contributes
some  three-quarters  of  revenues  from  environmental  taxes.  The  implicit  tax  rate  on  energy  shows  that  wide
differences in the tax revenue raised per unit of energy consumed persist (the highest taxing country levies over five
times as much revenue per unit of energy than the least taxing Member State), and indicates that in the weighted
average, once adjusted for inflation, taxation of energy has been gradually declining.

As from this year, the Taxation Trends report contains a breakdown of energy taxes. The data show that in the vast
majority of cases, Member States raise little revenue from energy taxes on sources other than transport fuels, such as
electricity.

Member States introduce special tax measures to offset the effects of the global financial crisis

The  statistics  covered  in  the  Taxation  Trends  report  cover  the  years  up  to  2007,  before  the  global  economic  and
financial crisis spread to Europe. From the second half of 2008 onwards, governments have scrambled to introduce
measures  to  support  the  economy  or  to  consolidate  public  finances.  A  budgetary  analysis  of  these  measures  lies
outside the scope of this report, which aims instead at giving a broad picture of the variety of measures introduced in
the  tax  domain.  Besides  the  more  detailed  country-by-country  description  in  Part  III  of  the  report,  the main tax
measures adopted in 2008 and at the beginning of 2009 are listed in a synoptic box in the following pages. Although
it  is  too  early  to  undertake  a  full  analysis  of  these  measures,  not  least  because  some  governments  were  still
considering different options at the time of writing, some features stand out.

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Main results

• The measures are quite diverse in form, scope, and budgetary impact, with some Member States introducing
substantial  reforms,  others  counting  primarily  on  the  automatic  stabilisers  to  support  economic  activity
although complementing this with some targeted actions.

• Although in the majority of cases the measures consist of discretionary tax cuts, some Member States have

instead opted for revenue increasing measures, owing to the lack of budgetary room for manoeuvre.

• One of the most common types of measure was the direct support of household spending power by reductions
in the PIT. This happened more often through increases in allowances than cuts in rates, because of equity
considerations but also because an increase in allowances, having a proportionally higher impact on lower-
income households, is expected to more directly boost private consumption. In a few cases, PIT rates were
even increased, but this was typically limited to higher incomes. Some countries suffering from particularly
pronounced  drops  in  GDP  decided  to  defer  previously  decided  PIT  rate  cuts.  This  seems  to  point  towards
some increase in progressivity in the coming years.

• With the notable exception of the United Kingdom, Member States have generally not opted for temporary
VAT rate cuts as a way to boost consumer spending in the short run; Finland decreased VAT on food, however.
In contrast, a number of Member States hiked VAT rates, curtailed the scope of exemptions and reduced rates,
or increased excise duties to help cover the budgetary shortfall generated by the slump.

• Likewise, measures to reduce the general CIT rate were comparatively rare, presumably owing to the fact that
such  a  measure,  while  boosting  confidence  in  the  long  run,  has  no  short-term  impact  on  loss-making
companies. Nevertheless, many Member States attempted to support business investment through measures
such as more generous depreciation allowances or investment tax credits; in a few cases, the cuts were targeted
towards SMEs. Several Member States have opted for granting these incentives for a limited period of time
only, in order to give an immediate boost to capital spending.

• In general, as world prices decreased with the onset of the recession, Member States did not cut excise duties
on energy products, although e.g. Italy cut excise duties on gas for industrial use and granted some tax and
social contributions relief to road haulage operators.

• A wide variety of measures targeting individual sectors were introduced. In particular, several Member States
tried to dampen the slump in the housing sector by granting tax reductions of various kinds; Cyprus and Malta
took  measures  to  reduce  the  tax  burden  on  tourism;  other  measures  aimed  at  supporting  stock  prices  or
reducing inheritance taxes. 

Concluding remarks

Given the fact that the EU is, in general, one of the most highly taxed areas in the world, one pressing issue is what
lessons tax policy should learn from the global financial crisis. In theory, its well-developed welfare systems, made
possible precisely by those high taxation levels, should have made Europe more resilient; in addition, heavy taxation
is usually believed to take a higher toll on growth during cyclical upturns, when it contributes to factor scarcity and
exacerbates  inflation,  rather  than  in  a  recession;  yet,  although  the  crisis  originated  in  the  United  States,  it  spread
quickly  to  the  EU  and  resulted  in  a  slump  of  comparable  proportions.  Does  the  crisis  suggest  that  another  fiscal
policy model would have been preferable? The measures introduced varied considerably across Member States, but
the  substantial  differences  in  the  impact  of  the  crisis  and  in  Member  States'  budgetary  and  financial  constraints
justified a differentiated response. Nevertheless, the array of measures targeting individual sectors raise the question
of whether industry-specific instruments represent an optimal response to an economy-wide slump, not to mention
that such a patchwork of incentives risks being incoherent at European level.

A prima facie exam of the measures introduced seems to point to a continuation of the recent trend towards greater
reliance on consumption rather than labour or capital taxes. This would be in line with the remarkable decline in
CIT rates observed since the end of the 1980s and which the statistics in this report document to be ongoing, and
with the markedly cyclical nature of capital tax revenue.

Taxation trends in the European Union                 11

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Main results

Another interesting question relates to what will be the future path of the overall tax ratio. Although the depth of the
recession as well as the discretionary tax cuts introduced in many countries make it a safe bet that the tax-to-GDP
ratio will decrease in the coming couple of years, further down the road a reduction in deficit levels will be inevitable,
and  the  public  debt  accumulated  during  the  downturn  will  have  to  be  serviced.  In  addition,  the  baby  boom
generation will soon start to reach retirement age. Will this, in due course, lead to a tax burden on active workers that
even exceeds the historic peaks of 1998-2000? 

One  effect  of  the  crisis  on  the  policy  debate  has  been  that  demands  for  fairness  have  come  more  clearly  to  the
forefront.  This,  together  with  the  budgetary  needs,  has  stimulated  international  cooperation  on  ensuring  more
effective  taxation  of  portfolio  investments  held  abroad.  There  is  now  visibly  greater  international  consensus  on
information  exchange,  the  final  objective  of  the  Savings  Directive  and  of  the  Mutual  Assistance  Directive,  which
embody the EU approach in this area. 

One interesting observation contained in the report is that the Member States with the highest tax ratios tend to
show less short-term change in tax ratios than the others, as if high taxes somehow introduced elements of rigidity
or, in other words, perpetuated themselves. Many tax-cutting programmes have been announced over the last ten
years, but their results were generally modest, as highlighted by the limited decline in tax-to-GDP ratios. This has
brought attention to the issue of whether economic growth could not be stimulated by raising the same or a similar
amount of revenue but in different forms. A reflection is ongoing on whether offsetting cuts in direct taxes by raising
consumption taxes would be beneficial. The data indeed show a trend, in most countries, towards a higher ITR on
consumption since 2001, and indeed, some of the boldest measures taken in response to the crisis fit in this logic. It
is, however, difficult to evaluate to what extent this process is intentional or the by-product of other factors, such as
mere political expediency or, in the new Member States, the adaptation in excise duties to EU minima. 

Finally,  the  evidence  from  our  survey  of  environmental  taxation  deserves  careful  reflection,  particularly  in  the
current context of revenue shortfalls. Revenue from environmental taxes has been declining, as a percent of GDP, for
several years. This may be justified by greater efforts done elsewhere, for example in emissions trading, by the trend
decline  in  energy  intensity,  and  by  the  fact  that  energy  prices  at  the  source  have  grown  considerably;  but  is
nevertheless at odds with the perceptions of the general public as well as with oft-stated policy objectives. Finally, the
wide divergence of taxation per unit of energy raises the question of the optimal degree of differentiation between
EU Member States that participate in the same Internal Market but have unequal industrial structures and climate
conditions.

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Main results

Box 1: Overview of the main tax related measures taken in response to the economic and 

financial crisis 

<@><@p1@>bI_crisis.pdf

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Austria  

Annual tax relief of about € 3 billion annually (1.1 % of GDP) targeted by the tax reform law 2009 (Steuerreformgesetz 
2009 ) consisting of the following:
• Changes in the income tax system (€ 2.3 billion): lowering of the marginal rates of the second and third brackets;
increase in the width of the zero-rate bracket by € 1 000 (to € 11 000); increase in the tax bracket for the top rate of 50 %
by € 9 000 (to € 60 000).

• Introduction of family tax relief package (€ 0.5 billion): increase in child allowances and child-related tax credits, tax

allowances for childcare costs, tax exemptions for childcare subsidies paid by employers.

• Increase in the tax allowances for enterprises from 10 % to 13 % from 2010 onwards.

•

Increased depreciation of 30 % in the year of investment introduced for the years 2009 and 2010 (€ 0.7 billion).

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VAT rate reduction (from 21 % to 6 %) for the construction of private (for € 50 000) and social dwellings.

Belgium

Acceleration of VAT restitutions.

Increase in the general reduction for the wage withholding tax from 0.25 % to 0.75 % from 1 June 2009 and to 1 % as from 1
January 2010, in the reduction for scientific personnel to 75 % (from 1 January 2009), and in the reduction for night and
shift workers from 10.7 % to 15.6 % (from 1 June 2009).
Increase in the number of overtime hours which qualify for reduced wage withholding tax from 65 hours to 100 hours in
2009 and to 130 hours in 2010.

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Temporary prolongation of the payment delay for the wage withholding tax.

Bulgaria

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Introduction of a 5-year tax holiday for investment, applicable, under certain conditions, to profits from agriculture,
processing, production, high-tech industry and the building of infrastructure. The tax holiday is considered state aid and
would apply subject to approval by the European Commission.
Introduction of mortgage interest deduction for young families.

Decrease in the CIT rate for semi-governmental organisations from 25 % to 10 %.

Temporary reduction of the VAT for hotel accommodation by 3 percentage points to 5 %.

Cyprus

Decrease in the airport landing fees levied on airline companies and cancelled overnight stay fees levied by local authorities.

Czech Republic

Reduction in employers' and employees' SSC rates.

Acceleration in depreciation of particular assets.

Lower VAT rate for labour-intensive local services.

VAT deduction on passenger cars for entrepreneurs.

Increase in the earned income tax credit from 4 % to 4.25 %.

Denmark

Increase in the personal allowance from DKK 42 400 (€ 5 700) to DKK 42 900 (€ 5 750) and increase in the middle tax
bracket basic allowance from DKK 289 300 (€ 38 850) to DKK 347 200 (€ 46 600).

Savings of almost DKK 50 billion in the compulsory supplementary pension scheme can be withdrawn in 2009 with a
favourable tax treatment.

Payment of VAT and withheld personal income taxes is postponed.

The government has initiated a major tax reform to be phased in from 2010 to 2019. The main measures are to reduce the
rate of the bottom tax bracket from 5.26 % to 3.76 %, abolish the medium tax bracket with the 6 % rate altogether, and
increase the allowance of the top tax bracket to DKK 389 900 in 2010 and DKK 424 600 in 2011. The ceiling of the top
marginal tax rate will be reduced from the current 63 % to 56 %.

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Main results

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Increase in the reduced VAT rate from 5 % to 9 %, narrowing of the range of goods to which the reduced rate is applicable.

Estonia

Deferral of the income tax rate cut by 1 percentage point.

Deferral of the increase in the annual personal allowance.

Increase in the excise duties on alcohol and tobacco by 10 %.

Adjustment for inflation of the income tax scale by 4 %.

Finland

Rate reduction in all the four state income tax brackets (between 1 and 1.5 percentage points).

Introduction of a new labour income tax credit targeted at low- and medium-income earners.

Increase in the pension income allowances in state and municipal income taxation.

Increase in the tax credit for paid household work to € 3 000 per taxable person.

Decrease in the national pension contribution paid by employers by 0.8 percentage points as of 1 April 2009.

Decrease in the VAT rate on food from 17 % to 12 % as of 1 October 2009.

France

PIT reduction for low-income households resulting in a cut of 2/3 in 2009 PIT for people concerned.

Treasury measures for firms: tax credit reimbursements (research tax credit and carry-back tax credits) and VAT
reimbursements are anticipated.

Local tax (Taxe professionnelle ) exemption of all investments on equipments and property made from 23 October 2008 to
31 December 2009.
As from 1 July 2009 a reduced VAT rate of 5.5 % will apply to restaurant services.

It is planned that from 2010 onward the local business tax will no longer be based on the annual value of commercial and
industrial equipment, but will be calculated only on the annual rental value of immovable property. The aim of the reform
is to enhance the competitiveness of French companies by reducing the tax burden on investment.

Reduction of the bottom PIT rate from 15 % to 14 %.

Germany

PIT thresholds are increased by € 400 retroactively as from 1 January 2009 and again by € 330 as from 1 January 2010.

Increase in the basic allowance from € 7 664 to € 7 834 retroactively as from 1 January 2009 and to € 8 004 as from 1
January 2010.

Increase in the PIT credit for services supplied by self-employed persons for household repairs to 20 % of € 6 000 (i.e.
maximum € 1 200).

One-off payment of € 100 per child in 2009 (Kinderbonus ).

Incentives for buyers of environmentally friendly cars.

Increase in the thresholds for the expensing of movable fixed assets for SMEs. 

Introduction of declining-balance depreciation at a rate of 25 % for movable fixed assets acquired or produced after 1
January 2009 and before 31 December 2010.

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Main results

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Greece

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Introduction of extra tax on personal income for high income earners (income above € 60 000). The tax is gradually
increased from € 1 000 for income between € 60 001 and € 80 000 to € 25 000 for income above € 900 000.

Income policy 2009 for public servants, doctors in the national healthcare system, employees of public law corporate
bodies, local authorities, Police, Fire Department, Port’s Corps and the Army, consists of a non-taxable amount of € 500 for
gross income up to € 1 500, and € 300 for gross income between € 1 501 and € 1 700. No other wage increase will be granted
in 2009.
Introduction of special benefit of € 500 to unemployed persons or low-income pensioners who already had contracted a
mortgage loan in March 2009.

Introduction of a special social cohesion benefit for 2009 to low-income pensioners, farmers-pensioners and long-term
unemployed persons. The benefit is non-taxable and ranges from € 100 to € 200 depending on the geographic region of
residence.

Reduction from 2.0 % to 0.5 % of a local authority duty imposed on short-stay accommodation (in hotels, motels,
bungalows, rooms-to-let facilities, camping) and on gross revenue of restaurants, clubs, bars, etc.

Suspension of the banking fee of 0.6 % on loans to hotels or other types of accommodation facilities for 2009.

For the years 2009–2010, reduction of the applicable rate of the single property tax from 1 % on owner- occupied buildings
and 6 % on building plots to 0.33 % for real estate owned by hotel businesses.

Car registration tax reduction of 50 % for the period April–August 2009.

Suspension of airport landing and parking fees for the period April–September 2009 (excluding Athens International
Airport).

Hungary

Labour and personal income taxes are planned to be decreased, while taxes on consumption and capital are expected to
increase further.

The solidarity tax for corporations and private persons with high income is planned to be abolished as of 2010.

As from 1 July 2009, the general VAT rate will be increased from 20 % to 25 %. A reduced 18 % VAT rate will be
introduced temporarily for dairy products, baked goods and district heating (as from August 2009).

As from 1 January 2009, the lowest PIT bracket (taxed at an 18 % rate) will be increased from HUF 1.7 million (€ 5 900) to
HUF 1.9 million (€ 6 600).

As from 1 July 2009, the employers' SSC will be decreased by 5 percentage points (applied up to the double of the minimal
wage).

Ireland

Increase in the standard VAT rate from 21 % to 21.5 % in December 2008 and in some excise duties.

Widening of the standard tax band by € 1 000 for a single person, and by € 2 000 for a married couple with 2 incomes.

Introduction of income levy of 1 % on gross income up to € 100 100 per annum and a rate of 2 % for income above this
amount. On income in excess of € 250 120 a further 1 % is payable. Social welfare payments are excluded from this levy.
From 1st May 2009 the income levy rates are doubled to 2 %, 4 % and 6 %. The exemption threshold is € 15 028. The 4 %
rate applies to income in excess of € 75 036 and the 6 % rate to income in excess of € 174 980.

Introduction of a pension levy on public sector wages. New arrangement: first € 15 000 of earnings exempt, 5 % on next
€5000 of earnings, 10 % on earnings between € 20 000 and € 60 000 and 10.5 % on earnings above € 60 000. 

Increase in the employee SSC ceiling from € 50 700 to € 52 000. From 1st May 2009 increase in the employee SSC ceiling
from € 52 000 to € 75 036.

Increase in the capital gains tax from 20 % to 22 %. From 8 April 2009 increase to 25 %.

From 8 April 2009 increase in capital acquisitions tax rate from 22 % to 25 %.

From 8 April 2009 increase in Deposit Interest Retention Tax (DIRT)  from 23 % to 25 %.

Increase in the R & D tax credit from 20 % to 25 % of incremental expenditure.

Reduction of the stamp duty top rate from 9 % to 6 %.

Payment dates for corporation and capital gains tax are to be brought forward in 2009.

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Main results

<@><@p4@>bI_crisis.pdf

Stronger measures to fight tax evasion.

IRAP paid by employers is now 10 % deductible from CIT or PIT.

Italy

Prorogation of the partial exemption from taxation of productivity-based pay increases.

Reductions in advance tax payments by incorporated companies.

Introduction of a 5.5 point surcharge on the CIT, applicable to companies operating in research and exploitation of
hydrocarbons, oil refining, production and sale of petrol, gas and similar products, and to production and sale of electricity
(so-called 'Robin tax').
Substitute taxation (on an optional basis) at a reduced rate on asset revaluations, bringing tax accounting better in line with
company accounting.

Cut on excise duties on gas for industrial use and series of cuts of taxes and social contributions for road haulage operators.

Prorogation until 2011 of the measures supporting housing renovation, i.e. the 36 % PIT tax credit on renovation expenses,
and the reduction to 10 % of the applicable VAT rate.

Capping of the interest rate for variable-rate mortgages (the Government will reimburse the difference to the banks
through tax credits).

Tax incentives for purchases of household appliances and furniture.

Substantial cut of taxes on housing, freeing the first property owned from the municipal property tax (ICI).

Increase in the standard VAT rate from 18 % to 21 %.

Latvia  

Increase in the reduced VAT rate from 5 % to 10 %. Various types of goods have been made ineligible for the reduced rate.

Increase in excise duty on cigarettes from January 2009 and increase in excise duties on fuel, smoking tobacco, coffee,
alcohol and non-alcoholic beverages from February 2009.
Reduction of the PIT rate from 25 % to 23 % and increase of the basic tax allowance, the allowance for dependent persons
and the disability allowances.

Increase in the standard VAT rate by one point to 19 %.

Lithuania

The 9 % VAT rate applying to construction services and the 5 % super-reduced rate are abolished, although short
transitional regimes apply to some of these.
Cut of the PIT rate to a flat 15 % and introduction of separate compulsory health insurance contribution of 6 % (instead of
allocating 30 % share of PIT to compulsory health insurance fund), bringing the combined rate on employment income to
21 %.
The application procedure of the tax-exempt minimum is increased for low-income persons. The basic personal allowance
applies only to employment income and is determined on a sliding scale, declining as income increases. The additional tax-
exempt amount is also increased.
Significant adjustments are made to the social security system, mainly with the aim of better integrating in the system
various categories of self-employed persons.
Increase in the CIT rate from 15 % to 20 %.

Introduction of significant investment incentives for the period up to 2013.

Increase in excise duties on fuel, alcohol and cigarettes.

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Main results

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Luxembourg

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Policy of converting tax relief into tax credits: replacement of the general tax allowance and the tax allowance for the retired
of € 600 by a tax credit of € 300; replacement of the deduction of € 1 920 applied to unmarried taxpayers with dependent
children by a tax credit of € 750.
Linear indexation by 9 % of the PIT brackets without modifying the underlying tax rates.

Reduction of the CIT rate from 22 % to 21 %.

Abolition of capital duty.

Housing: increase in the deduction ceiling for the one-off premium paid as part of a temporary life insurance policy;
increase of the deductibility ceiling for interest paid on a housing credit; decrease of the ‘social’ credit rate; extension of the
preferential tax treatment for the construction or renovation of owner-occupied dwellings (reduced VAT rate of 3 %).

Extension of the 80 % tax exemption for income and gains from intellectual property rights to internet domain names. In
addition, qualifying intellectual property is exempted from net wealth tax.

Extension of VAT exemptions to cultural services and to registration tax on trucks.

Malta

Increase in the PIT thresholds.

Travellers' departure tax is abolished.

Netherlands

Increase in the tax credit for working parents. Employee's contribution to the unemployment social security scheme is
abolished.
Introduction of a bonus of up to € 3 000 for employees working after reaching the age of 62. Increase in the ceiling for the
deduction of annuity premiums related to private pensions. 

Introduction of a number of administrative simplifications in the tax and social security systems.

Change of the basis for car taxation from list prices to CO2 emissions. For highly fuel-efficient cars the motor vehicle tax is
abolished and for cars running on natural gas the motor vehicle tax is reduced. A tax exemption is introduced for
hydrogen. Demolition subsidy for old cars. 

Abolition of tax on flight tickets. 

Easing of depreciation rules for investments in 2009 and easing of requirements on loss compensation.

Tax cuts for SMEs, including an exemption granted to a larger share of their profits. Increase in the relief for new 
enterprises (startersaftrek).
Companies may pay VAT quarterly instead of monthly.

Increase in WBSO tax credits for R&D investments and in EIA/MIA/VAMIL environmental subsidies.

Introduction of new PIT rates of 18 % and 32 % (replacing the 2008 rates of 19 %, 30 % and 40 %).

Decrease of the period for VAT refund from 180 to 60 days.

Refund of the VAT on bad debts lasting more than 180 days by the tax authorities.

Poland

Increase in the investment incentive (i.e. an immediate accelerated depreciation of certain fixed assets), which is available to
small taxpayers and newly established entities under both personal and corporate income taxes. 

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Main results

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Introduction of a new general 12.5 % CIT rate for taxable profits up to € 12 500.

Portugal

Introduction of tax credits for investment — CIT deduction and exemption from the payment of municipal real estate tax,
municipal real estate sales tax and stamp duty tax.
Increase in deductions from taxable income related to education, health, dwelling and nursing home expenses.

Exclusion of commuting expenses from the taxable income.

Increase in the personal deduction allowance for disabled taxpayers.

Reduction in advance payments for SMEs.

Reduction in the top real estate tax rate and extension of the period of payment exemption.

Reduction of the VAT reimbursement threshold.

Anticipation of VAT and PIT reimbursements.

Romania

VAT rate reduction (from 19 % to 5 %) for the construction of social dwellings and, subject to conditions, private dwellings
not exceeding 120 m2 and a value of RON 380 000 (about € 90 000).
Taxpayers who derive income from agricultural activities will be required to pay a 2 % tax on their gross income.

Increase in employee's and employers' SSC rates; decrease in employers' contributions for work accidents and professional
diseases by 0.5 %.
Increase in level of deductibility of voluntary health insurance (from € 200 to € 250) and threshold of deduction for
employees' contribution to facultative pension schemes (€ 200 to € 400).

Increase in the cap for the deductibility for voluntary pension and health contributions from corporate and personal
income.
Temporary tax exemptions on capital gains from trading securities on the Romanian stock market.

Specific types of capital gains realised by non-residents are now subject to permanent tax exemption.

Reduction in dividend taxes of non-residents from 16 % to 10 %.

Reduction in the car pollution tax.

Increase in excise duties on alcohol beverages, cigarettes and fuel as from April 2009.

Increase in the PIT basic allowance from € 3 435.27 to € 4 025.70 per year.

Slovakia  

Introduction of an employee tax credit as a form of negative income tax in the maximum amount of € 181.03 per year.

Decrease in the rate of contribution to the Social Insurance Agency (reserve fund of solidarity) from 4.75 % to 2 % for
mandatorily insured self-employed.
Reduction of the period for refunding the VAT deductions from 60 days to 30 days.

Changes in rules of property depreciation — increase in input price for investment property depreciation, accelerated
depreciation and depreciation of components.
Changes in tax legislation concerning business environment — group registration of VAT, retroactive registration and
simplification of record-keeping for tax purposes for small entrepreneurs.
State subsidy and corporate income tax allowance for research activities carried out by the business sector.

Increase in investment allowance for sole entrepreneurs investing in equipment or intangible assets.

Increase in investment allowance for agriculture and forestry activities.

Slovenia  

Increase in investment allowance for legal entities investing in equipment or intangible assets and softer conditions for use
of allowance.
Prepayments for corporate income tax calculated in a way that lower tax rate for current tax period is taken into
consideration.
Increase in excise duties on petrol and gas oil and on alcohol beverages to secure stable inflow of public revenues. Increase
of excise duties on tobacco products are planned for May 2009.

18

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report2009.book  Page 19  Thursday, May 28, 2009  1:35 PM

Main results

<@><@p7@>bI_crisis.pdf

Spain

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

Temporary non-taxation from Tax on Capital Transfers and Documented Legal Act (ITP/AJD) for residential property
registration purposes (2009–2010).
A 100 % tax rebate on the wealth tax.

Acceleration of VAT restitutions.

Free depreciation for companies maintaining employment.

Interest rate reduction in case of deferment of tax payments.

Elimination of projected phase-out for R & D tax deduction in the CIT.

Deadline extension of contributions made to housing bank accounts schemes and own-housing reinvestment.

Advanced claim of own housing mortgage tax deduction through monthly withholding tax payments.

Abatements and reductions of SSC for hiring unemployed workers with children.

An additional tax credit of € 400 is granted to working and self-employed taxpayers to support household purchasing
power.

Cut in the CIT rate from 28 % to 26.3 %.

Reduction in the rate of SSC by 1 percentage point for employees and self-employed.

Sweden  

Further reductions of SSC for persons aged under 26.

Increase in the in-work tax credit.

Increase in the lower tax bracket for central government income tax.

Increase in the tax-free personal allowance for taxpayers aged over 65 years old.

Amendment of the 3:12 rule, applicable to closely held companies, by reducing the amount taxed as employment income.

Limitations on the tax deductibility of intra-group interest payments.

Introduction of a tax credit for renovations, conversions and building maintenance (for households).

Temporary reduction in the standard VAT rate from 17.5 % to 15 % with effect from 1 December 2008 to 31 December
2009.
Increase in alcohol and tobacco duty to offset the effects of  the VAT reduction.

United Kingdom

Increased personal income tax allowances for the under 65s by GBP 130 above indexation.

Deferral of the planned increase in the small companies’ rate of corporation tax.

Temporary exemption from Stamp Duty Land Tax (SDLT) for acquisitions of residential property worth not more than
GBP 175 000 for land transactions between September 2008 and end-2009.
Temporary increase in threshold at which empty property becomes liable for business rates.

An increase in capital allowances for new investment to 40% for one year with effect from April 2009.

From April 2010, an additional rate of income tax of 50% will apply to income over GBP 150 000.

Personal income tax allowance will be restricted for annual incomes over GBP 100 000 from April 2010.

From April 2011, increase in national insurance contributions by 0.5 % for employees, employers and self-employed.

From April 2011, tax relief on pension contributions restricted for those with incomes of GBP 150 000 and over, and
tapered down until it reaches 20%.

Norway

Introduction of allowance to carry back company losses (maximum NOK 20 million (€ 2.3 million)) to the preceding two
years. The rules are temporary and affect the fiscal years 2008 and 2009.
Increase in tax credit for companies engaged in research and development projects approved by the Research Council of
Norway.

Source: Commission services

Taxation trends in the European Union                 19

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Table of contents

TABLE OF CONTENTS

Preface ........................................................................................................................................................................................................ 3

Main results ............................................................................................................................................................................................... 5

Table of contents ..................................................................................................................................................................................21

List of tables ............................................................................................................................................................................................23

List of tables in Annex A .....................................................................................................................................................................24

List of graphs and maps......................................................................................................................................................................26

Glossary ....................................................................................................................................................................................................27

Introduction ............................................................................................................................................................................................29

PART I  OVERVIEW OF TAXATION IN THE EUROPEAN UNION

1. Tax structures and recent developments in the enlarged union  ................................................................................33

2. Revenue structure by type of tax  ............................................................................................................................................40

3. Revenue structure by level of government  .........................................................................................................................47

PART II  TAXATION BY ECONOMIC FUNCTION

Introduction ............................................................................................................................................................................................53

1. Distribution of the tax burden by economic function .....................................................................................................57

2. Trends in the implicit tax rate on consumption .................................................................................................................65

2.1.  Tax burden on consumption increasing ......................................................................................................................65

2.2.  Implicit tax rate on consumption in the EU-25: 2007 level  ...................................................................................67

2.3.  VAT component of the ITR on consumption  .............................................................................................................69

2.4.  Excise duty on tobacco and alcohol component of the ITR on consumption ...............................................72

3. Trends in the Implicit tax rate on labour  ..............................................................................................................................77

3.1.  Up to late 1990s, very strong long-run increase in labour taxation  ..................................................................77

3.2.  Since beginning of this decade, slow decline from peaks  ....................................................................................78

3.3.  Diverse development across Member States  ............................................................................................................78

3.4.  Implicit tax rate on labour in the EU-27: large differences in levels ...................................................................79

3.5.  Composition of the implicit tax rate on labour .........................................................................................................80

3.6.  A comparison with tax wedges computed for example household types  .....................................................84

4. Trends in the implicit tax rate on capital  ........................................................................................................................... 103

4.1.  Introduction   ....................................................................................................................................................................... 103

4.2.  Implicit tax rates on capital: long-term trends   ...................................................................................................... 106

4.3.  Implicit tax rates on capital and business income   ............................................................................................... 109

4.4.  Developments of the capital base   ............................................................................................................................. 111

5. Trends in environmental taxes .............................................................................................................................................. 115

5.1.  Revenue development and structure ........................................................................................................................ 115

5.2.  Transport fuel taxes .......................................................................................................................................................... 118

5.3.  The implicit tax rate on energy; properties and trends ....................................................................................... 120

5.4.  Have green tax reforms had any visible impact on the energy intensity of GDP?  .................................... 123

PART III  DEVELOPMENTS IN THE MEMBER STATES

Austria ............................................................................................................................................................................................. 126

Belgium........................................................................................................................................................................................... 130

Bulgaria ........................................................................................................................................................................................... 134

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Table of contents

Cyprus ..............................................................................................................................................................................................138

Czech Republic..............................................................................................................................................................................142

Denmark..........................................................................................................................................................................................146

Estonia..............................................................................................................................................................................................150

Finland .............................................................................................................................................................................................154

France...............................................................................................................................................................................................158

Germany..........................................................................................................................................................................................162

Greece ..............................................................................................................................................................................................166

Hungary ...........................................................................................................................................................................................170

Ireland ..............................................................................................................................................................................................174

Italy....................................................................................................................................................................................................178

Latvia ................................................................................................................................................................................................182

Lithuania..........................................................................................................................................................................................186

Luxembourg ..................................................................................................................................................................................190

Malta .................................................................................................................................................................................................194

Netherlands....................................................................................................................................................................................198

Poland ..............................................................................................................................................................................................202

Portugal ...........................................................................................................................................................................................206

Romania...........................................................................................................................................................................................210

Slovakia............................................................................................................................................................................................214

Slovenia ...........................................................................................................................................................................................218

Spain .................................................................................................................................................................................................222

Sweden ............................................................................................................................................................................................226

United Kingdom ...........................................................................................................................................................................230

European Union averages.........................................................................................................................................................234

Norway.............................................................................................................................................................................................240

BIBLIOGRAPHY .............................................................................................................................245

ANNEX A: TABLES .........................................................................................................................251

ANNEX B: METHODOLOGY AND EXPLANATORY NOTES ...........................................................335

Part A: Tax structure by tax type ............................................................................................................................................337

Part B: Tax structure by level of government  ...................................................................................................................342

Part C: Tax structure by economic function  ......................................................................................................................343

Part D: Implicit tax rates ............................................................................................................................................................353

22

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Table of contents

LIST OF TABLES

TABLE II-2.1

IMPLICIT TAX RATES ON CONSUMPTION IN THE UNION .................................................................66

TABLE II-2.2

VAT RATES IN THE MEMBER STATES ................................................................................................72

TABLE II-3.1

IMPLICIT TAX RATES ON LABOUR IN THE UNION  ............................................................................79

TABLE II-3.2

TOP PERSONAL INCOME TAX RATES ................................................................................................81

TABLE II-3.3

TAX WEDGES FOR A SINGLE EXAMPLE WORKER AT 2/3 OF AVERAGE EARNINGS  ...................85

TABLE II-4.1

ADJUSTED TOP STATUTORY TAX RATE ON CORPORATE INCOME   ...........................................104

TABLE II-4.2

ADJUSTED TOP STATUTORY TAX RATE ON CORPORATE INCOME - EU V. 3RD COUNTRIES ..105

TABLE II-4.3

CAPITAL TAX BASE TO GDP...............................................................................................................112

TABLE II-5.1

ENVIRONMENTAL TAX REVENUES IN THE UNION ..........................................................................116

TABLE II-5.2

ENERGY TAX REVENUES IN RELATION TO FINAL ENERGY CONSUMPTION (NOMINAL ITR)....122

TABLE II-5.3

ENERGY TAX REVENUES IN RELATION TO FINAL ENERGY CONSUMPTION (REAL ITR) ..........123

TABLE B-1.1

ITALIAN METHOD  ................................................................................................................................378

TABLE B-1.2

ESTIMATES FOR THE SPLIT OF THE PERSONAL INCOME TAX ....................................................381

TABLE B-1.3

ESTIMATES FOR THE SPLIT OF THE PERSONAL INCOME TAX ....................................................382

TABLE B-1.4

ESTIMATES FOR THE SPLIT OF THE PERSONAL INCOME TAX ....................................................383

TABLE B-1.5

ESTIMATES FOR THE SPLIT OF THE PERSONAL INCOME TAX ....................................................384

Taxation trends in the European Union                 23

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Table of contents

LIST OF TABLES IN ANNEX A

TABLE TOT_G:

TOTAL TAXES (INCLUDING SSC) AS % OF GDP.............................................................................. 251

TABLE TOT_G:

TOTAL TAXES (EXCLUDING SSC) AS % OF GDP ............................................................................ 252

TABLE TOT_T:

TOTAL TAXES (EXCLUDING SSC) AS % OF TOTAL TAXATION...................................................... 253

TABLE A.1_G:

INDIRECT TAXES AS % OF GDP: TOTAL .......................................................................................... 254

TABLE A.1_T:

INDIRECT TAXES AS % OF TOTAL TAXATION: TOTAL ................................................................... 255

TABLE A.1.1_G:

INDIRECT TAXES AS % OF GDP: VAT............................................................................................... 256

TABLE A.1.1_T:

INDIRECT TAXES AS % OF TOTAL TAXATION: VAT ........................................................................ 257

TABLE A.1.2_G:

INDIRECT TAXES AS % OF GDP: EXCISE DUTIES AND CONSUMPTION TAXES ......................... 258

TABLE A.1.2_T:

INDIRECT TAXES AS % OF TOTAL TAXATION: EXCISE DUTIES AND CONSUMPTION TAXES .. 259

TABLE A.1.3_G:

INDIRECT TAXES AS % OF GDP: OTHER TAXES ON PRODUCTS (INCL. IMPORT DUTIES) ....... 260

TABLE A.1.3_T:

INDIRECT TAXES AS % OF TOTAL TAXATION: OTHER TAXES ON PRODUCTS 
(INCL. IMPORT DUTIES)...................................................................................................................... 261

TABLE A.1.4_G:

INDIRECT TAXES AS % OF GDP: OTHER TAXES ON PRODUCTION............................................. 262

TABLE A.1.4_T:

INDIRECT TAXES AS % OF TOTAL TAXATION: OTHER TAXES ON PRODUCTION ...................... 263

TABLE A.2_G:

DIRECT TAXES AS % OF GDP: TOTAL.............................................................................................. 264

TABLE A.2_T:

DIRECT TAXES AS % OF TOTAL TAXATION: TOTAL ....................................................................... 265

TABLE A.2.1_G:

DIRECT TAXES AS % OF GDP: PERSONAL INCOME TAXES.......................................................... 266

TABLE A.2.1_T:

DIRECT TAXES AS % OF TOTAL TAXATION: PERSONAL INCOME TAXES................................... 267

TABLE A.2.2_G:

DIRECT TAXES AS % OF GDP: CORPORATE INCOME TAX ........................................................... 268

TABLE A.2.2_T:

DIRECT TAXES AS % OF TOTAL TAXATION: CORPORATE INCOME TAX .................................... 269

TABLE A.2.3_G:

DIRECT TAXES AS % OF GDP: OTHER............................................................................................. 270

TABLE A.2.3_T:

DIRECT TAXES AS % OF TOTAL TAXATION: OTHER ...................................................................... 271

TABLE A.3_G:

SOCIAL CONTRIBUTIONS AS % OF GDP: TOTAL ............................................................................ 272

TABLE A.3_T:

SOCIAL CONTRIBUTIONS AS % OF TOTAL TAXATION: TOTAL ..................................................... 273

TABLE A.3.1_G:

SOCIAL CONTRIBUTIONS AS % OF GDP: EMPLOYERS ................................................................. 274

TABLE A.3.1_T:

SOCIAL CONTRIBUTIONS AS % OF TOTAL TAXATION: EMPLOYERS .......................................... 275

TABLE A.3.2_G:

SOCIAL CONTRIBUTIONS AS % OF GDP: EMPLOYEES ................................................................. 276

TABLE A.3.2_T:

SOCIAL CONTRIBUTIONS AS % OF TOTAL TAXATION: EMPLOYEES........................................... 277

TABLE A.3.3_G:

SOCIAL CONTRIBUTIONS AS % OF GDP: SELF- AND NON-EMPLOYED....................................... 278

TABLE A.3.3_T:

SOCIAL CONTRIBUTIONS AS % OF TOTAL TAXATION: SELF- AND NON-EMPLOYED................ 279

TABLE B.1_G:

TAXES BY LEVEL OF GOVERNMENT AS % OF GDP: CENTRAL GOVERNMENT ......................... 280

TABLE B.1_T:

TAXES BY LEVEL OF GOVERNMENT AS % OF TOTAL TAXATION: CENTRAL GOVERNMENT... 281

TABLE B.2_G:

TAXES BY LEVEL OF GOVERNMENT AS % OF GDP: STATE GOVERNMENT............................... 282

TABLE B.2_T:

TAXES BY LEVEL OF GOVERNMENT AS % OF TOTAL TAXATION: STATE GOVERNMENT........ 283

TABLE B.3_G:

TAXES BY LEVEL OF GOVERNMENT AS % OF GDP: LOCAL GOVERNMENT .............................. 284

TABLE B.3_T:

TAXES BY LEVEL OF GOVERNMENT AS % OF TOTAL TAXATION: LOCAL GOVERNMENT........ 285

TABLE B.4_G:

TAXES BY LEVEL OF GOVERNMENT AS % OF GDP: SOCIAL SECURITY FUNDS ....................... 286

TABLE B.4_T:

TAXES BY LEVEL OF GOVERNMENT AS % OF TOTAL TAXATION: SOCIAL SECURITY FUNDS.... 287

TABLE B.5_G:

TAXES BY LEVEL OF GOVERNMENT AS % OF GDP: EC INSTITUTIONS ...................................... 288

TABLE B.5_T:

TAXES BY LEVEL OF GOVERNMENT AS % OF TOTAL TAXATION: EC INSTITUTIONS ............... 289

TABLE C.1_G:

TAXES ON CONSUMPTION AS % OF GDP: TOTAL.......................................................................... 290

TABLE C.1_T:

TAXES ON CONSUMPTION AS % OF TOTAL TAXATION: TOTAL ................................................... 291

TABLE C.1.1_G:

TAXES ON CONSUMPTION AS % OF GDP: TOBACCO AND ALCOHOL......................................... 293

TABLE C.1.1_T:

TAXES ON CONSUMPTION AS % OF TOTAL TAXATION: TOBACCO AND ALCOHOL .................. 293

TABLE C.2_G:

TAXES ON LABOUR AS % OF GDP: TOTAL ...................................................................................... 294

TABLE C.2_T:

TAXES ON LABOUR AS % OF TOTAL TAXATION: TOTAL ............................................................... 295

TABLE C.2.1_G:

TAXES ON LABOUR AS % OF GDP: EMPLOYED.............................................................................. 296

24

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Table of contents

TABLE C.2.1_T:

TAXES ON LABOUR AS % OF TOTAL TAXATION: EMPLOYED........................................................297

TABLE C.2.1.1_G:

TAXES ON LABOUR AS % OF GDP: EMPLOYED PAID BY EMPLOYERS........................................298

TABLE C.2.1.1_T:

TAXES ON LABOUR AS % OF TOTAL TAXATION: EMPLOYED PAID BY EMPLOYERS .................299

TABLE C.2.1.2_G:

TAXES ON LABOUR AS % OF GDP: EMPLOYED PAID BY EMPLOYEES ........................................300

TABLE C.2.1.2_T:

TAXES ON LABOUR AS % OF TOTAL TAXATION: EMPLOYED PAID BY EMPLOYEES .................301

TABLE C.2.2_G:

TAXES ON LABOUR AS % OF GDP: NON-EMPLOYED .....................................................................302

TABLE C.2.2_T:

TAXES ON LABOUR AS % OF TOTAL TAXATION: NON-EMPLOYED ..............................................303

TABLE C.3_G:

TAXES ON CAPITAL AS % OF GDP: TOTAL.......................................................................................304

TABLE C.3_T:

TAXES ON CAPITAL AS % OF TOTAL TAXATION: TOTAL................................................................305

TABLE C.3.1_G:

TAXES ON CAPITAL AS % OF GDP: CAPITAL AND BUSINESS INCOME ........................................306

TABLE C.3.1_T:

TAXES ON CAPITAL AS % OF TOTAL TAXATION: CAPITAL AND BUSINESS INCOME .................307

TABLE C.3.1.1_G:

TAXES ON CAPITAL AS % OF GDP: INCOME OF CORPORATIONS................................................308

TABLE C.3.1.1_T:

TAXES ON CAPITAL AS % OF TOTAL TAXATION: INCOME OF CORPORATIONS .........................309

TABLE C.3.1.2_G:

TAXES ON CAPITAL AS % OF GDP: INCOME OF HOUSEHOLDS....................................................310

TABLE C.3.1.2_T:

TAXES ON CAPITAL AS % OF TOTAL TAXATION: INCOME OF HOUSEHOLDS .............................311

TABLE C.3.1.3_G:

TAXES ON CAPITAL AS % OF GDP: INCOME OF SELF-EMPLOYED...............................................312

TABLE C.3.1.3_T:

TAXES ON CAPITAL AS % OF TOTAL TAXATION: INCOME OF SELF-EMPLOYED ........................313

TABLE C.3.2_G:

TAXES ON CAPITAL AS % OF GDP: STOCKS OF CAPITAL / WEALTH ...........................................314

TABLE C.3.2_T:

TAXES ON CAPITAL AS % OF TOTAL TAXATION: STOCKS OF CAPITAL / WEALTH.....................315

TABLE C.4_G:

ENVIRONMENTAL TAXES AS % OF GDP: TOTAL .............................................................................316

TABLE C.4_T:

ENVIRONMENTAL TAXES AS % OF TOTAL TAXATION: TOTAL ......................................................317

TABLE C.4.1_G:

ENVIRONMENTAL TAXES AS % OF GDP: ENERGY .........................................................................318

TABLE C.4.1_T:

ENVIRONMENTAL TAXES AS % OF TOTAL TAXATION: ENERGY...................................................319

TABLE C.4.2_G:

ENVIRONMENTAL TAXES AS % OF GDP: TRANSPORT ..................................................................320

TABLE C.4.2_T:

ENVIRONMENTAL TAXES AS % OF TOTAL TAXATION: TRANSPORT............................................321

TABLE C.4.3_G:

ENVIRONMENTAL TAXES AS % OF GDP: POLLUTION/RESOURCES ............................................322

TABLE C.4.3_T:

ENVIRONMENTAL TAXES AS % OF TOTAL TAXATION: POLLUTION/RESOURCES......................323

TABLE D.1:

TABLE D.2:

IMPLICIT TAX RATES IN %: CONSUMPTION .....................................................................................324

IMPLICIT TAX RATES IN %: LABOUR .................................................................................................325

TABLE D.3:I

MPLICIT TAX RATES IN %: CAPITAL ..................................................................................................326

TABLE D.3.1:I

MPLICIT TAX RATES IN %: CAPITAL AND BUSINESS INCOME .......................................................327

TABLE D.3.1.1: 

IMPLICIT TAX RATES: CORPORATE INCOME ...................................................................................328

TABLE D.3.1.2: 

IMPLICIT TAX RATES: CAPITAL AND BUSINESS INCOME OF HOUSEHOLDS 
AND SELF-EMPLOYED ........................................................................................................................329

TABLE D.4: 

TABLE D.5: 

IMPLICIT TAX RATES: ENERGY..........................................................................................................330

IMPLICIT TAX RATES, DEFLATED: ENERGY .....................................................................................331

Taxation trends in the European Union                 25

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Table of contents

LIST OF GRAPHS AND MAPS

GRAPH I-1

LONG-TERM TRENDS IN THE OVERALL TAX RATIO (INCLUDING SSC) ......................................... 34

MAP I-1

GRAPH I-2

GRAPH I-3

GRAPH I-4

MAP I-2

DISTRIBUTION OF TOTAL TAX BURDEN ............................................................................................ 36

OVERALL TAX TO GDP RATIO IN EU COUNTRIES, THE US, JAPAN, AND NORWAY .................... 38

LEVEL IN 2000 AND CHANGE OF TAX-TO-GDP RATIO UNTIL 2007  ................................................ 40

STRUCTURE OF TAX REVENUES BY MAJOR TYPE OF TAXES ...................................................... 41

DISTRIBUTION OF TOP PERSONAL INCOME TAX RATES  .............................................................. 43

GRAPH I-5

DEVELOPMENT OF ADJUSTED TOP STATUTORY TAX RATE ON CORPORATE INCOME ........... 44

MAP I-3

GRAPH I-6

GRAPH I-7

DISTRIBUTION OF CORPORATE TAX RATES   .................................................................................. 45

EVOLUTION BY MAJOR TYPE OF TAXES  .......................................................................................... 47

REVENUE STRUCTURE BY LEVEL OF GOVERNMENT ......................................................................... 49

GRAPH II-1.1

DISTRIBUTION OF THE TOTAL TAX BURDEN BY ECONOMIC FUNCTION ..................................... 57

GRAPH II-1.2

DISTRIBUTION OF THE TOTAL TAX BURDEN BY ECONOMIC FUNCTION 2007 ............................ 59

GRAPH II-1.3

RELATIVE CONTRIBUTION OF TAXES ON LABOUR, CAPITAL AND CONSUMPTION 
(IN % OF GDP) TO THE CHANGE IN THE TOTAL TAX-TO-GDP RATIO, BY COUNTRY .................. 60

GRAPH II-1.4

DEVELOPMENT OF IMPLICIT TAX RATES .......................................................................................... 61

GRAPH II-2.1

IMPLICIT TAX RATE ON CONSUMPTION  ........................................................................................... 65

GRAPH II-2.2

IMPLICIT TAX RATE ON CONSUMPTION (MINIMUM-MAXIMUM) ...................................................... 67

GRAPH II-2.3

DECOMPOSITION OF THE ITR ON CONSUMPTION   ........................................................................ 68

GRAPH II-2.4

VAT COMPONENT OF THE ITR ON CONSUMPTION  ........................................................................ 70

GRAPH II-2.5

VAT REDUCED RATE AND BASE INDICATOR  ................................................................................... 71

GRAPH II-2.6

TOBACCO AND ALCOHOL COMPONENT OF THE ITR ON CONSUMPTION   .................................. 73

GRAPH II-3.1

TIME TREND OF ITR ON LABOUR  ...................................................................................................... 77

MAP II-1

TAX BURDEN ON LABOUR ................................................................................................................... 80

GRAPH II-3.2

COMPOSITION OF THE IMPLICIT TAX RATE ON LABOUR ............................................................... 82

GRAPH II-3.3

EVOLUTION OF THE COMPONENTS OF THE IMPLICIT TAX RATE ON LABOUR  .......................... 83

GRAPH II-3.4

PAIR-WISE COMPARISONS OF ITR ON LABOUR AND TAX WEDGE INDICATOR  ......................... 86

GRAPH II-3.5

TIME TREND MICRO AND MACRO INDICATORS IN THE UNION ..................................................... 87

GRAPH II-4.1

IMPLICIT TAX RATE ON OTHER PRODUCTION FACTORS AND ITR ON CAPITAL  ...................... 107

GRAPH II-4.2

COEFFICIENT OF VARIATION OF THE ITR ON CAPITAL ................................................................ 108

GRAPH II-4.3

IMPLICIT TAX RATE ON CAPITAL  ..................................................................................................... 109

GRAPH II-4.4

IMPLICIT TAX RATE ON CAPITAL AND BUSINESS INCOME IN EU-25 ........................................... 110

GRAPH II-4.5

IMPLICIT TAX RATE ON CAPITAL AND BUSINESS INCOME  .......................................................... 111

GRAPH II-5.1

ENVIRONMENTAL TAX REVENUES BY MEMBER STATE AND TYPE OF TAX  ............................. 117

GRAPH II-5.2

EVOLUTION OF THE STRUCTURE OF ENVIRONMENTAL TAXES  ................................................ 118

GRAPH II-5.3

ENERGY TAX REVENUES BY MEMBER STATES............................................................................. 119

GRAPH II-5.4

EVOLUTION OF ENERGY EFFICIENCY, ITR ON ENERGY AND ON LABOUR................................ 124

GRAPH B.1

SENSITIVITY ANALYSIS: ROLE OF IMPUTED SOCIAL CONTRIBUTIONS ..................................... 338

26

Taxation trends in the European Union

report2009.book  Page 27  Thursday, May 28, 2009  1:35 PM

<@>glossary.pdf

Country abbreviations
BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK
NO

Belgium
Bulgaria
Czech Republic
Denmark
Germany
Estonia
Ireland
Greece
Spain
France
Italy
Cyprus
Latvia
Lithuania
Luxembourg
Hungary
Malta
Netherlands
Austria
Poland
Portugal
Romania
Slovenia
Slovakia
Finland
Sweden
United Kingdom
Norway (not a member of the EU)

Glossary

GLOSSARY

Commonly used acronyms
EU
EMU

European Union
Economic and monetary union

MS
EU-25
EU-27
EU-15
EA-16
NMS-12
NMS-10
ECSC
EEA

PIT 
CIT
ESA79
ESA95
GDP
ITR
SSC
VAT

Member State
European Union (25 Member States)
European Union (27 Member States)
European Union (15 Member States)
Euro area (BE, DE, IE, EL, ES, FR, IT, CY, LU, MT, NL, AT, PT, SI, SK, FI)
New Member States (BG, CZ, EE, CY, LV, LT, HU, MT, PL, RO, SI, SK)
New Member States (CZ, EE, CY, LV, LT, HU, MT, PL, SI, SK)
European Coal and Steel Community
European Economic Area

Personal Income Tax
Corporate Income Tax
European System of Accounts 1979
European System of Accounts 1995
Gross Domestic Product
Implicit Tax Rate
Social Security Contributions
Value Added Tax

Taxation trends in the European Union                 27

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report2009.book  Page 29  Thursday, May 28, 2009  1:35 PM

Introduction

Introduction

This  publication  presents  time  series  of  tax  revenue  data  from  National  Accounts  for  the  twenty-seven  Member
States and Norway. It provides a breakdown of taxes according to different classifications: by type of taxes (direct
taxes, indirect taxes, social contributions), by level of government, and by economic function (consumption, labour,
capital). It also compiles data for the sub-group of environmental taxes. 

The breakdown of tax revenue data computed in percentage of GDP provides indicators of the tax burden and of the
structure of taxation in the different Member States, as well as developments over time. As the interpretation of the
tax-to-GDP ratio as an indicator for the tax burden requires additional information, an economic classification of
taxes  has  been  developed  and  implicit  tax  rates  (ITR)  have  been  computed  for  the  different  economic  functions.
ITRs measure the effective average tax burden on different types of economic income or activities; in each case, the
ITR expresses aggregate tax revenues as a percentage of the potential tax base.

Tax revenues as broken down by types of taxes and by level of government are aggregations of the common national
account categories of taxes. These are directly available from the national accounts provided by Member States to
Eurostat  and  follow  the  classification  prescribed  by  the  'European  System  of  Accounts'  (ESA95)1).The  economic
classification  of  taxes  and  the  categorisation  of  energy  taxes  is  not  standard  and  is  computed  specifically  for  the
publication 'Taxation trends in the European Union' using more detailed tax revenue data provided by the Member
States. The corresponding implicit tax rates require additional assumptions and calculations. Ministries of Finance in
the Member States have in particular helped to produce the data required for these computations. The publication
gives a comprehensive overview of the methodology and data used for this purpose. 

This edition of the publication 'Taxation trends in the European Union' covers the 1995-2007 period, corresponding
to the years for which national accounts data are generally available in the ESA95 format. 

The  publication  is  divided  into  three  parts.  Part  I  reviews  the  major  trends  and  developments  in  taxation  in  the
Union. Part II presents the economic classification of taxes and conducts a comparison of implicit tax rates between
Member  States.  Part  III  contains  28  country  chapters,  which  review  the  main  trends  in  the  development  of  the
overall  tax  burden  and  give  an  overview  of  the  tax  system  and  of  the  main  recent  policy  changes.  The  table  of
statistics  provided  for  each country  contains  four  blocks  of  the  data:  A  -  Structure  of  revenues  in  %  of  GDP;  B  -
Structure according to level of government in % of GDP; C - Structure by economic function in % of GDP, including
the sub-group of environmental taxes; D- Implicit tax rates.

Annex A presents the same data organised differently: each table presents a single tax category, in % of GDP or in %
of  total  taxes,  or  an  implicit  tax  rate,  for  all  years  and  Member  States  for  which  they  are  available  together  with
arithmetic or weighted EU averages. Annex B describes the methodology employed in calculating the ratios included
in Annex A, the sources used for the tax revenue data and the methods employed by the Ministries of Finance to
allocate the revenue of the personal income tax to labour, capital or other sources of taxable income. The lists of all
taxes for which revenue data were submitted by the Member States and their respective allocation to the different
economic    functions  and  environmental  tax  categories  can  be  found    on  the    European  Union's  Europa  website:
http://ec.europa.eu/taxtrends

1)

 European Commission (1996).

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1.

OVERVIEW OF TAXATION IN THE EUROPEAN UNION

I

Overview of taxation in the
European Union

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Part I

1.

TAX STRUCTURES AND RECENT DEVELOPMENTS IN THE ENLARGED UNION

A broad or a narrow measure of taxation? 

The analysis in this report is mostly based on a wide measure of taxation, i.e. one that includes actual compulsory
social  security  contributions.  In  theory,  social  contributions  differ  from  taxes  in  that  contributions  should  be
payments  in  exchange  for  insurance  services  rendered  to  the  individual,  such  as  health  or  old-age  insurance.  In
practice, however, in the EU Member States workers generally have little or no control about the level of coverage
and are often prevented from switching to a different fund to obtain the same insurance at a lower cost; moreover,
social  security  systems  often  involve  substantial  redistribution  between  fund  members  so  that  the  link  between
individual  payments  and  risk  coverage  can  be  fairly  weak.  These  elements,  the  fact  that  the  payments  are
compulsory, and the fact that their level is usually quite high, plead for treating them as taxes. Hence, considering a
wide  measure  of  taxation  including  social  contributions  seems  more  appropriate  in  the  context  of  this  report.
Nevertheless, data on taxation levels excluding social contributions are also shown in Annex A.

Use of the different averages

For the Union, both the simple arithmetic average and the GDP-weighted average are shown in the Annex A tables.
The approach followed in the report is to focus on the GDP-weighted average when comparing the EU as a whole
with third countries; the arithmetic average is instead used in comparing individual Member States with the EU as it
seems  preferable  to  compare  countries  with  a  benchmark  that  relates  only  to  the  policy  stance  of  each  country
independently of its size. In general, unless otherwise indicated, the arithmetic average is used. 

The report shows averages for the EU with its current membership (EU-27), the euro area in its current 16-country
composition (EA-16), as well as for the EU at 25 Member States (EU-25), i.e. the membership before the accession of
Romania and Bulgaria. The EU-25 average is used whenever a trend over the entire 1995–20071) period is discussed;
this choice is due to the fact that data for Romania and Bulgaria do not stretch back to 1995, making the EU-27
average incomplete for the early years analysed.

Level and long-term development of the overall tax burden

In 2007, the overall tax-to-GDP ratio (including social security contributions) in the European Union amounted to
39.8 % in the GDP-weighted average, about 12 percentage points of GDP above those recorded in the United States
and Japan. The tax level in the EU is high not only compared with the United States and Japan but more generally;
among the major non-European OECD members, only New Zealand has a tax ratio that exceeds 35 % of GDP2) .

The high tax-to-GDP ratios in the EU, particularly the EU-15 (the Union of 15 Member States, prior to the 2004
enlargement), are to a large extent the result of the persistent and largely unbroken3) upward trend in the tax burden
in  the  1970s,  and  to  a  lesser  extent  also  in  the  1980s  and  early  1990s4).  This  long-run  increase  in  the  overall  tax
burden  was  the  result  of  the  growing  share  of  the  public  sector  in  the  economy  in  those  years.  Taxes  and  social
contributions  were  raised  in  order  to  finance  increasing  government  spending;  labour  taxes  in  particular  were
increased  steadily  in  order  to  finance  expenditure  on  the  welfare  state,  notably  for  old-age  pensions,  health  care,

1) Data  prior  to  1995  are  not  analysed,  because  they were  computed  under a  different statistical framework (ESA79)  and  are  therefore  not

2)

3)

4)

directly comparable.

See OECD (2008b).

Some marked decreases have occurred in single years, for example in 1994 as a result of the severe recession in 1993. 

European Commission (2000a) reports a long-run increase of 11 percentage points in the euro area between 1970 and 1999, compared with
a relatively small increase of 2.5 % of GDP recorded in the United States. Similar differences are reported in OECD (2002a).

Taxation trends in the European Union                 33

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Part I

Overview of taxation in the European Union

access to education and other social benefits5). In most EU countries, a rise in unemployment levels between 1970
and the early 1990s also contributed to the pressure to increase taxes. 

Graph I-1

Long-term trends in the overall tax ratio (including SSC)
% of GDP

<@>gI_1.gif

Source: Commission services

Note: The statistical break is due to a change in classification at Eurostat. All data are GDP-weighted. 

From the early 1990s, first the Maastricht Treaty and subsequently the Stability and Growth Pact resulted in the set
up  of  a  multilateral  budgetary  surveillance  framework,  within  which  Member  States  have  undertaken  a  series  of
fiscal  consolidation  efforts.  In  a  number  of  Member  States,  fiscal  consolidation  relied  primarily  on  restricting  or
scaling back primary public expenditure (not least by cutting or postponing public investment), in others the focus
was rather on increasing taxes (in some cases temporarily). For some Member States, the fiscal consolidation effort
in the run-up to the EMU ruled out any major tax cuts.

Only in the later 1990s did a number of countries take advantage of buoyant tax revenues to reduce the tax burden,
through cuts in the personal income tax, social contributions, and also in the corporate income tax. However, the
overall tax burden decreased only from 2000. One reason why the tax cuts were not immediately apparent in the
figures  is  that  the  economic  upswing  of  the  late  1990s  boosted  the  measured  overall  tax  burden,  even  while
substantial  cuts  in  statutory  tax  rates  were  being  implemented.  For  instance,  strong  economic  growth  may  have
moved  taxpayers  into  higher  nominal  income  tax  brackets  (bracket  creep)  in  some  Member  States.  In  addition,
during  the  expansionary  phase  between  1995  and  2000,  many  companies  moved  from  a  loss-making  to  a  profit-
making  position;  initially,  carry-overs  of  losses  from  previous  years  cushion  the  increase,  but  as  these  run  out,
companies  may  face  a  rapidly increasing corporate  income  tax  bill,  an  effect  that may  have  been  at  play  in  those
years. A clear decline in tax-to-GDP ratios is indeed only visible in the figures between 2001 and 2002. However,

5) A discussion of the factors behind the expansion of the public economy in the earlier years of that period can be found in Cameron (1978).

34

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Overview of taxation in the European Union

Part I

especially in 2002, the effects of tax cuts have probably been amplified by the economic slowdown and the action of
similar  mechanisms  (in  reverse)  as  those  described  above.  Overall,  despite  a  trend  towards  lower  tax  rates,
particularly in the corporate income tax, the successive increases in the tax-to-GDP ratio recorded in the years after
2004 suggest that, despite the rhetoric, in the majority of countries there is a limited appetite for a radical reduction
in the overall tax burden. Indeed, the most aggressive tax cuts took place in the Central and Eastern European new
Member  States  in  the  1990s,  when  the  need  to  restructure  these  economies  was  particularly  stringent;  in  the  old
Member States, the tax burden, net of cyclical effects, was not reduced significantly. 

In the medium and long run, it is the development of expenditure that drives the tax ratio, particularly in euro area
countries  where  the  general  government  deficit  is  normally  subject  to  strict  limits.  The  autumn  2008  EU
Commission forecasts project an increase by over a point of GDP in EU general government expenditure from 2007
to 2010 (in the weighted average). The forecast for  the  euro area shows a slightly weaker increase in expenditure
(+ 0.8 %  of  GDP  until  2010).  The  response  to  the  global  financial  crisis,  which  has  involved  throughout  Europe
recourse to extraordinary expenditure programmes and an increase in the projected general government deficit, will
probably make it even more difficult in the future to reduce the tax burden and yet ensure budgetary stability. 

Taxation trends in the European Union                 35

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Overview of taxation in the European Union

Map I-1

<@>1101_TOT.pdf

Distribution of total tax burden

Total taxes as % of GDP, 2007

< 30

30 – < 35

35 – < 40

40 – < 45

45 – < 50

Data source: Commission Services 
© EuroGeographics Association, for the administrative boundaries
Cartography: Eurostat — GISCO, 03/2009

0

600 km

Malta

0

10

Wide disparities in tax levels across Member States

As  illustrated  by  Graph  I-2,  there  are  wide  differences  in  tax  levels  across  the  Union.  These  differences  not  only
reflect social policy choices such as public or private provision of services, e.g. old-age and health risk protection, but
also  technical  factors:  some  Member  States  provide  social  or  economic  assistance  via  tax  reductions  rather  than
direct  government  spending,  while  social  transfers  are  exempted  from  taxes  and  social  contributions  in  some
Member States but not in others6); both of these choices affect the level of the tax-to-GDP ratios. As can be seen in
Map I-1, there are two groups of high-tax countries, the Nordics (i.e. Denmark, Sweden and Finland), and a cluster

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Part I

of four Member States towards the centre of the EU, namely Belgium, France, Italy and Austria, all of which had a tax
ratio in excess of 40 % in 2007. With the exception of the Nordic Member States and Cyprus (whose tax rate was well
below  average  just  a  few  years  ago),  the  geographically  more  peripheral  countries  tend  to  show  lower  tax  ratios,
particularly in Eastern Europe. 

The wide variety of tax ratios in the Union is not new. Even before the 2004 enlargement, the EU included a number
of Member States with tax ratios close to the 50 % mark, such as the Scandinavian countries, but also several low tax
Member States, such as Ireland, Greece, Spain and Portugal. However, given the generally lower tax ratios in the new
Member  States,  the  2004  and  2007  enlargements  resulted  in  a  significant  decline  in  the  EU  mean  value;  this  is
apparent in Graph I-2 where the new Member States concentrate on the right side. Indeed, the total tax-to-GDP ratio
of the new Member States is almost six percentage points lower than the average of the former EU-15. The range of
variation within the Union also increased as first the Baltic Republics and then Romania had levels of taxation well
below  the  previous  minimum,  although  in  the  years  since  2004  the  dispersion  has  decreased  as  the  12  newer
members have seen their tax ratios increase more than the old EU-15. This, together with the expansion of the euro
area to a growing number of new Member States, has had the result that the tax ratio in the euro area is no longer
significantly higher than that of the EU as a whole (38.2 % v. 37.5 % of GDP).

There are substantial differences in the total tax burden not only between the old and the new Member States but
also amongst the latter. One may distinguish two groups of countries, a smaller one composed of three countries
(Cyprus,  Hungary  and  Slovenia)  with  tax  levels  exceeding  the  EU-27  average  (37.5 %)  and  the  remaining  new
Member States  with  lower  tax ratios:  from  the Czech  Republic  (36.9 %,  less  than  one percentage  point  below the
average) to Romania (29.4 %, i.e. 8.6 percentage points below the average). Graph I-2 shows the tax-to-GDP ratios in
more detail for the EU Member States and some other countries.

6) Countries with a relatively high tax-to-GDP ratio often impose higher taxes on social transfers, perhaps because this is more congruent with
pure horizontal equity considerations. Adema (2005) estimated that in 2001 taxes and social contributions on public transfers exceeded 2 %
of GDP in Denmark, Sweden, Finland, Austria and the Netherlands, while they accounted for only 0.2-0.3 % of GDP in Ireland and the
United Kingdom. In Denmark and Sweden, where the revenue from taxes on benefits is highest, the amounts raised are sufficient to finance
one quarter of social spending. 

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Graph I-2

Overall tax-to-GDP ratio (incl. SSC) in the EU, US, Japan, and Norway
2007, in %

<@>gI_2.gif

Source: Commission services for the EU countries and NO, OECD for the US and Japan. Data for Japan refer to 2006. Figures for US are 

provisional (OECD 2008b). EU: arithmetic averages

Development of the tax ratio excluding social contributions

Looking at the data excluding SSCs, the most striking changes in the country ranking are, of course, visible for some
countries, such as the Czech Republic, Germany, or France, where the level of social contributions is highest (Annex
A Table Tot_G: Total Taxes (excluding SSC)). The former two in particular rank much lower in terms of the tax level
if SSCs are excluded (respectively at the 24th and 19th place in the EU). Compared with the ranking including social
contributions, the picture changes more at the top than in the bottom half, where the least taxed countries remain
more or less the same. One old Member State, Greece, becomes one of the least taxing countries in the EU (third
lowest place). It is also noteworthy that the general increase in the tax ratio since 2000 has taken place more clearly at
the  level  of  taxes  in  a  narrow  sense  (i.e.  excluding  SSCs),  probably  owing  to  the  fact  that  several  countries  have
introduced reforms of their social security systems. 

At Union level, tax ratio on the increase since 2004

As  a  result  of  the  pick  up in  revenues  after  2004,  the EU  average  tax-to-GDP  ratio is higher in  2007 than  in  our
reference year 2000, both in the simple arithmetic and in the weighted average. There are nevertheless a few cases of
significant reductions. The most striking one is Slovakia, almost half of whose extraordinary 1995–2007 reduction in
the tax burden, i.e. 4.7 percentage points of GDP, took place after 2000. Finland and Sweden, too, though remaining
high-tax  countries,  have  cut  the  tax  burden  by  nearly  the  same  amount  (4.2  and  3.5  percentage  points  of  GDP
respectively). At the other extreme, the increase in revenue in Cyprus stands out for its size (11.6 % of GDP, of which
almost half in 2007 alone) while another large increase, 6.5 % of GDP, took place in another Mediterranean country,

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Overview of taxation in the European Union

Part I

Malta. In Spain and the Czech Republic, too, the increases were relatively marked at over 3 % of GDP from 2000 to
2007. 

Graph  I-3  charts,  for  every  country,  the  changes  in  the  tax-to-GDP  ratios  between  2000  and  2007  in  percentage
points of GDP, in comparison with their starting point in the base year 2000. The main purpose of the graph is to
show to what extent countries starting with a higher than average tax ratio tend to reduce it over time.

The top half of the graph shows which Member States have seen their overall tax ratio increase since 2000, while the
bottom half shows what countries reduced it. The right-left dimension of the graph instead identifies the starting
point at the beginning of the decade compared with the 2000 average; that is, countries that at the beginning of the
period displayed higher-than-average total tax ratios are in the right half and vice versa.

Several facts are highlighted by this graph:

• The graph shows a broad, although not very marked, tendency for convergence to the average. This can be
most intuitively seen from the distribution of the data points in the four quadrants. The bottom right and the
top left quadrant show respectively which countries that were high tax in 2000 have tended to reduce their tax
ratio, and which low-tax countries have tended to increase the ratio; the two quadrants together show what
Member  States  moved  towards  the  average.  In  other  words,  the  north-west  to  south-east  axis  represents
convergence.  Nineteen  Member  States  out  of  27  are  located  along  this  axis.  This  is  confirmed  by  the
convergence indicators, which show a similar picture (see Table Tot_G in Annex A).

• This convergence, however, took place more often in the sense that low-tax countries have increased their tax
ratio (the top left quadrant, containing 11 cases) than in the case of high-tax countries cutting their tax ratios
(the bottom right quadrant includes eight countries). 

•  Slightly  more  countries  have  reduced  their  tax  ratios  (15)  than  increased  it  (12);  in  the  period  under
consideration,  the  arithmetic  average  of  the  tax  ratio  went  up  because  of  very  large  increases  in  Malta  and
Cyprus, without which the ratio would have declined. 

• If one takes the GDP of the Member States into account and uses the weighted average, the result is that the
overall tax ratio has declined in the EU since 2000. It should be considered, however, that 1999 represented an
all-time peak in tax levels, so the 2000 benchmark is not a stringent one. Indeed, if the benchmark were 2001
instead of 2000, the comparison would show an increase not only in the arithmetic but also in the weighted
average.

• Only one high-tax Member State saw the tax ratio increase further from 2000 levels —Italy; in contrast, seven
countries  who  were  below  average  in  2000  reduced  their  overall  tax  ratio  further  —  although  only  very
marginally in three cases.

• More below average Member States have increased their tax ratio than reduced it (11 v. 7, three of which only

very marginally).

• Low-tax countries tend to display large adjustments in either direction, upwards or downwards, whereas above

the average the picture appears more static.

• Four Member States have shown much larger variation than the others: Cyprus and Malta upwards, as already
mentioned,  and  Slovakia  and  Finland  downwards.  The  increases  in  Cyprus  and  Malta  amounted  to
respectively 11.6 and 6.5 percentage points of GDP, albeit from a very low base as these Member States started
of around 30 % in 2000. Following the substantial 2007 jump, Cyprus' tax ratio is now the eighth highest in the
EU at 41.6 %, whereas Malta's (34.7 %) still ranks quite low (19th place). 

• In Slovakia the tax ratio, which was already low in 2000, has fallen by a further 4.7 points of GDP since then;
the year 2006 in fact saw another strong decline, from 31.5 % to 29.4 % of GDP, while the following year no
change was recorded. Overall, over the entire period for which data are available (1995–2007), Slovakia is the

Taxation trends in the European Union                 39

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Overview of taxation in the European Union

Member  State  that  has  carried  out  the  most  profound  restructuring  of  its  tax  system,  with  the  tax  ratio
declining by over one quarter. The country thus changed its ranking significantly, from being essentially in line
with the old Member States' average in 1995 at 40.3 % of GDP, to having the second lowest ratio in the EU-27
in 2007.

• Finland stands out for its substantial reduction in the tax ratio, which has fallen steadily by about one tenth
since its 2000 peak. Sweden, too, reduced its tax ratio significantly (3.5 percentage points of GDP), although
from a very high level (51.8 % of GDP, the highest on record).

Graph I-3

Level in 2000 and change of tax-to-GDP ratio until 2007
in %

<@>gI_3.gif

Source: Commission services

2.

REVENUE STRUCTURE BY TYPE OF TAX

The  structure  of  tax  revenues  by  major  type  of  taxes  (i.e.  direct  taxes,  indirect  taxes  and  social  contributions)  is
shown in Graph I-4. 

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Part I

Graph I-4

Structure of tax revenues by major type of taxes
2007, % of the total tax burden 

<@>gI_4_1.gif

<@>gI_4_2.gif

<@>gI_4_3.gif

Source: Commission services

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Generally, the new Member States have a different structure compared to the old Member States; in particular while
most  old  Member  States  raise  roughly  equal  shares  of  revenues  from  direct  taxes,  indirect  taxes,  and  social
contributions, the new Member states often display a substantially lower share of direct taxes in the total. The lowest
shares of direct taxes are recorded in Slovakia (only 20.8 % of the total), Bulgaria (20.9 %) and Romania (23.0 %); in
Poland  the  share  of  direct  taxes  shrank  by  one  third  between  1995  and  2004  but  has  now  increased  again  and
currently  stands at  24.9 %.  One of  the reasons for  the low direct tax revenue can  be found  in  the generally  more
moderate tax rates applied in the new Member States for corporate tax and personal income tax (see Maps I-2 and
I-3). Several of these countries have adopted flat-rate systems which typically induce a stronger reduction in the rates
of direct taxes than in those for indirect taxes.

The low share of direct taxes in the new Member States is counterbalanced by higher shares of both indirect taxes
and  social  contributions  in  total  tax  revenues.  The  highest  shares  of  indirect  taxes  are  indeed  found  in  Bulgaria,
where  the  share  is  well  over  half  of  revenue,  and  Cyprus,  where  it  lies  close  to  the  50 %  mark.  As  for  social
contributions,  the  Czech  Republic  stands  out  with  its  44.2 %  share,  but  Slovakia,  Germany  and  France,  too,  are
characterised by a rather high level.

Also among the old Member States (EU-15) there are some noticeable differences. The Nordic countries as well as
the United Kingdom and Ireland have relatively high shares of direct taxes in total tax revenues. In Denmark and, to
a lesser extent, also in Ireland, Malta and the United Kingdom the shares of social contributions to total tax revenues
are  low.  There  is  a  specific  reason  for  the  extremely  low  share  of  social  contributions  in  Denmark:  most  welfare
spending  is  financed  out  of  general  taxation.  This  requires  high  direct  tax  levels  and  indeed  the  share  of  direct
taxation  to  total  tax  revenues  in  Denmark  is  by  far  the  highest  in  the  Union.  Among  the  old  Member  States,
Germany's  system  represents  in  a  sense  the  opposite  of  Denmark's;  Germany  shows  the  highest  share  of  social
contributions in the total tax revenues, while its share of direct tax revenues on the total is among the lowest in the
EU-15. 

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Part I

Map I-2

<@>1103_PIT.pdf

Distribution of top personal tax rates

Top statutory personal income
tax rate, 2008

< 20

20 – < 30

30 – < 40

40 – < 50

50 – < 60

Data source: Commission Services
© EuroGeographics Association, for the administrative boundaries
Cartography: Eurostat — GISCO, 03/2009

0

600 km

Malta

0

10

Map I-2 shows the geographical distribution of top PIT rates in the EU. The map highlights the fact that Western
European Member States generally tend to adopt higher top rates than Eastern European Member States; the highest
top rates are found in a band running from Belgium to Finland across the Netherlands, Denmark and Sweden, with
the addition of Austria. A more detailed discussion of PIT rates, including their development over time, can be found
in Part II.2 of this report.

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Graph I-5

Development of adjusted statutory tax rate on corporate income 
EU-27 and euro area averages; in %

<@>gI_7.gif

Note: Methodological notes: see note to Table II-4.1.

Source: Commission services

Since the end of the 1990s there has been a strong trend towards lower corporate tax rates (see Graph I-5). Tax cuts
were often coupled with limitations in special tax regimes, or their outright abolition. This trend started in the new
Member  States,  but  the  old  Member  States  followed  suit  and  reduced  their  statutory  corporate  tax  rates
substantially7).  Overall  all  Member  States  except  Malta,  Hungary  and  Finland  show  lower  statutory  rates  in  2009
than in 1995. The downward trend is ongoing: in 10 countries rate cuts were introduced in 2008 or 2009 (Czech
Republic, Germany, Estonia, Spain, Italy, Lithuania, Luxembourg, Slovenia, Sweden, United Kingdom8), see Table
II.4-1 in Part II.4). The average corporate tax rate in the EU-27 is now 23.5 % (see Graph I-5), while in the euro area,
comprising mostly old Member States, the average is around two and a half percentage points higher.

7)

8)

See European Commission (2006).

In Luxembourg the national tax was reduced. In Lithuania the decline in 2008 is due to the expiry of a temporary tax; in 2009 however, it
increased by five percentage points 

44

Taxation trends in the European Union

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Overview of taxation in the European Union

Part I

Map I-3

<@>1102_CIT.pdf

Distribution of corporate tax rates 

Adjusted top statutory tax rate
on corporate income, 2009

< 15

15 – < 20

20 – < 25

25 – < 30

> 30

Data source: Commission Services
© EuroGeographics Association, for the administrative boundaries
Cartography: Eurostat — GISCO, 03/2009

0

600 km

Malta

0

10

Some  countries  have  implemented  changes  that  go  beyond  simple  rate  cuts.  Estonia  is  a  good  example  of  this
development. The country moved away from the classical corporation tax system: despite the low CIT rate (26 %) in
force since 1994, since the beginning of 2000 Estonia decided to levy no corporate tax on retained profits, so that
only  distributed  profits  are  taxed.  The  rate  was  later  cut  to  21 %.  A  similar  system  had  been  introduced  also  in
Lithuania,  but  was  later  abolished.  Another  example  is  Belgium,  where  the  introduction  of  the  notional  interest
system had the effect of reducing the tax burden fairly significantly, even though it does not translate to a change in
the tax rate. 

Taxation trends in the European Union                 45

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Part I

Overview of taxation in the European Union

Map I-3 shows the distribution of current CIT rate levels; again, an east-west dimension exists, with south-western
countries and the Nordics applying higher rates than the others, but the transition from higher to lower rates is less
regular and predictable, highlighting the different policies being pursued in this domain. In addition, a comparison
between Map I-2 and Map I-3 shows that CIT rates now frequently lie below top PIT rates, a situation which can
potentially  lead  to  'corporatisation'  9)  driven  by  tax  purposes.  A  more  detailed  discussion  of  CIT  rates  and  their
recent trends is supplied in Part II.4 of this report. 

Trends in PIT and CIT revenue by country

The latest data show a partial reversal of the reduction of personal income tax revenue achieved in the early years of
the 21st century. Revenues have, in fact, been picking up since 2005. Compared with the year 2000, only one country,
Sweden,  reduced  PIT  revenue  by  more  than  2 %  of  GDP.  In  evaluating  this  fact,  however,  it  has  to  be  taken  into
account that both 2006 and 2007 were characterised by high GDP growth, which, in the absence of tax cuts, boost
PIT revenue through various channels, in particular job creation10). The highest increase was recorded for Cyprus
(2.7 percentage points of GDP, of which 1.7 in 2007 alone).

As for corporate income taxes, it is striking that the rather strong decline in the corporate income tax rates has not
resulted, so far, in marked reductions in tax revenue; indeed, in 19 out of 27 EU countries CIT revenues, as a share of
GDP, increased since 2000. The major exceptions to this trend were Finland and Luxembourg, were CIT revenues
declined by 2.0 % and 1.5 % of GDP compared to 2000, although in Finland's case the 2000 figure represented an
outlier. This cannot easily be attributed to cyclical factors, as real growth in the EU was higher in 2000 than in 2007.
Hence,  it  seems  likely  that  base  widening,  an  increase  in  the  degree  of  corporatisation  of  the  economy,  or  other
factors have played  a  role.  The  strongest increase  in  CIT  revenue  was  recorded  in  Malta,  where  CIT revenue  has
nearly tripled in the last decade. Malta did not cut CIT rates in that period.

Changes in composition by main tax type

Graph I-6 decomposes the change in the overall tax burden into (positive or negative) changes of its three major
components;  the  black  line  shows  the  change  in  the  overall  tax-to-GDP  ratio  for  all  the  countries.  The  graph
highlights that, in the period under consideration, only some Member States shifted taxation clearly from one type of
taxes  to  another;  that  increases  or  decreases  of  revenues  are  commonly  shared  out  amongst  all  three  categories.
Examples  of  significant  changes  in  the  tax  mix  are  Bulgaria,  which  shifted  the  burden  of  taxation  from  social
contributions to indirect taxes, Latvia and Slovenia, where direct tax increases more than compensated for decreases
in, respectively, social contributions and indirect taxes, and Greece, where forceful cuts in both direct and indirect
taxes were partly offset by increases in social contributions. It is nevertheless debatable to what extent the shifts in
the tax mix were a deliberate result and not a by-product of separate policy decisions. An example of a deliberate
action was the 2007 reform in Germany, when part of the revenue from a VAT increase was used to finance a cut in
social security contributions; however, in revenue terms the effects of this measure do not stand out clearly when
comparing the 2007 tax mix with its 2000 equivalent. 

9) Corporatisation is the phenomenon by which individuals set up corporations and channel their income through them in order to be taxed
under the corporate regime instead of the personal income tax. The result is then that CIT revenue is 'artificially' inflated at the expense of
PIT revenue. If a group of enterprises is constituted of entities taxed both under the PIT and the CIT, the same effect may result from a
shifting of profits towards the corporate sector, even in the absence of changes in the legal form of any enterprise. For a discussion of the
extent of corporatisation in the EU, see De Mooij and Nicodème (2008).

10) EU employment grew by 1.5 % and 1.7 % in 2006 and 2007 respectively, more than double the rate in the previous two years.

46

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Graph I-6

Evolution by major type of taxes
2000-2007, differences in % of GDP

<@>gI_8.gif

Overview of taxation in the European Union

Part I

Source: Commission services 

3.

REVENUE STRUCTURE BY LEVEL OF GOVERNMENT

Graph I-7 displays a classification of aggregate tax revenue (including social contributions) by the receiving level of
government. In the ESA95 framework of national accounts, taxes are classified according to four different units of
government that may operate within a country and to the institutions of the European Union. The combination of
the different government levels operating within a Member State is called the general government, and may include:

• Central (or federal or national) government, including all administrative departments and central agencies of
the  State  whose  competence  extends  normally  over  the  whole  economic  territory,  except  for  the
administration of the social security funds;

• State (or regional) government, when relevant within a Member State, which are separate institutional units
exercising some of the functions of government at a level below that of central government and above that at
local level, except for the administration of social security funds;

• Local (or municipal) government, whose competence extends to only a local part of the economic territory,

apart from local agencies or social security funds;

•  Social  security  funds,  including  all  central,  state  and  local  institutional  units  whose  principal  activity  is  to

provide social benefits.

The figures shown in Graph I-7 represent 'ultimately received' tax revenues. This means that the shares displayed
under state and local governments do not only include 'own' taxes of government sub-sectors, but mostly also the

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Part I

Overview of taxation in the European Union

relevant part of the tax revenue that is actually 'shared' between the different levels of the general government, even
in  cases  where  a  government  sub-sector  has  practically  no  power  to  vary  the  rate  or  the  base  of  those  particular
taxes11). Furthermore, these figures exclude grants between different levels of government12). The taxes received by
the institutions of the European Union do not only include taxes paid directly to them (i.e. the ECSC levy on mining
and  iron  and  steel  producing  enterprises  paid  by  resident  producer  units),  but  also  taxes  collected  by  general
governments on behalf of the EU, such as receipts from the Common Agricultural Policy (CAP), customs duties on
imports from third countries and a share in VAT revenues.

In 2007, in the EU about 59 % of the 'ultimately received' aggregate tax revenue (including social contributions) was
claimed by the central or federal government, roughly 29 % accrued to the social security funds, and around 11 % to
local  government.  Less  than  1 %  of  tax  revenue  is  paid  to  the  institutions  of  the  European  Union.  There  are
considerable  differences  in  structure  from  one  Member  State  to  another;  for  instance,  some  Member  States  are
federal or grant regions a very high degree of fiscal autonomy (Belgium, Germany, Austria, and Spain). In the United
Kingdom and Malta, the social security system is not separate from the central government level from an accounting
viewpoint. The share of sub-federal revenue (defined as municipalities plus the state level where it exists) varies from
0.7 % in Greece to 32.6 % in Sweden. Not only Sweden, but also Germany, Spain, and Belgium show high shares of
total taxes received by the non-central authorities. At the other end, this share is noticeably small, besides Greece, in
Cyprus (1.3 %), Ireland (2.2 %) and Bulgaria (2.7 %), as well as in Malta, where local government does not receive
directly any tax funds. Concerning social security funds, the highest shares in the EU are reported by France, where
the share exceeds 50 %, and to a lesser extent Slovakia, Belgium and Germany. 

Significant  increase  in  the  shares  of  tax  revenues  of  state  and  local  governments  occurred  in  Spain,  Romania,
Slovakia and Italy (see Tables B.2_T and B.3_T in Annex A). In Spain, an increase in the share of state tax revenue is
first visible from 1997 onwards. This mainly reflects the introduction of the new five-year (1997–2001) arrangement
for  sharing  tax  revenues  between  the  autonomous  regions.  In  2002,  Spain  witnessed  a  substantial  increase  of  the
share  collected  by  the  communidades  autónomas  of  more  than  10 %  of  total  taxes,  due  to  the  new  financing
agreement  between  the  central  government  and  the  autonomous  regions;  the  share  rose  further  in  the  following
period  as  the  reform  was  implemented.  Romania  and  Slovakia  too  saw  a  marked  increase  in  local  government
revenue, whereas in Lithuania, Bulgaria and Denmark the opposite took place. In Italy, an increase in the share of
local tax revenues is visible from 1998 onwards, due to the reform that, among other important changes, introduced
the IRAP (Regional Tax on Productive Activities), and decreased the dependence of the local governments on grants
from the central government.

11) Additional statistical information was used for the classification of taxes by ultimately receiving government sub-sectors for Belgium.

12)

It should be mentioned, however, that the distinction between shared taxes and grants is somewhat fuzzy; the data could be influenced by
small institutional difference between countries that do not have real significance. 

48

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Overview of taxation in the European Union

Part I

Graph I-7

Revenue structure by level of government
2007, in % of the total tax burden

<@>gI_9_1.gif

<@>gI_9_2.gif

<@>gI_9_3.gif

Source: Commission services

Taxation trends in the European Union                 49

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Part I

Overview of taxation in the European Union

The  data  shown  in  Graph  I-7  indicate  substantial  differences  in  the  structures  of  the  taxation  systems  across  the
Union. These data give, however, little insight into the degree of tax autonomy of sub-central levels of government as
such. Generally speaking, taxation involves: (i) setting a tax base, (ii) defining statutory tax rates, (iii) collecting the
tax,  and  (iv)  attributing  its  revenues.  At  each  stage,  one  or  several  levels  of  government  may  be  involved.
Furthermore, the degree of fiscal autonomy may vary. For example, in the case of 'own' taxes, the central or sub-
central government unit is responsible for all phases of the tax-raising process. When the tax is 'joint', the central
government is usually solely responsible for: (i) setting the base, and (ii) collecting the tax, but operates together with
the regions in (ii) setting the rates. The term 'shared tax' generally means that the central government is responsible
for:  (i)  setting  the  base,  (ii)  defining  the  tax  rates,  and  also  for  (iii)  collecting  the  tax13),  but  the  sub-central
governments are automatically and unconditionally entitled to a percentage of the tax revenue collected or arising in
their territory. Other modalities may also exist. In practice, the fiscal organisation of government — including the
fiscal  relations,  the  constitutional  arrangements  and  the  tax  raising  process  —  is  quite  complex,  and  varies
considerably  from  one  Member  State  to  another.  An  OECD  study  (2006c)  complements  tax  revenue  statistics  by
offering a typology of the 'taxing powers' of government sub-sectors, and by applying this typology to tax revenue
statistics. The study shows important differences as regards the tax autonomy of the Länder and Regions within the
group of federal countries in the Union (i.e. Germany, Austria, Belgium and Spain14). It also shows differences as
regards the tax autonomy of local governments within the European Union. 

13) Except in Germany, where the Länder collect the tax.

14) See also OECD (2002d) for the results of a study on this topic covering six of the EU's new Member States.

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1.

TAXATION ACCORDING TO ECONOMIC FUNCTIONS

II

Taxation by economic  
function

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report2009.book  Page 53  Thursday, May 28, 2009  1:35 PM

Taxation by economic function

Introduction

The tax-to-GDP ratio and the breakdown of tax revenues into standard categories such as direct taxes, indirect taxes
and  social  contributions  provide  a  first  insight  into  cross-country  differences  in  terms  of  tax  levels  and  its
composition  in  terms  of  tax  type.  This  information  is,  however,  already  available  from  the  National  Statistical
Offices.  This  publication  additionally  provides  a  broad  classification  of  taxation  in  three  economic  functions  -
consumption, labour and capital. The report contains data on the absolute level of taxation by economic function
and computes implicit tax rates or ITRs, i.e. average effective tax burden indicators1); unlike simple measures of the
tax  revenue,  these  take  into  account  the  size  of  the  potential  tax  base,  which  often  differs  substantially  from  one
country to the other. The methodology utilised in this survey is discussed in detail in Annex B.

In addition, data on environmental taxation in the EU have also been computed for the purpose of this report. The
definition  of  a  tax  as  environmental  is  independent  of  its  classification  by  economic  function:  any  tax,  be  it  on
consumption, labour or capital, that has the effect of raising the cost of activities which harm the environment, is
classified  here  as  an  environmental  tax.  Environmental  taxes  are  subsumed  under  the  classification  by  economic
function because the use of the environment can be regarded as an additional production factor.

1)

The term 'implicit tax rates' is used in order to distinguish the backward looking approach from forward looking average effective tax rates
calculated on the basis of the tax code.

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report2009.book  Page 55  Thursday, May 28, 2009  1:35 PM

Distribution of the tax burden  
by economic function

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report2009.book  Page 57  Thursday, May 28, 2009  1:35 PM

Taxation by economic function

Part II

1.

DISTRIBUTION OF THE TAX BURDEN BY ECONOMIC FUNCTION

Breakdown of revenue by economic function: significant differences between Member States 

Graph II-1.1 ranks Member States by overall tax burden and displays a breakdown of revenue by economic function
for the year 2007. The graph shows quite a lot of variation both in terms of the overall level and in its composition. In
particular, despite the fact that most indirect taxes are harmonised at EU level, there is substantial variation in the
amount of revenues raised from consumption taxes. Even greater variation is visible in revenues from capital and
business income, while some smaller revenue sources, such as taxation of stocks of capital/wealth and taxation of
non-employed labour (essentially pensions and social security benefits) range from significant to negligible. Overall,
the taxes levied on (employed) labour income, which are usually withheld at source (i.e. personal income tax levied
on  wages  and  salaries  income  plus  social  contributions),  represent  the  most  prominent  source  of  revenue,
contributing over 40 % of overall receipts on average, followed by consumption at roughly one third and then capital
at just over one fifth.

Graph II-1.1 Distribution of the total tax burden by economic function

Taxes on labour (employed and non-employed), consumption and capital (capital and business 
income and stocks) 2007, in % of GDP

<@>gII_1_1.gif

Source: Commission services

The three panels in Graph II-1.2 show the share of the revenue from the three different economic functions.

The results shown in the first panel, on the share of consumption taxes in overall revenues, are interesting in several
respects; first, there is a clear outlier, Bulgaria, where the share of consumption taxes is more than 12 percentage
points  higher  than  in  the  second-ranking  country,  Estonia.  Second,  it  is  a  distinctive  feature  of  the  new  Member
States to display a high reliance on consumption taxes: the first 10 positions in the ranking refer to countries that
joined the Union in the last two enlargement rounds. Of the two remaining new Member States, Slovenia and the
Czech Republic, only in the latter is the share of consumption taxes below the EU average.

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Part II

Taxation by economic function

Apart from the fact that generally lower capital taxation in these countries symmetrically tends to boost the share of
consumption taxation, this distribution is also linked to structural factors, such as the fact that in the new Member
States  the  energy  intensity  of  the  economy  is  generally  higher  (an  important  element  of  consumption  taxes  is
represented by mineral oil duties) or to the fact that tobacco and alcohol taxes generally account for a greater share of
total taxation there. 

At  the  bottom  end  we  find  Italy  and  Spain,  where  VAT  revenue  is  relatively  low  owing  to  exemptions  and  low
standard rate (in the latter), and a group of countries with high overall taxation (France, Belgium, Sweden) where the
low share from consumption taxes is mostly the mirror image of high labour taxation. Another interesting fact is that
differences  in  the  shares  of  consumption  taxes  between  Member  States  have  been  growing  quite  markedly  in  the
2000-2006  period,  a  trend  that  reversed  in  2007  but  still  kept  the  dispersion  among  the  Member  States  larger
compared to the one in 2000, as shown by divergence indicators (see Table C.1_T in Annex A). This seems related to
the fact  that those  countries, where  the share  of consumption  taxes  is highest,  have been  increasing further  their
reliance  on  this  type  of  taxes,  while  countries  with  low  consumption  taxes  have  for  the  most  part  seen  revenue
dwindle or stagnate1).

The second panel in Graph II-1.2 presents the level of labour taxes in overall tax revenue. The importance of labour
taxes is highlighted by the fact that 15 of the EU Member States derive around half their revenue from labour taxes:
12  raise  between  48 %  and  53 %  of  the  total,  while  Sweden,  Austria  and  Germany  obtain  more  than  54 %.  The
bottom half of the distribution is more dispersed, with Cyprus raising the least amount of financing from labour, a
mere 26.4 % of the total.

Another  interesting  feature  of  this  graph  is  the  great  variation  in  tax  revenue  from  non-employed  labour;  this
category refers to personal income tax and/or social contributions that are raised on old-age pension benefits and
social benefits. Revenues vary markedly from country to country given widely different traditions in the taxation of
benefits and transfers, some of which are frequently exempted from taxation. Denmark, Sweden, the Netherlands,
Germany and Finland tend to raise a substantial amount of taxes on such benefits; given, however, that the granting
of unemployment benefits is tightly linked to the labour market situation, the revenue raised from taxes on benefits
are linked to the cycle and may therefore vary over time. In the other Member States the amount of tax raised on
such benefits is generally lower, if not negligible. Countries with low taxation of employed labour usually tax the
non-employed lightly or not at all2).

The bottom panel in Graph II-1.2 highlights the differences in the extent of capital taxation. The share of revenue
yielded by capital taxes is large in Cyprus, Malta, the United Kingdom, Luxembourg, Spain, Ireland, Italy and Poland,
where they contribute over one quarter of total taxes, and noticeably small in the Baltic Republics, Hungary, and
Slovenia  with  less  than  one  seventh.  As  for  their  composition,  taxes  raised  on  capital  and  business  income  are
generally more important than taxes on stocks of capital/wealth; one important exception is France, where high taxes
on wealth lead to broadly equal proportions between the two types. In the recently accessed Member States, these
taxes  by  and  large  yield  a  lower  share  of  revenue  than  in  the  EU-15;  this  might  be  linked,  however,  to  a  lower
aggregate value and productivity of the capital stock.

1)

2)

In four of the five highest ranking countries, Bulgaria, Estonia, Romania and Cyprus, the share of consumption taxes has grown markedly
since the beginning of the decade, possibly owing in part to the adaptation of their tax systems to the EU excise minima in a context where
low general taxation levels lead naturally to a high share of consumption taxes in revenue. At the bottom end, Italy, France and Spain reduced
their share further, while the share in Belgium remained largely unchanged.

It  should  be  pointed  out,  however,  that  since  the  statistical  identification  of  these  taxes  is  rather  difficult,  such  taxes  may  well  be
underestimated by the ratios presented here. Note also that often transfers or benefits are not taxed upon reception but previously; in those
cases, the taxes levied cannot be identified as having been raised on transfers or benefits and are therefore, as a rule, booked as taxes on
employed labour income.

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Graph II-1.2 Distribution of the total tax burden by economic function

2007, in % of total tax burden

Taxation by economic function

Part II

<@>gII_1_2_1.gif

<@>gII_1_2_2.gif

<@>gII_1_2_3.gif

Source: Commission services 

Taxation trends in the European Union                 59

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Part II

Taxation by economic function

Additional details on the structures of the taxation systems by economic function in the individual Member States
are given in the country chapters in Part III of this publication.

Breakdown of revenue by economic function: changes over time 

The distribution of the overall tax burden by economic function has undergone some important changes since 2000,
and  the  pattern  is  rather  mixed  across  Member  States  (see  Graph  II-1.3;  the  black  line  represents  the  sum  of  the
changes of the different components as % of GDP). The two most striking features of developments have been an
across-the-board — partly cyclically induced — increase in capital taxes as a percentage of GDP to the highest levels
since  2000  and  a  slight  decline  of  labour  taxes;  labour  taxes  have  indeed  significantly  increased  only  in  seven
Member States, while in 17 others they contributed in a non-negligible way to reducing overall taxation. In several
cases  the  stabilisation  or  decline  in  labour  taxes  occurred  after  an  initial  increase  up  to  2002.  Despite  significant
changes in many Member States, consumption taxes as % of GDP are, on average, at about the same level in 2007 as
in 2000.

Graph II-1.3 Relative contribution of taxes on labour, capital and consumption to the change 

in the total tax-to-GDP ratio, by country
2000-2007, in % of GDP 

<@>gII_1_3.gif

Source: Commission services

60

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Taxation by economic function

Part II

Overall trends in implicit tax rates

Graph  II-1.4  displays  the  evolution  of  the  three  main  implicit  tax  rates,  on  labour,  on  consumption  and  capital,
between  1995  and  2007.  These  ITRs  are  commented  in  detail  in  the  next  chapters.  They  are  here  juxtaposed  to
highlight four main facts: first, that implicit tax rates on labour remain well above those for capital and consumption;
second, that the decline in labour taxation stopped in 2005; third, that effective taxation of capital is on the increase;
and finally, that since 2001 consumption taxation has been trending upwards slowly. 

Graph II-1.4 Development of implicit tax rates 

EU-25 average, 1995-2007, in %

<@>gII_1_4.gif

Source: Commission services

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report2009.book  Page 62  Thursday, May 28, 2009  1:35 PM

Trends in the implicit tax rate
on consumption

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report2009.book  Page 65  Thursday, May 28, 2009  1:35 PM

Trends in implicit tax rate on consumption

Part II

2.

TRENDS IN THE IMPLICIT TAX RATE ON CONSUMPTION

2.1.

Tax burden on consumption increasing

Graph  II-2.1  and  Table  II-2.1  show  the  trend  development  of  the  ITR  on  consumption  in  the  period  under
consideration1).  The  ratio  has  experienced  significant  variation  over  time;  a  first  rising  phase,  until  1999,  was
followed by a drop; in two years it fell by around three quarters of a percentage point. The decline at the turn of the
century was not sufficient to offset the effects of the two periods of growth, so that over the entire period the ITR of
consumption  has  climbed.  Since  2001,  the  ratio  has  been  increasing  steadily  every  year  to  reach  22.2 %  in  2007.
Compared with 2000, the base year for this report, the evolution is broadly the same both for the euro area and for
the EU-27; the increase of ITR on consumption is 1.3 percentage points for the EU-27 and 1.1 percentage points for
the EA-16. The ITR on consumption is somewhat lower, on average, in the euro area than in the Union as a whole. 

Graph II-2.1 Implicit tax rate on consumption

1995-2007

<@>gII_2_1.gif

Source: Commission services

1)

Previous editions of this report, based on the earlier ESA79 system of national accounts, reported broad stability in the implicit tax rate on
consumption in the EU-15 from the early 1970s until the early 1990s.

Taxation trends in the European Union                 65

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Part II

Trends in implicit tax rate on consumption

Table II-2.1

Implicit tax rates on consumption in the Union
1995–2007, in %

<@><@p1@>tII_2.1.pdf

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

Difference

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1995-2007 2000-2007
0.1
20.6
5.8
-
2.0
22.1
0.3
30.5
0.9
18.8
4.6
21.3
-0.3
24.8
-1.1
-
0.3
14.2
-1.4
21.5
-0.8
17.4
8.6
12.6
0.9
19.4
-0.1
17.7
3.8
21.1
-0.4
30.8
4.5
14.8
3.0
23.3
-0.5
20.5
3.6
20.7
1.1
19.2
1.3
-
0.6
24.6
-1.1
26.4
-2.1
27.6
1.6
27.6
-1.0
20.0

22.5
17.6
19.7
33.7
19.0
17.9
25.7
-
15.9
22.1
18.0
11.3
19.5
19.2
22.5
27.9
14.8
23.9
22.8
19.5
20.0
15.9
25.1
21.4
29.4
26.9
19.9

21.3
-
21.2
31.6
18.3
19.8
24.7
-
14.4
22.1
17.1
12.3
17.9
16.4
20.8
29.5
14.0
23.4
21.1
20.7
19.6
-
24.1
24.6
27.4
26.9
19.9

21.6
-
19.4
31.9
18.1
20.5
25.2
-
14.6
22.2
17.3
11.3
18.9
20.4
21.6
27.2
14.8
23.6
22.1
19.7
19.3
-
22.9
23.6
29.3
26.7
19.9

21.4
-
18.6
32.7
18.3
18.6
25.4
-
15.3
22.0
17.8
11.5
21.1
20.7
21.6
27.6
13.8
23.5
22.3
18.9
19.9
-
24.4
23.0
29.1
27.2
19.7

21.3
20.6
19.6
33.3
18.6
19.9
24.7
15.5
15.8
20.0
16.6
18.9
18.6
17.0
23.9
26.0
16.5
24.2
22.2
18.3
19.8
17.7
24.0
21.1
28.1
26.9
19.2

21.4
18.7
19.3
33.7
18.5
20.0
24.9
16.1
15.4
20.3
17.1
15.4
17.4
17.9
22.8
25.4
18.1
23.9
22.5
17.9
19.9
16.2
23.9
19.4
27.7
26.8
19.0

21.0
18.9
18.9
33.5
18.5
19.9
23.9
16.7
15.2
20.3
17.3
14.3
17.5
17.5
22.8
25.6
16.5
24.4
22.1
17.2
19.3
15.5
23.0
18.8
27.6
26.6
19.1

22.0
23.2
21.8
33.3
18.2
19.8
25.9
15.3
16.0
20.1
16.8
20.0
18.5
16.1
25.3
27.6
17.6
24.8
22.1
18.4
19.7
16.4
23.9
21.5
27.7
26.9
19.1

21.8
19.7
19.4
33.4
18.9
19.8
25.9
16.5
15.7
20.9
17.9
12.7
18.7
18.0
23.1
27.5
15.9
23.7
22.1
17.8
19.2
16.8
23.5
21.7
28.6
26.3
19.4

22.2
24.4
22.2
33.9
18.1
22.2
26.4
14.8
16.3
20.1
16.7
20.0
20.2
16.5
26.2
26.4
19.7
25.0
21.7
19.5
20.6
17.9
23.6
22.2
27.6
27.5
18.7

22.3
25.5
21.1
34.0
18.3
23.4
26.5
15.2
16.4
19.9
17.4
20.4
20.1
16.7
26.3
25.8
19.9
26.5
21.2
20.2
21.0
17.7
23.8
20.2
27.2
27.4
18.6

22.0
25.4
21.4
33.7
19.8
24.4
25.6
15.4
15.9
19.5
17.1
21.4
19.6
17.9
26.9
27.1
20.3
26.8
21.6
21.4
20.3
18.1
24.1
20.6
26.5
27.8
18.4

1.4
-
-0.7
3.2
1.0
3.1
0.8
-
1.7
-2.0
-0.3
8.8
0.2
0.2
5.8
-3.7
5.5
3.5
1.1
0.6
1.2
-
-0.5
-5.9
-1.2
0.2
-1.5

NO
EU-27
EU-25
EA-16

-
-
21.4
20.3

-
-
21.1
20.2

-
-
21.2
20.3

-
-
21.3
20.5

-
21.1
21.5
20.8

-
20.9
21.1
20.5

-
20.4
20.7
20.1

29.3
20.7
21.0
20.5

27.9
21.1
21.2
20.7

28.2
21.4
21.5
21.1

28.8
21.9
21.9
21.3

29.9
22.0
22.0
21.4

30.3
22.2
22.2
21.5

-
-
0.8
1.2

-
1.3
1.1
1.0

Source: Commission services

The trend increase has involved most of the Union. Compared to 2000 levels, only 10 countries have experienced
declines.  The  most  notable  declines  in  the  ITR  were  in  Finland  (– 2.1  percentage  points)  and  in  France  (– 1.4),
followed by more moderate ones in Greece and Slovakia (both – 1.1 percentage points), the United Kingdom (– 1.0),
Italy (– 0.8), Austria (– 0.5), Hungary (– 0.4), Ireland (– 0.3) and Lithuania (– 0.1). However, the majority of the new
Members States show gradual increases in their ITRs on consumption. In the period 2000–07, the most remarkable
increase  of  ITR  on  consumption  is  noticed  in  Cyprus  (by  8.6  percentage  points),  in  Bulgaria  (by  5.8  percentage
points), in Estonia (by 4.6 percentage points) and in Malta (by 4.5 percentage points).

Graph II-2.2 gives an indication of the degree of convergence by showing the minimum and maximum values for the
ITRs on consumption for the relevant years, followed by the third extreme values; the respective lines form 'external'
and 'internal' bands. The external bands depict the maximum deviation of the ITRs, within which all the rates are
located, while the internal bands give a good picture of the majority of Member States. The graph clearly shows that
since 1999 the lowest ITRs on consumption are strictly converging upwards to the average, while the highest ones are
almost stable with slight tendency to decrease from 2006. Both the low consumption taxing and high consumption
taxing countries have experienced a slow increase in the ITRs, which is reflected in the upward trend of the EU-25
arithmetic average. The same picture of increasing convergence is shown by the two other indicators shown in Table
D.1  in  Annex  A,  namely  the  difference  between  the  maximum  and  minimum  value  and  the  ratio  between  the
standard deviation and the mean; both indicators show convergence over the examined period, particularly since
1999.  The  increasing  convergence  in  the  ITRs  is  mostly  due  to  the  rise  in  the  ITRs  in  most  of  the  New  Member

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Trends in implicit tax rate on consumption

Part II

States. Notably, the ITR for Cyprus has increased significantly in the examined period from the lowest EU level in
1995 to the level close to EU average. 

Graph II-2.2 Implicit tax rate on consumption

1995–2007

<@>gII_2_2.gif

Source: Commission services

2.2.

Implicit tax rate on consumption in the EU-27: 2007 level

The  arithmetic  average  implicit  tax  rate  for  the  EU-27  is  22.2 %  for  2007.  The  lowest  ITR  on  consumption
throughout  the  whole  Union  is  for  Greece  (15.4 %),  followed  by  Spain  (15.9 %),  Italy  (17.1 %)  and  Lithuania
(17.9 %). In the high consumption taxing countries Denmark stands out with 33.7 %, almost six percentage points
above the following Member States: Sweden, Hungary, the Netherlands and Finland.

The aggregate level of the ITR on consumption combines a number of taxes on consumption, which are different in
nature and justification. Thus, a certain level of disaggregation is needed to highlight different components of the
ITR on consumption and their share in the composition of the aggregate. The approach taken in this report has been
to classify consumption taxes into four main sub-components: VAT, energy, excise duties on tobacco and alcohol and
residual  (see  Graph  II-2.3).  This  breakdown  follows  the  approach  introduced  the  first  time  in  the  2007  report
constructed on the basis of the National List of Taxes supplied by Member States (see online version of the report).

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Trends in implicit tax rate on consumption

Graph II-2.3 Decomposition of the ITR on consumption 

2007

<@>gII_2_3.gif

Note:

Italian data on tobacco and alcohol include revenue from stamp duties.

Source: Commission services

Not surprisingly, the VAT component is the largest. Nevertheless in all Member States the non-VAT component of
the ITR is far from negligible; it ranges from lows of respectively 27.3 % in Sweden, 28.5 % in Lithuania and 30.8 % in
Cyprus up to highs of 42.4 % for Luxembourg, 44.8 % for Malta and 45.4 % for Hungary. 

VAT component of the ITR

The variation in the VAT component of the ITR, while non-negligible, is not as marked as that registered for the
other three. Although the difference between the highest and lowest VAT component of the ITR exceeds 100 %, the
variation in the energy component of the ITR and, even more so, for the tobacco and alcohol component and for the
remaining consumption taxes is even wider. 

The  preceding  paragraph  highlights  the  fact  that  in  breaking  down  the  ITR  on  consumption  for  different
components we use as a single denominator, the value of private consumption. This is a fairly precise measure for the
ITR on VAT, but it introduces a statistical bias in the measures of the other components, because they refer to taxes
levied on specific goods and thus their tax base is only a small portion of the final consumption. Although necessary
to obtain an additive breakdown of the ITR, this fact should be borne in mind by the reader. 

Energy component 

The energy tax component, which includes excises on motor vehicle fuels, usually accounts for between two and five
percentage  points,  the  average  being  3.4  points.  The  lowest  values  are  found  in  Greece  (1.6  percentage  points)
followed  by  Cyprus  and  Spain  (respectively  2.3  and  2.4  percentage  points),  while  the  highest  are  found  in
Luxembourg  (6.5  points),  followed  by  Sweden  (4.9  points),  Denmark  (4.7  points)  and  the  Czech  Republic  (4.6

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points). Despite the transitional periods granted to most of the New Member States, the energy component is in line
with  the  EU  average  and  rather  high  in  some  of  them  (in  the  Czech  Republic,  in  Slovenia  and  Bulgaria  (all  4.2
percentage points) as well as in Hungary and Poland where the component amounts to 3.9 percentage points in both
countries). A high contribution of the energy component does however not necessarily imply high excise rates but
may be due to a comparatively high share of energy use in the economy; conversely high taxation of energy could in
theory result in a low energy component if the heavy taxes succeed in discouraging energy use (see also chapter on
environmental taxation2)). 

Tobacco and alcohol component

Taxation  of  alcohol  and  tobacco  amounts  to,  on  average,  the  equivalent  of  2.0  percentage  points.  The  range  of
variation is however wide, extending from 1.0 percentage points in the Netherlands to 3.8 points in Luxembourg.
Other countries where tobacco and alcohol taxes raise little income include Italy, France, Denmark and Austria (all
1.2 points) whereas in Bulgaria and Estonia this component accounts for a significant portion of the ITR (3.7 and 3.4
points respectively). 

Another issue is the effect of the elasticity of cigarettes and alcohol consumption on income. As this is typically low,
their share in the final consumption in countries with higher disposable income per capita is typically lower; thus the
tobacco and alcohol component is relatively small in comparison with the countries with lower disposable income
per  capita.  In  this  regard  it  is  not  surprising  that  the  lowest  contributions  from  tobacco  and  alcohol  taxation  are
typically found in the old Member States, the only exceptions being Luxembourg (where, however, consumption by
tourists  is  likely  to  play  a  non-negligible  role)  and  Ireland.  As  mentioned  above,  a  high  tobacco  and  alcohol
component does not necessary imply high tax rates (and vice versa). 

Residual

The residual component in the ITR on consumption not only varies a lot among Member States in size but is also
rather heterogeneous. It is largest in Denmark (6.1 %) and Hungary (6.0 %) whereas it is very limited in most of the
countries  of  central  and  eastern  Europe.  Denmark  stands  out  for  the  great  number  of  additional  duties,  most  of
which are also pollution and transport taxes (Tables C.4 to C.4.3 in Annex A list the revenue amounts for energy,
pollution and transport taxes in detail). In the case of Hungary, however the residual is almost fully due to the local
tax on company sales.

2.3.

VAT component of the ITR on consumption

The upward trend of the VAT component of the ITR on consumption can be noticed over the examined period (see
Graph II-2.4) and this applies both to the average and the extremes, while less clear in the third smallest and third
highest value. The high extremes in 2007, which are left out of the inner bands, are represented by Denmark and
Sweden  and  the  low  by  Greece  and  Spain.  The  sharp  and  yet  steady  pick-up  in  the  minimum  value  is  due  to
increasing statutory VAT rates (from 10 % to 15 % in Cyprus and from 15 % to 18 % in Malta) as well as to widening
of the tax bases. 

The general upward trend of the VAT component of the ITR on consumption is noticeable in 2007 too, where only
six Member States experience decreases: Finland, Malta (both – 0.2 percentage points) and France (– 0.1 percentage
points) show only minor decreases, while the decreases in Spain (– 0.4 percentage points), Ireland (– 0.7 percentage
points) and Slovakia (– 1.0 percentage points) are more pronounced. On the other side, in countries such as Cyprus

2) Note also that the energy component identified in this table does not necessarily include all the revenue data listed in Table C.4.1 in Annex

A, as that may include energy taxes other than excises, although excises will generally represent the bulk of them.

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Trends in implicit tax rate on consumption

and  Lithuania  the  increase  is  in  the  range  of  1.0  percentage  points.  Moreover,  in  Germany  the  VAT  component
increase is 1.6 percentage points mainly due to increase in the VAT rate in 2007.

Graph II-2.4 VAT component of the ITR on consumption 

1995–2007

<@>gII_2_4.gif

Source: Commission services

A better insight into the peculiarities of the VAT tax bases in the Member States’ tax systems is given by a specific
indicator  representing  the  difference  between  the  generally  applicable  statutory  VAT  rate  (disregarding  reduced
rates) and the VAT component of the ITR on consumption. This indicator, which we call ‘VAT reduced rate and base
indicator’, was presented for the first time in the 2007 year's edition of the report; it aims at giving a snapshot of the
extent  by  which  a  given  VAT  system  approximates  a  ‘pure’  consumption  tax,  characterised  by  a  flat  rate  and  the
widest  possible  tax  base  (i.e.  the  entire  value  of  private  consumption  without  exemptions).  A  low  value  of  this
indicator suggests that the VAT tax base approximates the value of private consumption and, hence, reduced rates
and VAT exemptions play a minor role, while a high value represents an indication that a substantial share of private
consumption is spared from taxation at the standard VAT rate. Other factors contributing to a high indicator value
could  also  be  represented  either  by  a  high  registration  threshold  for  VAT,  implying  taxation  of  only  a  share  of
intermediate consumption or significant levels of VAT evasion or avoidance.

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Graph II-2.5 VAT reduced rate and base indicator
2007, in percentage points

<@>gII_2_5.gif

Trends in implicit tax rate on consumption

Part II

Source: Commission services

Graph II-2.5 shows that for Italy and Greece the indicator reaches around nine percentage points, an outstanding
value in itself. A major explanation for the high value of the indicator for Italy lies in the wide application of the
reduced  (10 %)  and  super-reduced  (4 %)  rates;  these  apply  to  widely  consumed  goods  and  services  such  as
foodstuffs,  transport,  books  and  periodicals,  pharmaceuticals,  public  facilities,  hotel  accommodation,  restaurant
services,  and  residential  housing;  the  favourable  treatment  of  housing  in  particular  is  likely  to  have  a  significant
impact on revenues. In Poland, as of 2006, the reduced rates are also widely applicable and considerably lower: the
super-reduced rate is 3 % and the reduced rate 7 %.

The  lowest  values  (remarkably  low  at  less  than  one  and  a  half  percentage  point)  are  attributable  to  Estonia  and
Cyprus. As for Luxembourg (indicator is – 0.51 %), the geographical smallness of the territory and the significant
expenditure  by  non-residents  generally  make  the  interpretation  of  the  ITR  difficult;  revenues  from  consumption
taxes  paid  by  non-residents  might  therefore  be  the  main  cause  for  its  negative  indicator  value.  Bulgaria,  which
maintained  until  recently  a  VAT  account  system  notably  to  fight  tax  evasion,  also  displays  a  low  value  in  2007
(around 3 %3)).

Table II-2.2 includes the standard VAT rates in the Member States, compared with the non-standard ones (reduced,
super-reduced  and  parking).  Note  that  in  some  Member  States  the  non-standard  rates  are  imposed  on  a  narrow
range of goods or services, or on goods having a limited share in the final consumption of households.

3)

Bulgaria  introduced  a  VAT  account  system  in  2003  in  order  to  ensure  the  virtual  VAT  payments.  All  VAT-registered  businesses  were
required to open a VAT account, which was separated from other business' cash flows.

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Trends in implicit tax rate on consumption

Table II-2.2

VAT rates in the Member States
2007, in %

<@><@p1@>tII_2.2.pdf

Member State

Standard rate

Reduced rate

Super reduced rate

Parking

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

21
20
19
25
19
18
21.5
19
16
19.6
20
15
21
19
15
20
18
19
20
22
20
19
20
19
22
25
15

6/12
7
9
-
7
5
13.5
9
7
5.5
10
5/8
10
5/9
6/12
5
5
6
10
7
5/12
9
8.5
10
8/17
6/12
5

-
-
-
-
-
-
4.8
4.5
4
2.1
4
-
-
-
3
-
-
-
-
3
-
-
-
-
-
-
-

12
-
-
-
-
-
13.5
-
-
-
0
-
-
-
12
-
-
-
12
-
12
-
-
-
-
-
-

Note: Before 2007, in Bulgaria the reduced rate was applied by way of reducing the tax base to 35 % and then applying the 20 % standard rate.

Source: Commission services

2.4.

Excise duty on tobacco and alcohol component of the ITR on consumption 

The average of the excise duty on tobacco and alcohol component of the ITR on consumption is generally stable
throughout the observed period. This stability may appear somewhat surprising since it is often asserted that the fact
that many excises are specific, i.e. expressed as a fixed nominal amount per physical measure of product, and the
already recalled generally low income and price elasticity of excisable goods should lead to revenue lagging behind
inflation, and therefore to a gradual erosion of the excise component. This is not borne out by our data; at least as far
as the EU-25 average is concerned.

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Graph II-2.6 Tobacco and alcohol component of the ITR on consumption 

1995–2007, in %

<@>gII_2_6.gif

Source: Commission services

As of 2007 Luxembourg and Bulgaria have demonstrated the highest tobacco and alcohol component of the ITR on
consumption (3.8 and 3.7 percentage points respectively). As Bulgaria, the other three countries with high excises
(Czech Republic, Estonia and Slovakia) have experienced an increase in the tobacco and alcohol component of the
ITR on consumption, ranging from 0.3 percentage points in the Czech Republic to 0.5 percentage points in Estonia
and to 1.5 percentage points in Slovakia. In 2007, in total, 13 countries show a very slight decrease (less than 0.1
percentage  points)  in  the  tobacco  and  alcohol  component  of  the  ITR  on  consumption,  in  three  countries  this
component  decreased  between  – 0.1  percentage  points  and  – 0.2.  Only  Malta  and  Portugal  experienced  a  more
pronounced drop by 0.3 and 0.4 percentage points respectively; whereby Portugal was falling further below the EU-
25  average.  In  the  other  Member  states  the  tobacco  and  alcohol  component  of  the  ITR  on  consumption  remains
stable with the slight deviation of less than 0.1 percentage points. The graph shows that despite the fact that there are
still no maximum excise duty rates provided in the acquis, there is evidence that the implicit excise duty rates on
tobacco and alcohol, measured by way of the excise component of alcohol and tobacco of the ITR on consumption,
are slightly converging in  recent years towards the average, which has in itself shown a tendency to remain quite
stable over the last years.

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Trends in the implicit tax rate
on labour

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Trends in implicit tax rate on labour

Part II

3.

TRENDS IN THE IMPLICIT TAX RATE ON LABOUR

3.1.

Up to late 1990s, a very strong long-run increase in labour taxation

The tax burden on labour in the European Union started growing strongly in the early 1970s. The increase was very
marked in the 1970, decelerating only slightly in the 1980s and the first half of the 1990s. As shown in Graph II-3.1,
the weighted EU-15 average implicit tax rate on labour employed (ITR on labour) increased from about 28 % (1970)
to almost 42 % (1997)1). Now only five countries in the EU have ITRs below the 30 % mark. Labour taxes rose so
forcefully because they were the only ones that could provide the volume of funds necessary to finance the additional
government  expenditure  and  because  unlike  consumption  taxes,  they  could  be  made  progressive  in  line  with  the
social  and  political  demands  of  the  time.  In  the  first  half  of  the  1990s,  further  increases  were  due  to  the  rise  in
unemployment  caused  by  the  recession  at  the  beginning  of  the  decade.  Finally,  in  the  second  half  of  the  decade,
budgetary  consolidation  in  the  run-up  to  EMU  forced  several  Member  States  to  increases  in  the  tax  burden.2)
Available data indicate that the ITR did not stop increasing until 1998.

Graph II-3.1 Time trend of ITR on labour

in % (weighted averages)

<@>gII_3_1.gif

Note: The average ITRs on labour based on ESA79 system of national accounts are weighted by the total compensation of employees in the 

economy, whereas for ESA95 the GDP-weighted average is used. Data based on ESA79 are only available for the EU-9 and EU-15 Member 
States (1970–79 and 1980–97, respectively).

Source: Commission services

1)

See European Commission (2000a, 2000b).

2) Data for the 1995–2007 period is based on ESA95 and not fully comparable with previous ESA79 data. ITRs on labour computed on the
basis of ESA95 data are generally lower than those on the basis of ESA79 data over the same period. This is notably due to the numerator of
the indicator, as taxes on labour employed (as % of GDP) are generally lower in the new series. This is attributable to improved methods for
estimating the allocation of personal income tax across different income sources. In many cases compensation of employees, as the main
component of the denominator, was revised upwards. 

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3.2.

Since beginning of this decade, slow decline from peaks

Starting from the late 1990s, concerns about excessive labour costs prompted initiatives to lower the tax burden on
labour income, in order to boost the demand for labour and foster work incentives3). Some Member States opted for
cutting  taxes  or  social  contributions  across  the  board  while  others  focused  on  targeted  reductions  in  social
contributions  for  low  wage  and  low-qualified  workers4).  These  cuts  in  social  contributions  were  mostly  aimed  at
granting relief to employers, although some countries have also implemented substantial cuts in employees' social
contributions  (see  below  for  a  more  detailed  analysis).  Reforms  of  personal  income  taxes  have  varied,  including
lowering tax rates, raising the minimum level of tax exempt income or introducing specific deductions, allowances
or credits for low-income workers5).

Although the impact of these measures on the general ITR on labour remains small6), the long-run increase in the
ITR on labour stopped in the late-1990s at 37.7 % in 1998 and started to gradually decline, reaching 36.2 % in 2004.
After  having  been  stable  in  2005,  the  average  increased  to  36.6 %  in  2007;  this  was  mainly  due  to  (significant)
increases in several bigger Member States. It is interesting to note that the EU-25 weighted average only marginally
deviates from the EU-15 average in the 1995–2007 period (by less than 0.1 percentage points in all years).

When  looking  at  the  different  types  of  averages  calculated,  it  is  noticeable  that  the  arithmetic  averages  clearly  lie
below the weighted averages discussed so far7). This is due to the fact that the tax burden in all big Member States but
the United Kingdom is above the EU average. The trend in the arithmetic and weighted averages is, however, rather
similar.  Only  in  2006  and  2007,  the  upward  movement  in  the  arithmetic  euro  area  average  is  weaker  than  in  the
weighted average and, in the case of the EU-27 average, the increase in the weighted average is not reflected in the
arithmetic average (Table II-3.1). 

3.3.

Diverse development across Member States since 2000

The pattern of the changes over the 2000–2007 period is quite diverse across Member States. In general, the central
and eastern European Member States that acceded to the EU in 2004 and 2007, show a much stronger decline than
the arithmetic EU-27 average in this time period: the average in these Member States has gone down by more than
three percentage points since 2000, while the EU-27 average decreased by only 1.5 percentage point. The euro area
average  has  gone  down  by  a  mere  0.3  percentage  points.  As  a  result  of  this  development,  the  average  of  the  new
Member States is now, at 34.2 %, slightly below the EU-27 average (34.4 %), while it had been above the EU average
in all years up to 2006.

This divergence in development is, of course, also visible when looking at a country-by-country breakdown of the
ITRs on labour: reductions since 2000 are in particular noticeable in newly acceded Member States, with the highest
reductions having taken place in Bulgaria, Lithuania, Slovenia and Slovakia, Latvia and Estonia. However, the three
Nordic  Member  States  and  Ireland  also  significantly  reduced  the  ITR.  On  the  other  hand,  the  ITR  increased
markedly in Portugal and Spain. In all the other Member States the change amounted to less than 2.5 percentage
points.  In  the  most  recent  years,  there  is  no  clear  trend:  from  2006  to  2007,  for  slightly  more  Member  States
increasing rates can be observed than decreasing ones (see Table II-3.1).

3)

4)

See also Carone and Salomäki (2001).

For a discussion of tax reforms in the 2000–06 period in those 19 EU Member States that are also OECD member countries see OECD
(2008). Bulgaria, Cyprus, Estonia, Latvia, Lithuania, Malta, Romania, Slovenia are not presently members of the OECD.

5)

See Box ‘Main fiscal measures affecting the ITR on labour’ and Part III, Developments in Member States for more details.

6) A discussion of possible reasons for the smaller than expected decline can be found in Annex B, Part D.

7)

See Annex A, Table D.2 for details.

78

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report2009.book  Page 79  Thursday, May 28, 2009  1:35 PM

Table II-3.1

Implicit tax rates on labour in the Union
1995–2007, in % 

Trends in implicit tax rate on labour

Part II

Difference

<@>tII_3.1.pdf

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1995-2007 2000-2007
-1.6
43.8
-8.9
-
0.7
40.5
-4.0
40.2
-1.8
39.4
-4.0
38.6
-2.8
29.7
1.0
-
2.9
29.0
-0.8
41.2
0.3
38.0
2.4
22.1
-5.7
39.2
-8.9
34.5
1.3
29.3
-0.2
42.6
-0.5
19.0
-0.3
34.6
0.9
38.5
1.4
36.8
3.0
26.5
-2.1
-
-0.7
38.5
-5.4
38.5
-2.7
44.3
-4.1
46.8
0.8
25.7

43.6
35.9
40.5
40.2
40.4
39.3
28.7
-
28.3
42.6
44.2
21.8
36.9
38.7
29.6
42.6
19.2
34.1
40.5
35.8
26.6
37.6
37.8
37.4
43.3
48.5
25.1

43.4
-
39.5
40.2
39.6
37.8
29.3
-
29.5
41.5
41.8
21.3
34.6
35.0
29.6
43.0
17.8
33.6
39.4
36.3
26.4
-
36.8
39.4
45.3
48.0
24.8

43.9
-
40.3
40.7
40.6
37.6
29.5
-
28.7
41.8
43.4
21.5
36.1
38.4
29.3
43.7
19.9
32.8
40.7
35.9
26.3
-
37.0
38.3
43.6
48.4
24.4

44.3
-
40.7
38.9
40.6
38.9
28.6
-
28.6
42.3
44.8
22.5
37.2
38.3
28.8
42.8
18.2
33.2
40.3
35.6
26.2
-
37.5
38.0
43.8
49.4
25.0

43.6
32.9
41.2
38.8
40.4
37.8
26.0
34.4
29.8
41.2
43.5
22.2
37.8
38.1
28.3
41.2
20.8
30.9
40.8
32.4
27.6
31.1
37.6
36.7
43.8
44.8
24.1

43.4
35.5
41.4
38.1
40.4
36.9
25.0
35.6
29.9
41.5
43.4
22.7
36.6
36.9
29.3
39.3
20.4
31.5
40.8
32.7
27.8
29.5
37.7
36.1
42.5
44.7
24.3

43.5
34.3
40.3
40.8
40.5
37.3
27.4
34.6
29.5
41.7
43.6
22.8
36.5
40.2
29.6
40.9
21.4
30.6
40.6
33.2
27.4
31.8
37.5
37.1
44.1
46.2
25.0

44.0
36.3
41.8
37.5
39.2
36.1
26.3
33.7
29.9
41.4
43.1
22.7
36.7
36.0
29.5
38.3
21.0
31.4
41.0
32.7
27.9
28.9
37.5
34.5
41.5
44.7
24.8

43.9
38.7
40.7
41.0
40.7
37.8
28.5
34.5
28.7
42.1
43.7
21.5
36.7
41.2
29.9
41.4
20.6
34.5
40.1
33.6
27.0
32.2
37.7
36.3
44.1
47.2
25.3

43.8
34.7
41.7
37.1
38.8
34.1
25.4
34.2
30.3
41.9
42.9
24.5
33.2
34.9
30.4
38.4
21.3
31.6
40.8
33.1
28.1
28.0
37.6
32.9
41.5
45.0
25.5

42.7
30.6
41.1
37.1
39.0
33.9
25.4
35.1
30.8
41.9
42.5
24.1
33.1
33.6
30.7
38.8
21.3
34.6
40.8
34.2
28.6
30.4
37.4
30.5
41.6
44.5
25.8

42.3
29.9
41.4
37.0
39.0
33.8
25.7
35.5
31.6
41.3
44.0
24.0
31.0
32.3
31.2
41.2
20.1
34.3
41.0
35.0
30.0
30.1
36.9
30.9
41.4
43.1
26.1

-1.5
-
0.9
-3.2
-0.5
-4.8
-4.0
-
2.6
0.1
6.0
1.8
-8.2
-2.2
2.0
-1.4
1.1
-0.4
2.5
-1.9
3.5
-
-1.6
-7.6
-2.9
-3.7
0.3

-

-

-

-

-

-

-

38.7

39.0

39.2

38.5

37.9

37.8

EU-27
EU-25
EA-16

-
35.7
34.2

-
35.6
34.4

-
36.0
34.6

-
36.1
34.7

36.1
36.1
34.7

35.9
35.9
34.6

35.5
35.7
34.5

35.1
35.4
34.2

35.0
35.2
34.3

34.8
34.9
34.1

34.5
34.7
34.1

34.4
34.8
34.2

34.4
34.8
34.3

Source: Commission services

3.4.

Implicit tax rate on labour in the EU-27: large differences in levels

-

-
-0.9
0.2

-

-1.5
-1.1
-0.3

There  are  large  differences  in  the  level  of  labour  taxation  among  the  Member  States  (see  Table  II-3.1).  At  one
extreme, Malta (20.1 %) and Cyprus (24.0 %) stand out with the lowest ITR on labour in the Union. This might be
linked with their historical ties to Britain, as the United Kingdom and Ireland are the only other two countries whose
ITR on labour is more than eight percentage points below the EU-27 average. Other countries, too, have low taxes on
labour. Bulgaria has a below 30 % ITR (see Map II-1), while the rate in Portugal and Romania is very close to the
30 %  mark.  In  contrast  to  these  geographically  more  peripheral  Member  States,  most  'continental'  European
Member States (Italy, Belgium, Czech Republic, France, Hungary, Austria, Germany, Slovenia) exhibit above average
ITRs.  The  same  applies  to  the  Nordic  countries.  Within  these  two  groups  of  countries  Italy,  Sweden,  Belgium,
Finland, Czech Republic France, Hungary and Austria stand out for reporting an ITR on labour which exceeds 40 %.
When comparing the ITR on labour with the overall tax-to-GDP ratio, it is noticeable that those Member States that
exhibit a high ITR on labour in most cases also have a high tax-to-GDP ratio. The same applies to low-tax countries.
This result is in line with the high share of labour taxes in overall tax revenues.

Taxation trends in the European Union                 79

report2009.book  Page 80  Thursday, May 28, 2009  1:35 PM

Part II

Trends in implicit tax rate on labour

Map II-1

<@>1104_ITRL.pdf

Tax burden on labour

Implicit tax rates on labour, 2007

< 25

25 – < 30

30 – < 35

35 – < 40

> 40

Data source: Commission Services
© EuroGeographics Association, for the administrative boundaries
Cartography: Eurostat — GISCO, 03/2009

0

600 km

Malta

0

10

3.5.

Composition of the implicit tax rate on labour

The  tax  burden  on  labour  is  essentially  composed  of  personal  income  taxes  and  social  security  contributions.  In
most  Member  States  the  personal  income  tax  contains  several  rates.  However,  a  description  of  the  entire  rate
structure  goes  beyond  the  scope  of  this  chapter8).  Therefore,  the  focus  lies  on  the  top  rate,  which  is  also  of
importance when comparing CIT and PIT rates. Table II.3.2 contains the top PIT rates (including surcharges and
local taxes) for the EU Member States and Norway on 1995–2008 income. The table shows a clear downward trend
over the whole period, which became even stronger after the turn of the century. Twenty-two EU Member States

80

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report2009.book  Page 81  Thursday, May 28, 2009  1:35 PM

Trends in implicit tax rate on labour

Part II

have cut the rate over the time period covered whereas only one country (Portugal) increased it slightly9). In just four
cases the rate has not changed (in Austria, Latvia, Malta and the United Kingdom). The EU-27 average went down by
10.6 percentage points since 1995 and 7.3 percentage points since 2000. The reduction since 2000 is most noticeable
in the central and eastern European countries that joined the union in 2004 and 2007, with the biggest cuts having
taken place in four countries that moved to flat rate systems, Bulgaria (– 40.0 percentage points), the Czech Republic
(– 28.0), Romania (– 24.0) and Slovakia (– 23.0). On average, these countries have reduced the top PIT rate by more
than 11 percentage points since 2000, whereas the former EU-15 countries have reduced the top rate by a mere 3.5
percentage points. 

Table II-3.2

Top personal income tax rates
1995–2008 income

<@>tII_3.2.pdf

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

Difference

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1995-2008 2000-2008
-6.9
53.7
60.6
-30.0
29.0
50.0
-17.0
32.0
43.0
-0.7
59.8
63.5
-6.3
51.2
57.0
-5.0
26.0
26.0
-3.0
42.0
48.0
-5.0
40.0
45.0
-5.0
45.0
56.0
-13.2
54.8
59.1
-1.0
46.1
51.0
-10.0
30.0
40.0
0.0
25.0
25.0
-9.0
33.0
33.0
-8.2
39.0
51.3
-4.0
40.0
44.0
0.0
35.0
35.0
-8.0
52.0
60.0
0.0
50.0
50.0
0.0
40.0
45.0
2.0
40.0
40.0
-24.0
40.0
40.0
-9.0
50.0
50.0
-23.0
38.0
42.0
-4.0
52.2
62.2
4.9
54.7
61.3
0.0
40.0
40.0

-6.9
-40.0
-28.0
-4.5
-9.5
-5.0
-7.0
-5.0
-13.0
-13.3
-6.1
-10.0
0.0
-9.0
-12.3
-4.0
0.0
-8.0
0.0
-5.0
2.0
-24.0
-9.0
-23.0
-12.2
-4.9
0.0

60.6
40.0
32.0
59.7
53.8
26.0
44.0
45.0
48.0
59.0
45.9
40.0
25.0
33.0
47.2
44.0
35.0
60.0
50.0
40.0
40.0
40.0
50.0
42.0
54.0
51.5
40.0

60.1
38.0
32.0
59.6
51.2
26.0
42.0
42.5
48.0
58.3
45.9
40.0
25.0
33.0
43.1
40.0
35.0
52.0
50.0
40.0
40.0
40.0
50.0
42.0
53.5
53.1
40.0

56.4
29.0
32.0
59.8
51.2
26.0
42.0
40.0
48.0
57.8
46.1
40.0
25.0
33.0
39.0
40.0
35.0
52.0
50.0
40.0
40.0
40.0
50.0
38.0
52.5
55.5
40.0

53.7
29.0
32.0
59.0
47.5
26.0
42.0
40.0
45.0
53.4
46.1
30.0
25.0
33.0
39.0
38.0
35.0
52.0
50.0
40.0
40.0
40.0
50.0
19.0
52.1
56.5
40.0

53.7
24.0
32.0
59.0
44.3
24.0
42.0
40.0
45.0
53.5
44.1
30.0
25.0
33.0
39.0
38.0
35.0
52.0
50.0
40.0
40.0
16.0
50.0
19.0
51.0
56.6
40.0

53.7
10.0
15.0
59.0
47.5
21.0
41.0
40.0
43.0
45.8
44.9
30.0
25.0
24.0
39.0
40.0
35.0
52.0
50.0
40.0
42.0
16.0
41.0
19.0
50.1
56.4
40.0

53.7
24.0
32.0
59.0
44.3
23.0
42.0
40.0
45.0
45.8
44.1
30.0
25.0
27.0
39.0
36.0
35.0
52.0
50.0
40.0
42.0
16.0
50.0
19.0
50.9
56.6
40.0

60.6
40.0
40.0
62.9
57.0
26.0
48.0
45.0
56.0
57.7
51.0
40.0
25.0
33.0
51.3
44.0
35.0
60.0
50.0
44.0
40.0
40.0
50.0
42.0
59.5
54.4
40.0

60.6
40.0
40.0
61.4
55.9
26.0
46.0
45.0
56.0
59.0
46.0
40.0
25.0
33.0
47.2
44.0
35.0
60.0
50.0
40.0
40.0
48.0
50.0
42.0
57.8
56.7
40.0

60.6
40.0
40.0
61.1
55.9
26.0
46.0
45.0
48.0
59.0
46.0
40.0
25.0
33.0
47.2
44.0
35.0
60.0
50.0
40.0
40.0
40.0
50.0
42.0
55.6
53.6
40.0

60.6
50.0
40.0
62.0
57.0
26.0
48.0
45.0
56.0
59.6
51.0
40.0
25.0
33.0
51.3
44.0
35.0
60.0
50.0
45.0
40.0
40.0
50.0
42.0
61.2
61.4
40.0

53.7
24.0
32.0
59.0
47.5
22.0
41.0
40.0
43.0
45.8
44.9
30.0
25.0
27.0
39.0
40.0
35.0
52.0
50.0
40.0
42.0
16.0
41.0
19.0
50.5
56.6
40.0

41.7

41.7

41.7

41.7

41.5

47.5

47.5

47.5

47.5

47.5

43.5

40.0

40.0

40.0

EU-27
EU-25
EA-16

47.3
47.5
50.4

47.1
47.3
50.4

46.4
46.9
50.2

46.1
46.3
49.4

45.3
45.7
48.8

44.7
45.0
48.4

43.7
44.1
47.1

42.9
43.6
46.1

42.2
42.8
44.9

41.2
41.8
43.4

39.9
41.4
43.0

39.3
40.9
42.7

39.1
40.6
42.1

37.8
39.8
42.1

-1.7

-9.5
-7.7
-8.3

-7.5

-6.9
-5.3
-6.3

Note: BE: including crisis tax (1993-2002) and local surcharge, DK: state taxes plus municipality taxes and including church tax. DE: including 

solidarity surcharge, FR: including general social welfare contribution and welfare debt repayment levy (since 1996), which are partly 
deductible from PIT, HU: including solidarity tax in 2007 and 2008, IT: including regional surcharge and local surcharge,  LU: including 
solidarity surcharge for Unemployment Fund (since 2002), FI, SE: state taxes plus municipality taxes, NO: including surtax.

Source: Commission services

8)

The interested reader can find a complete description of the rate system and the brackets in force in the Member States in the 'Taxes in
Europe'  database  on  the  EU  website  at  the  following  url:  http://ec.europa.eu/tedb.  The  database  is  accessible  free  of  charge  and  updated
annually.

9)

Portugal introduced a new top PIT rate on 2006 income.

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Part II

Trends in implicit tax rate on labour

The average top PIT rate on 2008 income of the newly acceded central and eastern European countries is, at 22.82 %,
less then half the average of the former EU-15 countries (46.95 %), with the EU-27 average standing at 37.79 %. 

Of course, the picture given by the rates is incomplete. Not only the level and change of the top PIT rate is relevant
but also the income level at which they are applied. Moreover, the progression of PIT rates applied, the structure of
allowances and tax credits, and the definition of the tax base play a key role in defining the effective tax burden. This
is very aptly illustrated by the fact that the ITR on labour only marginally declined in the 1995–2007 period, despite
the  strong  reduction  in  the  top  PIT  rates.  Moreover,  in  the  majority  of  the  Member  States  social  security
contributions have a higher impact on the level of the ITR than the PIT. On average, nearly two thirds of the overall
ITR on labour consist of non-wage labour costs paid by both employees and employers (see Graph II-3.2). Only in
Denmark, Ireland and the United Kingdom do personal income taxes have an above 50 % share in the total charges
paid on labour income. In Denmark, the share of social contributions in government receipts is very low as most
welfare spending is financed by general taxation10). As a result, Denmark has only the 10th highest ITR on labour in
the EU, although the ratio of PIT (as a percentage of total labour costs) is, at around 34 % in 2007, by far the highest
of all Member States (see Graph II-3.2). In some of the Member States, namely Romania, Greece and Slovakia less
than 20 % of the ITR on labour consists of personal income tax. 

Graph II-3.2 Composition of the implicit tax rate on labour

2007, in %

<@>gII_3_2.gif

Source: Commission services

Between 2000 and 2007 the components of the ITR on labour have changed markedly in several Member States (see
Graph  II-3.3).  For  the  EU-27  average  the  following  development  can  be  observed:  personal  income  taxation  of
labour  as  well  as  employers'  SSC  and  payroll  taxes  have  gone  down,  while  employees'  SSC  have  very  slightly

10) A large part of employees' social contributions in Denmark comes from an 8 % contribution paid on the basis of employees' gross earnings.

Some studies classify this revenue as a social security contribution, while others report it as a separate type of personal income tax.

82

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Trends in implicit tax rate on labour

Part II

increased (all as a percentage of total labour costs). It is interesting to note, that on average hardly any changes can be
observed for the euro area. 

Graph II-3.3 Evolution of the components of the implicit tax rate on labour

2000–2007, differences in percentage points

<@>gII_3_3.gif

Note: Countries are ordered by the change in the ITR on labour. 

Source: Commission services

When looking at the shares of the ITR on labour over time, it should be borne in mind that both inflation and real
earnings growth tend to push up the ITR on labour owing to progressivity, the so-called 'fiscal drag'. On the other
hand,  social  security  systems  are  often  regressive  owing  to  the  existence  of  contribution  ceilings.  Depending  on
which of these two influences is stronger, the ITR will tend to drift upwards or downwards over the years even in the
absence of explicit adjustments in tax brackets and thresholds. In a sense, of course, not adjusting for inflation and
real  earnings  growth  is  a  policy  decision  too.  Moreover,  one  has  to  note  that,  according  to  an  OECD  study11),  a
(partial) automatic or discretionary adjustment of the income tax system to inflation is in place in 10 out of those 19
EU  Member  States  (EU-19)  that  are  also  OECD  member  countries,  whereas  such  adjustments  for  real  earnings
growth are only in place in two of these Member States. In the case of social contributions, automatic adjustments for
the so-called fiscal drag apply in at least 13 of these Member States. 

When looking at the changes in single Member States, an interesting aspect is that in most of the countries on the left
hand side of Graph II-3.3, whose ITR on labour has gone up notably since 2000, all components have increased or at
least  remained  more  or  less  stable.  As  concerns  the  countries  that  have  reduced  the  ITR  on  labour  in  this  time
period, this change is to a large extent driven by reductions in PIT and employers' SSC and payroll taxes. Only in
three countries a real shift in the different components of the tax burden can be observed. In the case of Hungary,

11) See OECD (2008, pp. 23–55). The study shows that, in the absence of any policy adjustments, fiscal drag would have led to an increase in the

average tax burden in all EU-19 Member States covered. The effect seems to be strongest for low-wage earners.

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employers'  SSC  and  payroll  taxes  were  reduced,  while  employees'  SSC  increased.  In  the  case  of  Romania,  the  tax
burden paid by employers was markedly reduced, while the one by employees (SSC share and PIT) increased. As
concerns the Netherlands, the shift took place within the share paid by the employees (from SSC to PIT). From an
economic point of view, it is often thought that in the long run both components of the SSC are shifted to labour,
whereas in the short run the impact may differ as increases in employers' social contributions have an immediate
impact on the cost structure, while the impact from employees' social contributions is more indirect12). Box 1 at the
end of this chapter presents an overview of the main fiscal measures affecting the ITR on labour13).

3.6.

A comparison with tax wedges computed for example household types

The  discussion  in  the  preceding  section  is  based  on  the  ITRs  on  labour,  which  give  a  picture  of  the  average  tax
burden on labour across all income classes. However, even at an unchanged overall tax level, the burden of taxation
may  be  shifted between  high  and  low-income taxpayers  resulting  not  only  in  redistribution  but  notably  also in  a
different  impact  on  employment.  In  particular,  over  the  last  decade  policymakers  have  often  resorted  to  cuts  in
labour  taxes  that  are  targeted  to  the  bottom  end  of  the  wage  scale  in  order  to  boost  employability  of  low-skilled
workers. To evaluate progress in this direction, this section compares the evolution of the ITR on labour with that of
the tax wedge — i.e. the difference between labour costs to the employer and the corresponding net take-home pay
of the employee. 

The  annual  OECD  publication  Taxing  Wages,  provides  internationally  comparable  data  on  total  tax  wedges  for
various  household  types  and  different  representative  wage  levels.  The  representative  wage  levels  are  linked  to  the
average  gross  earnings  of  an  adult  full-time  worker,  including  both  manual  and  non-manual  workers.  The  tax
wedges  are  calculated  on  the  basis  of  tax  legislation  in  force,  by  expressing  the  sum  of  personal  income  tax,
employee's plus employer's social security contributions together with any payroll tax, as a percentage of total labour
costs. These indicators can theoretically identify discretionary tax policy measures as regards personal income tax
and social contributions while at the same time excluding the effects of cyclical factors (which are not filtered out by
the ITR on labour). However, because of the approach followed, the method has no link to actual tax revenue, nor
does it incorporate all the elements of the tax system that may be relevant, such as effects of special tax reliefs (which
are instead incorporated in the ITR). This implies that in the case of policy measures, the indicator at any selected
income level will tend to show either a large response or none at all depending on whether the representative worker
utilised  for  the  computation  falls  within  the  circle  of  its  beneficiaries  or  not;  the  ITR,  in  contrast,  will  tend  to
minimise  the  impact  of  only  targeted  measures.  Hence  the  two  approaches  are  complementary.  Besides,  the  tax
wedge  indicator  has  the  advantage  of  being  available  also  for  those  OECD  member  countries  that  are  not  EU
Member States14).

Taxing Wages provides data only for the OECD Member States, but tax wedges based on the same methodology are
computed for the EU in collaboration with the European Commission. The following analysis focuses on the 'Tax
wedge on low wage workers', which is the tax wedge for a single worker without children at two thirds of average
earnings (see Table II-3.3). That indicator is also used in the framework of the Lisbon Strategy — together with the
ITR on labour — to estimate the potential impact of tax provisions on the labour market. 

Table II-3.3 contains the tax wedge data for the 2000–2007 period15). The figures in Table II-3.2 display a downward
trend  indicating  a  clear,  although  not  particularly  strong,  impact  from  targeted  cuts  in  taxes  and  social  security

12)

 See Arpaia and Carone (2004).

13) For an overview of recent policy measures not only in the area of taxation but in the overall tax benefit system see Carone et al. (2009).

14) These data published by the OECD show that the tax burden in the main other industrialised countries is much lower that in the EU: the

EU-19 averages of the tax wedge are in general clearly above the overall OECD averages (OECD, 2008a).

15) Pre-2000 data are not fully comparable due to changes in the definition of the average wage (see OECD, 2006b, and European Commission,

2007).

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contributions that came to a halt in 2006. While the tax wedge is lower in 20 Members States in 2007 compared to
2000, the reductions appear to be particularly large in Bulgaria, Hungary, Sweden, Slovakia, Cyprus, and Finland.
Among  the  countries  that have increased  the tax  wedge in  this  period,  the  United  Kingdom  and  Malta show the
biggest increase with 2.3 and 1.8 percentage points, respectively; however, the tax wedges of both countries are still
among the lowest in the EU. On average the tax wedge in the EU-25 decreased by 1.5 percentage points.

Table II-3.3

Tax wedges for a single example worker at two thirds of average earnings
in % 

<@>tII_3.3.pdf

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27
EU-25
EA-16

2000
51.3
40.0
41.4
41.2
48.6
38.2
18.1
35.5
34.7
47.4
43.1
16.7
42.2
42.9
32.8
51.4
16.6
42.0
43.2
42.2
33.2
44.7
41.0
40.6
43.0
48.6
28.5

35.1

38.9
38.6
36.7

2001
50.7
36.9
41.3
40.5
47.7
37.4
17.3
35.1
35.3
47.6
42.7
17.0
42.0
42.9
31.2
50.9
17.0
38.9
42.9
41.8
32.2
45.2
42.2
41.3
41.4
47.8
28.1

35.2

38.3
38.1
36.3

2002
50.5
36.2
41.5
39.8
48.1
40.2
16.7
34.3
35.7
47.4
42.7
17.3
42.2
43.1
29.0
48.2
17.7
39.1
43.1
41.7
32.3
44.6
43.2
40.8
40.9
46.8
28.3

35.2

38.2
38.0
36.2

2003
49.6
36.0
41.7
39.8
48.8
40.7
16.2
34.4
34.7
45.0
41.1
18.6
41.4
40.9
29.3
44.5
17.4
40.0
43.5
42.0
32.4
43.4
43.2
40.9
40.0
47.0
29.8

34.9

37.9
37.7
35.9

2004
48.9
35.8
41.9
39.3
47.8
38.9
20.0
34.9
35.2
42.4
41.4
18.6
41.9
41.6
29.6
44.8
17.6
40.8
43.9
42.2
32.4
42.9
43.2
39.6
39.4
47.2
30.0

35.0

37.9
37.7
36.0

2005
49.3
36.3
42.0
39.2
48.2
39.2
16.8
34.9
35.5
41.3
41.7
11.9
41.8
42.6
30.2
43.1
17.9
41.4
43.3
42.2
32.4
42.4
41.6
35.2
39.5
46.6
30.6

34.2

37.3
37.1
35.1

2006
49.4
31.5
40.1
39.3
48.4
38.4
16.1
35.9
35.9
44.3
41.9
11.9
41.8
40.6
30.6
43.3
18.4
40.5
43.7
42.5
32.6
42.2
41.2
35.5
39.0
45.9
30.7

34.3

37.1
37.1
35.3

2007
49.6
32.3
40.5
39.3
47.4
38.7
15.0
36.7
35.6
44.4
42.0
11.9
41.2
41.3
31.4
45.9
18.6
40.2
44.1
41.6
32.6
41.8
40.9
35.6
38.2
43.3
30.8

34.2

37.1
37.1
35.3

Difference
2000-2007
-1.7
-7.7
-0.9
-1.9
-1.2
0.5
-3.1
1.2
0.9
-3.0
-1.1
-4.8
-1.0
-1.6
-1.4
-5.5
2.0
-1.8
0.9
-0.6
-0.6
-2.9
-0.1
-5.0
-4.8
-5.3
2.3

-0.9

-1.8
-1.5
-1.5

Source: Commission services, OECD, data from the Lisbon Strategy structural indicators database (OECD model)

Despite the differences between the two approaches, a comparison between the tax wedge indicator and the ITR on
labour for the year 2007 shows a rather small difference at the level of the EU-25 and euro area (arithmetic) averages
(see Graph II-3.4)16). At the level of individual Member States the results of the comparison of the two indicators
appear  mixed.  For  around  one  third  of  them  the  difference  between  the  two  indicators  is  rather  small.  Three
Member States have a tax wedge on low wage workers which is substantially (more than three percentage points)
lower than the ITR on labour, which appears reasonable considering the progressive structure of personal income
tax. On the other hand, 15 Member States present a tax wedge on low wage workers which is substantially higher
than the ITR on labour. This discrepancy is more surprising but could be explained by the following reasons: the tax
wedge considered relates to a single worker without children, so the effect of tax allowances linked to dependent

16) See European Commission (2004, pp. 101–104) and Annex B, Part D, for a comparison between the ITR on labour and the tax wedge for a

single worker without children at average earnings. 

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relatives  is  not  captured.  Furthermore,  social  contributions  are  often  subject  to  ceilings,  in  which  case  low  wage
workers have a social contributions rate, which is more elevated than that of high-paid workers. Another aspect that
needs to be considered is that average earnings based on the OECD definition refer to full-time equivalents and are,
therefore, rather high. Finally, the income distribution in the EU Member States is left skewed, which implies that the
earnings of the median workers are well below the average earnings.

As a result, the ranking between the Member States may also be quite different. The differences are not specific to a
single year. Nevertheless, the correlation between the macro and micro indicators is still fairly robust. Member States
with a high tax wedge on low wage workers generally also display relatively high ITRs on labour and the other way
round. For example, Sweden and Belgium are consistently in the higher group regarding the taxation of labour, while
Ireland, the United Kingdom, Cyprus and Malta are always in the group of the lowest countries.

Graph II-3.4 Pair-wise comparisons of ITR on labour and tax wedge indicator 

2007, in %, ordered by the ITR on labour

<@>gII_3_4.gif

Note: Countries are ordered by the level of the ITR on labour

Source: Commission services (using data from the Lisbon Strategy structural indicators database)

Graph II-3.5 compares the trends over time in the tax wedge indicator and the ITR on labour (with 1996 = 100). For
each  year  EU-25  arithmetic  averages  are  computed.  Indices  representing  the  trend  of  both  variables  have  been
plotted  into  the  graph17).  When  comparing  the  trends  it  should  be  borne  in  mind  that  tax  policy  changes  are
immediately integrated in the Taxing Wages model but might be reflected with some time lag only in the ITR on
labour18).

17) As discussed in the 2007 edition of the report (European Commission, 2007), data for the 1996–99 period are based on a different definition
of average wages. Therefore, the time series for the tax wedge contains a structural break in 2000. In order to calculate a series without a
break, the growth rates of the EU-25 average of the indicator are used for the calculation of the time trend of the tax wedge. The growth rate
for the years 1997 to 2000 are calculated based on the data using the old definition (wage of the average production worker). Growth rates for
2001 onward refer to the new average wage definition.

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Part II

Graph II-3.5 Time trend micro and macro indicators in the Union
EU-25, arithmetic averages, index 1996 = 100

<@>gII_3_5.gif

Source: Commission services

Over the 1996–2007 period, the EU average tax burden on labour stabilised and then started to slowly decline. This
trend is visible in the development of both indicators. However, the indicators do not always develop in parallel. Two
periods can be distinguished: up to 2000 the ITR on labour increased and then  remained stable, whereas  the tax
wedge started to decrease markedly already as of 1998. The gap between the two indicators opened up indicating
that targeted tax cuts were playing a growing role (see Box 2)19). In the second period, from 2001–05, the two series
run  roughly  parallel,  both  showing  a  downward  trend.  Despite  changes  in  single  years,  the  gap  overall  remained
nearly  unchanged  over  these  years.  In  2006  and  2007,  the  downward  trend  in  the  tax  wedge  slowly  continues,
whereas in the case of the ITR on labour, the average rate somewhat increased.

18) See Annex B, Part D, for an explanation.

19) The difference might be even bigger at lower income levels, given that targeted measures often aim at wages with a threshold well below 2/3

of the average wage.

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Box 2: Overview of main fiscal measures affecting the ITR on labour 

<@><@p1@>bII_3.pdf

MEASURES IN THE DOMAIN OF TAXATION

MEASURES IN THE DOMAIN OF SOCIAL 
CONTRIBUTIONS

Reduction in tax credits
pensioners tax credit).

(general,

employees and

2001 Reduction in employers' contribution rates for health
insurance and pay insurance schemes for 'blue collar'
workers.

Austria  

Reduction in the income and wage tax of low and middle-
income earners and of sole and single earner, reduction in
the number of tax brackets (2004-2005).

2004

Increase in commuters tax allowances and exemption of
compensation for overtime hours.

2008 Increase in health insurance contributions and reduction
in unemployment insurance contributions for low income
earners.

in credits

Cut in income tax (marginal tax rate, tax brackets);
increase
children.
Introduction of deductibility of charitable donations and
increase of deductibility of contributions to religious
communities.

and allowances

for

2009

tax brackets

suspended (1993-1998).
Indexing of
Introduction of 'crisis tax' (1993) on top of all statutory
rates plus 'solidarity levy' on personal income (1994).

Belgium   
1993

1997 Lowering of employers' contributions, especially in
respect of the low-paid. The scope of the reductions in
employers' SSC was expanded to more social security
schemes
the
introduction of the Estafette plan as well as the possibility
for deductions of employers' contributions over the
amount due for the hiring of young workers and low
skilled workers (2005).

followed by

(1997-2008),

and was

Reintroduction of automatic indexing of tax brackets.
Phasing out of ‘crisis tax’(1999-2002).

1999

2000 Flat rate reductions in employers' contributions for the
hiring of young workers, low skilled workers and workers
aged over 50.

2001

PIT reform (2001-2004) of which the main provisions are
(a) lowering of tax burden on earned income including
the introduction and subsequent increase of refundable
employment tax credit aimed at low paid workers (b) a
neutral tax treatment of spouses and singles (c) more
favourable treatment of dependent children (d) greening
of the tax system.

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<@><@p2@>bII_3.pdf

MEASURES IN THE DOMAIN OF TAXATION

MEASURES IN THE DOMAIN OF SOCIAL 
CONTRIBUTIONS

Belgium (continued…)
2003

Introduction and increase of tax rebates for scientific
researchers (2003-2009) and shift workers (2004-2009).
The tax rebate is granted on the amount of wage
withholding tax that has to be paid by the employer to the
tax administration. As they do not affect PIT, these
rebates are recorded as subsidies to the employers in the
national accounts. 

Overtime pay: tax reduction for the employees; for the
amount of
tax rebate granted on the
employers
withholding tax paid by the employer
to the tax
administration (2005–09).
Additional allowance for dependent persons aged more
than 65. Increase of
lump sum
professional expenses.

the first bracket of

2004 Structural reduction in employers' contributions.
2005 Replacement of the refundable employment tax credit by
an increased reduction in employee contribution for low
paid workers.

2006

New increase of the first bracket of lump sum professional
expenses.

2007

Increase of the basic allowance in the PIT for low- or
middle-income taxpayers. Exemption of non-recurring
bonuses linked to enterprise’s results.

2008

Doubling of deductible commuting expenses.

2009

Bulgaria   

2001 Lowering of the SSC rates by 3 percentage points.

Continuous lowering of the top PIT rate, increase of the
non-taxable minimum and flattening of the tax brackets
almost annually, most notably since 2002

2002 Introduction of second pillar and transfer of it to a share
January 1960.
for people born after 1st

of SSCs
(supplemented SG No. 10/2002)

Introduction of annual allowances for children.

2004

2006 Lowering of the SSC rates by 6 percentage points.

2007 Lowering of the SSC rates by 3 percentage points. 

Introduction of a 10 % flat PIT rate without allowance
and abolition of tax credit
for dependants. Disabled
individuals are granted an annual allowance of BGN 7920.

2008

2009 Lowering of the SSC rates by 2 percentage points. 

Progressive increase of the non-taxable allowance (1995-
2003).

Cut in the PIT rates from 20/30/40 % to 20/25/30 %.

Extension of basic tax free allowance.

Cyprus  
1995

2003

2008

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<@><@p3@>bII_3.pdf

MEASURES IN THE DOMAIN OF TAXATION

MEASURES IN THE DOMAIN OF SOCIAL 
CONTRIBUTIONS

Reduction from 6 to 4 brackets. 

Revision of several allowances. 

Introduction of the family splitting for families with
children.

Cut in two lowest tax rates from 15 % to 12 % and from
20 % to 19 % respectively, broadening of the first tax
bracket and replacement of standard tax allowances by tax
credits.

Czech Republic
2000

2001

2005

2006

Introduction of a 15 % flat PIT rate and increase in tax
credits.

2008

2009 Reduction in employers' and employees' contribution

Cut in rate of low tax bracket (1996-1999).

rates.

Denmark    
1996

Increase in rate of additional medium tax bracket. 

1997 Increase in employees' social contribution rate. 

Cuts in PIT, especially at the bottom to the middle end
(1999-2002).

Increases in thresholds of medium and top tax bracket
and introduction of an earned income tax credit or
employment allowance. 

1999 Introduction of employees' contributions

for special

pension savings scheme.

2004 Temporary suspension of obligatory contributions to the

special pension scheme (2004-2008).

Abolition of county taxes along with an offsetting increase
taxes and introduction of 8 percent
in municipal
healthcare state tax.

Increase in personal allowance as well as rate and upper
limit of earned income tax credit.

Increases in threshold of medium tax bracket and further
increase of rate and upper limit of earned income tax
credit.

Reduction in the bottom tax bracket, abolition of the
medium tax bracket and cut in the top marginal tax rate;
gradual increase in allowance for top tax bracket (2010-
2019).

2007

2008

2009

2010

Gradual cut in flat income tax rate from 26 % to 21 %
(1994 - 2008).

Estonia   
1994

Gradual increase of basic allowance in nominal terms by
100 % (2003 to 2006) and further increase by 50 % (2011).

2003

2002 Introduction of the unemployment insurance premium.

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Part II

<@><@p4@>bII_3.pdf

MEASURES IN THE DOMAIN OF TAXATION

MEASURES IN THE DOMAIN OF SOCIAL 
CONTRIBUTIONS

Decrease of the maximum amount for the deductions
from 100 000 EEK to 50 000 EEK.

Estonia (continued...)   
2005

2006 Reduction in the unemployment insurance rates (2006):
for employees 0.6 % (formerly 1.0 %) of gross wage and
for employers 0.3 % (formerly 0.5 %) of employee's gross
wage.

Additional basic allowance for the first child. Impact on
tax receipts in 2009. 

2008

Cancelling of additional basic allowance for the first child.
Additional basic allowance for the second child and next
children remains. Impact on tax receipts in 2010.

2009 Increase in the minimum rate for the social tax in case of
self-employed persons. Previously calculated from 2700
EEK a month; starting in 2009 the tax is calculated from
current year’s minimum wage (4350 EEK per month in
2009). Increase in the unemployment insurance rates as of
1 July 2009: for employees 1.0 % (formerly 0.6 %) of gross
wage and for employers 0.5 % (formerly 0.3 %) of
employee’s gross wage.

Finland   
1995

Annual cuts of marginal tax rates in state income taxation
in 1997 and 1999 - 2009, and increases in the lowest
amount of income subject to state income taxation (1995-
2009). Reductions in local income tax especially at the
bottom to the middle end by means of earned income tax
allowance (1997-2008).

Abolition of the lowest state income tax bracket (increase
in the tax exemption), subsequent annual increase in the
lowest amount of income subject to state taxation.

2001

1997 Reductions in employees' and employers' contribution

rates (1997-2002).

2003 Regional

reductions
contribution rates (2003 – 2009).

in employees’ and employers’

Introduction of earned income tax credit in state income
taxation.

2004 Increase in employers' and employees' contribution rates

(2004 and 2005).

2006 Reduction in the state employers’ national pension
insurance and health insurance contributions. Reduction
and employees’ pension insurance
in employers’
contributions. 

Reduction in the number of tax brackets from five to four.
Increase in earned income tax credit in state income
taxation, to be replaced by a labour income tax credit in
2009.

2007

2009 Reduction in the employers' national pension insurance
contribution. Reduction in employees' and employers'
unemployment insurance contributions.

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<@><@p5@>bII_3.pdf

MEASURES IN THE DOMAIN OF TAXATION

MEASURES IN THE DOMAIN OF SOCIAL 
CONTRIBUTIONS

Introduction of contribution for refunding of debt of
social security institutions (CRDS) with a broader base
than the generalised social contribution (CSG).

France   
1996

Increase in CSG tax rate from 2.4 % to 3.4 %.

1997 Reduction in employers' contributions

for

low-paid

CSG tax rate moved from 3.4 % to 7.5 % and became
partly deductible from income tax.

workers (1997-2001).

1998 Reduction in employees' sickness contributions. 

2000 Reduction in employees' and employers' unemployment

contributions (2000-2001).

Introduction of
especially to low-income earners.

the Prime pour

Increase of the Prime pour l’Emploi.

l'Emploi

targeted

2001

Introduction of a tax shield limiting direct
taxes to
maximum 60 % of income. Remodelling of income tax
through a reduction in the number of income tax brackets
from six to four and by lowering the rates. 

Increase of the Prime pour l’Emploi.

2004

2006

2007 Enterprises of less than 20 employees benefit from a total
exemption from employer's SSCs for employees receiving
the minimum statutory salary.

Reinforcement of tax shield to 50 % of income. Social
contributions (CSG and CRDS) are then included into the
tax shield.

2008

Temporary decrease of the PIT for low and medium
income people.

2009

Germany   

1997 Increase in social contribution rates.

Gradual increase of basic tax-free allowance by nearly a
quarter (1998-2005).

1998

Across-the-board cuts
in PIT bringing the highest
marginal rate down from 53 % to 42 % and the lowest rate
from 25.9 % to 15 % (1999-2005).

1999 Reduction in social contributions to the pension system

funded by ecological tax reform (1999-2002).

Introduction of a new top marginal tax rate of 45 %.

Reduction in lowest marginal tax rate (2009), increase in
basic tax allowance  (2009-2010).

2003 Slight

increases in contribution rate to the old-age

insurance.

2007 Slight

increases in contribution rate to the old-age
insurance (2007). Overall reduction in the contribution
rate to the unemployment insurance from 6.5 % to 2.8 %
(2007, 2008, 2009).

2009 Increase and subsequent reduction in health insurance

contribution rate.

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MEASURES IN THE DOMAIN OF TAXATION

MEASURES IN THE DOMAIN OF SOCIAL 
CONTRIBUTIONS

Cut in highest statutory PIT rate, indexing of tax brackets
plus increase in the level of tax-exempt income (2000-
2002).

Greece  
2000

2001 Reductions

in employers'

and employees' pension
contributions in respect of new staff and at the low end of
the wage scale (2001-2002). 

Conversion of tax deductions into tax credits.

Increase of the non-taxable income and expansion of the
central tax scales. Abolition of PIT rate of 15 %. Gradual
reduction of PIT rates for the taxable income of € 12 000
up to the level of € 75 000, for income earned in the 2007-
2009 period. PIT rate remains 40 % for income higher
than € 75 000.

Introduction of extra tax on personal income for high
income earners (income above € 60 000); tax is gradually
increased from € 1 000 € for income between € 60 001 and
€ 80 000 to € 25 000 for income above €900000.

Introduction of gradual reduction of PIT rates for income
earned in 2010 onwards: the applicable rate of the second
band (25 %) is decreased annually by one percentage
point until 2014 (i.e. in 2010 the rate is 24 % and in 2014
the rate is 20 %).

2003

2007

2009

2010

Hungary   

Income tax brackets reduced from six to three. Decrease
in employees' tax credit.

1999 Employers' total payroll costs generally reduced to 37.5 %.

Changes in tax brackets.

2001 Employers' social contributions reduced.

Increase in employees' tax credit.

2002

Changes in tax brackets.

2003 Increase in employees' mandatory pension contributions.

Reduction in the number of tax brackets to two through
abolition of the middle bracket.

2005 Decrease in lump-sum health contribution.

Cut in highest rate from 38 % to 36 %, introduction of a 4
% solidarity tax on high salaries.

2006 Increase in employee's individual healthcare contribution
from 4 % to 6 % (September 2006) and to 7 % (2007).

Change in tax brackets.

2007

2008 Decrease in employee's healthcare contribution from 7%
to 6%,
increase in employees' mandatory pension
contributions from 8.5 % to 9.5 %, decrease in employers'
healthcare contribution from 8 % to 5 % and increase in
employers' pension contributions from 21 % to 24 %.

Increase in lowest PIT bracket (as from 1 January 2009).

2009 Decrease in employers' SSC by 5 percentage points (up to

double of minimal wage, as from 1 July 2009).

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MEASURES IN THE DOMAIN OF TAXATION

MEASURES IN THE DOMAIN OF SOCIAL 
CONTRIBUTIONS

PIT rate cuts: of the lower band from 27 % to 20 % (1997-
2001) and the higher band from 48 % to 42 % (1998-
2001).
Increases in basic tax allowances/credits (1997-
2008). Widening and individualisation of the tax bands
(1997-2008).
Revenue-neutral move from a system of tax allowances to
a system of tax credits (completed in 2001).

2001

Ireland  

1997 Reduction in employers'

2002). Reductions in employees'
(1997-2008).

'PRSI' contributions (1997-
'PRSI' contributions

Reduction in higher PIT band from 42 % to 41 %.

2007

Introduction of an additional income levy of 1 % on gross
income up to € 100 100 per annum and a rate of 2 % for
income above this amount. On income in excess of € 250
120 a further 1 % is payable. Doubling of income levy to 2
% (above exemption threshold of € 15 028), 4 % (income
in excess of € 75 036) and 6 % (above € 174 980) as of 1
May 2009. 

2009 Introduction of a pension levy on public sector wages.

Two step increase in employee SSC ceiling.

Italy  
1997 Reductions in employers' social contributions in respect
of new jobs and at the low end of the pay scale (1997-
2000).

1998 Reduction in employers' health care contribution rate.
Introduction of new regional tax ('IRAP') based on the
value of production net of depreciations (1998). 

2000

2001

2002

2003

2007

Cut in the second bracket of the income tax.

Further general cuts in rates, in particular on the middle
brackets (2001-2002).

Family allowance supplemented by an additional
credit depending on the number of dependent children.

tax

Introduction of a 'no tax area' for low level of income
(2003). Revision of PIT tax rates (2003 and 2005).

2007 finance bill introduced several changes mainly in the
direction of increasing the equity of the tax system, raise
in tax-exempt basic allowances; introduction of cuts to
second and third bracket (from 33 % to 27 % and from 39
% to 38 %) for different levels of income; introduction of
new fourth 41 % rate bracket; fifth 43 % bracket now
applies to incomes from € 75 001 instead of € 100 000.
Deduction from IRAP of
social
contributions paid plus € 5 000 for each non temporary
worker (€10000 in depressed areas).

employer’s

the

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MEASURES IN THE DOMAIN OF TAXATION

MEASURES IN THE DOMAIN OF SOCIAL 
CONTRIBUTIONS

Reduction of IRAP tax rate from 4.25% to 3.9%.Granting
of tax credit of up to € 333 per month (€416 for women in
high female unemployment areas) granted to enterprises
located in depressed areas, per each new employee. 

Italy (continued…)
2008

IRAP paid by employers is now 10% deductible from CIT
or PIT.

2009

Latvia   
1997 Gradual

reduction in the rate of

insurance
contributions from 38 % to 33.09 % (1997, 2000, 2001 and
2003).

social

Gradual increase of non-taxable minimum and relief for
dependants (2005-2009). 

2005

Reduction in PIT rate from 25 % to 23 %. Introduction of
tax allowances for groups negatively affected by the flat
tax scheme.

2009 Abolition of the ceiling of SSCs for all insured persons.

Gradual increase of basic tax-exempt allowance from LTL
142 to LTL 320 and corresponding increase of individual
allowances for disabled and single parents (1996 to 2008).

Lithuania   
1996

2000 Mandatory social contributions increased by 1 % (to
31 %) of gross wages for employers and by 2 % (to 3 %)
for employees.

Introduction of additional tax-exempt allowance for the
first second child (0.1 of basic tax-exempt allowance,
2003).

2003

Gradual reduction in the income tax rate from 33 % to 27
% (from 1 July 2006) and to 24 % (from 1 January 2008).

2006

income.
Reduction in tax burden on employment
Previous all-in 24 % rate replaced with 15 % PIT rate + 6
% compulsory health insurance contribution for a total of
21 %. Various changes
in personal allowances or
deductions

2009 Introduction of health insurance contribution (see tax

section).  

Cut in PIT rate from 50 % to 46 %.  

Luxembourg   
1998

Substantial increase in tax allowance for house and child
care. 

1999 Introduction of a new long term care scheme with a

contribution rate of 1 % of taxable income.

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MEASURES IN THE DOMAIN OF TAXATION

MEASURES IN THE DOMAIN OF SOCIAL 
CONTRIBUTIONS

Cut in PIT from 46 % to 42 % (maximal rate) and increase
in the minimum threshold of taxation. Extension of
deduction possibilities for different types of income, a.o.
for privately held pension plans.

Luxembourg (continued…)
2001

Cut in PIT from 42 % to 38 %.

2002

2007 Increase in contribution rate to long-term care scheme

from 1 % to 1.4 % of income.

Increase of tax brackets. Introduction of child bonus
(transformation of tax relief for families with children
into tax credit).

2008

Increase of tax brackets. Introduction of tax credits for
income earners, the retired and monoparental families,
(replacing former tax relief for these categories). 

2009 Introduction of new uniform paid sick leave scheme.

Reduction in the number of tax brackets and change in
range of rates.

Increase in tax thresholds.

Increase in the number of tax brackets and change in the
tax thresholds.

Reduction in the number of tax brackets and change in
range of rates.

Increase in tax thresholds.

Increase in tax thresholds.

Malta
2000

2002

2003

2007

2008

2009

Netherlands   

1996 Reductions

in wage

social
tax
contributions with respect to the long-term unemployed,
the low-paid and for training purposes (1996-2001).

employers'

and

1998 Contribution for disability insurance scheme shifted from
the employee to the employer. Increases in employees'
contribution rate for state pensions and medical expenses
(1998-2000).

2001 Reductions

in

employees'

contribution

rate

for

unemployment insurance.

Across-the-board cut in PIT. Introduction of a tax credit
for all employees and self-employed (2001-2002),
in
return, lump sum deductions for labour cost expenses and 
self-employed were abolished in 2001.

Increase in the tax credit
introduction of a bonus for older employees.

for working parents and

2009 Abolishment of

the employee's contribution to the

unemployment social security scheme.

2006 Introduction of new health care insurance system.

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MEASURES IN THE DOMAIN OF TAXATION

MEASURES IN THE DOMAIN OF SOCIAL 
CONTRIBUTIONS

Cut in tax rates and limitation of tax deductions (up to
1998).

Poland  
1998

1999  Global reform of the social security system.

Rise of thresholds for the taxable income.

Introduction of new PIT rates of 18 % and 32 %
(replacing the 2008 rates of 19 %, 30 % and 40 %.)

2007

2009

Portugal  

 General cut in PIT rates.

2001 Targeted reductions in employers' social contributions.

 General cut in PIT rates.

Introduction of a new top tax bracket, changes in tax
credits.

Exclusion from public transport commuting expenses
from taxable income.

2005

2006

2009

Introduction of a flat rate tax system with a tax rate of 16
%, replacing the previous four bracket system with tax
rates ranging from 18 % to 40 %.

Romania  
2005

2006 Reductions in employees' and employers' contribution

rates (2006-2008).

2008 Global reform of the social security system: broadening of
the tax base by the inclusion of bonuses; removal of the
ceiling of five average gross wages on the payment of SSC
etc. Reform of pension system - introduction of a
compulsory second pillar (starting with 2008).

Increase in level of deductibility of voluntary health
insurance (from €200 to €250) and threshold of deduction
for
contribution to facultative pension
schemes (€ 200 to € 400).

employees'

2009 Increase in employee's and employers' contribution rates;
decrease in employers' contributions for work accidents
and professional diseases by 0.5 %. 

Slovakia   

Increase in tax allowances, reduction in the number of tax
brackets from 7 to 5 (1995-2002).

1995 Reduction in employers' social contributions by 2.8 %
social
increase

employees'

(1995-2006)
in
and
contributions by 1.4 % (1995-2006). 

Reduction in the top and in the bottom tax rates. 

2003

General tax reform, shift of the tax burden from direct
toward indirect taxes, elimination of exemptions and
special regimes and introduction of flat tax rate of 19 % in
PIT.

2004 Linkage of the contributions ceiling (payroll tax cap) to

the average wage (3 or 1.5 x average wage).

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MEASURES IN THE DOMAIN OF SOCIAL 
CONTRIBUTIONS

Slovakia (continued…)

2005 Introduction of mandatory privately managed fully

funded pillar at 9 % of gross earnings.

2006 Introduction of healthcare contribution annual clearing

(in 2006 for health contributions paid in 2005). 

Reduction in the non-taxable personal allowance. 

2007

2008 Increase in contributions ceiling (payroll tax cap) from 3

to 4 times the average wage.

Introduction of an employee tax credit as a form of
negative income tax; increase in basic allowance.

2009

Slovenia   

Reduction in the number of tax brackets from six to five
and of the lowest rate from 17 % to 16 %, increase in
general allowance for all taxpayers (from € 1 474 to € 2
355) and in tax allowances for taxpayers with children.

1996 Decrease of social contributions and introduction of

payroll tax.

2005 Phasing out of payroll tax by 1 January 2009 (2005-2009).
Rates are 0 %, 2.3 %, 4.7 % and 8.9 % in 2007 and 0 %, 1.1
%, 2.3 % and 4.4 % in 2008. 

Introduction of a dual income tax system (dividends,
interests and capital gains are taxed separately by
proportional rates.

Reduction in the number of tax brackets from five to
three; increase in general allowance for all taxpayers (from
increase in tax allowances for
€ 2 522 to € 2 800),
taxpayers with three or more children.

Further increase in general allowance to € 5 118 (if the
taxable income is up to € 8 557), € 4 082 (if the taxable
income is between € 8 557 and € 9 897), € 3 051 (if the
taxable income is above € 9 897)

2006

2007

2008

Spain   
1997 Targeted reductions in social contributions (1997-2000).

Across the board cut in PIT rates,
increase in basic
personal allowances and increase in work income
allowance for low wages.

1999

2001 Reduction in unemployment contributions for employers

and employees.

Cut in PIT and introduction of a non-wastable annual tax
credit of € 1200 for working females with children under
3 years of age.

2003

2006 Introduction of various abatements and reductions in

social contributions for hiring of disadvantaged workers.

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MEASURES IN THE DOMAIN OF SOCIAL 
CONTRIBUTIONS

Spain (continued…)

2007 Reduction of SSC of up to 40 % for research workers.

Reduction in the tax scale applicable to the general
component of taxable income from five brackets (15 % to
45 %) to four (24 % to 43 %). Increase in personal and
family allowances, which are now included in the first
income bracket taxed at a zero rate. Steady increase in the
general tax allowance for employment based on a non-
tax
linear
deductions (for women giving birth to children).

Introduction of general

formula (2007).

Indexing of main PIT tax parameters. Introduction of a €
400 general tax rebate for working and self-employed
income earners. Introduction of a tax deduction for
taxpayers renting their permanent dwelling.

2008

2009 Introduction of abatements and reductions in SSC for

hiring unemployed workers with children.

Several temporary tax measures taken in relation with the
global financial and economic crisis mainly addressed to
tackle taxpayers’ housing problems (up to 2010): Deadline
extension of contributions to housing bank account
schemes and own housing reinvestment and advanced
claim of own housing mortgage tax deduction through
monthly withholding
payments. Continued
tax
application of € 400 general tax rebate for working and
self-employed income earners. 

Sweden   

1995 Increases in employees' contribution rates (1995-1998).

Reductions in central- and local income tax, especially at
the bottom to the middle end (1999-2001).

1999

Increase in threshold for State income tax (2000-2002)
and increase in basic allowance (2001-2002).

2000 Reductions in employers' contribution rates (2000-2001).

2004 Reduction in employers' social contributions (2004, 2006

and 2007).

in the

tax reduction linked to pension
Increase
contributions, higher basic tax allowance for low and
middle income earners (2006).

2006

Introduction of an earned income tax credit in two steps
(2007, 2008) and subsequent increase (2009).

2007

2009 Reduction in employees' social contributions.

United Kingdom

PIT reductions, especially at the bottom to the middle end
(1999-2000).

1999 Increase in starting point for paying national insurance
contributions
for employers and employees.
Reduction in employers' contribution rates to compensate
for introduction of climate levy (1999-2001).

(NIC)

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MEASURES IN THE DOMAIN OF SOCIAL 
CONTRIBUTIONS

United Kingdom (continued…)

2002 Increase of the NIC by 1 % for both employers and

employees.

Abolition of the 10 % rate of income tax for non-savings
income. Decrease in the basic rate of PIT from 22 % to 20
%. Increase in tax-free personal allowance for taxpayers
under 65.

An additional rate of income tax (50 %) will be applied for
annual incomes above GBP 150 000; restriction of PIT
allowance for annual incomes over GBP 100 000.

2008

2010

2011 Increase in national insurance contributions by 0.5 % for

employees, employers and self-employed. 

Reduction of surtax (1999, 2002-2006).
minimum allowance (1999-2002, 2006, 2007).

Increase of surtax (2000, 2007).

Taxation of rehabilitation benefits as wage.

Norway  
1999

Increase of

2000

2002

Increase in allowance for labour union fees (2006-2009).

2006

2004 Phasing-out of regionally differentiated employers’ SSC

(2004-2006).

Increase in parent allowance.

Source: Commission services

2007 Reintroduction of regionally differentiated employers’

SSC.

2008

a

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on capital

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Part II

4.

TRENDS IN THE IMPLICIT TAX RATE ON CAPITAL

4.1.

Introduction 

In  recent  years  growing  policy  attention  has  been  devoted  to  the  taxation  of  capital,  and  in  particular  corporate
income taxes. Corporate income tax, although usually considered the main tax on capital, is not a major source of
revenue in any of the Union's Member States. In 2007, it represents 3.0 % of GDP on average in the EU1) and was
equal  to  or  less  than  4.0 %  of  GDP  in  all  countries  but  five:  Cyprus  (6.9 %),  Malta  (6.7 %),  Luxembourg  (5.4 %),
Czech Republic and Spain (4.8 %). After the inclusion of all other capital taxes, the revenue from the taxation of this
factor reaches sometime more than 10.0 % of GDP in some Member States — Cyprus (14.2 %), Italy (11.8 %), United
Kingdom (11.5 %), Malta (11.4 %); Luxembourg (11.3 %), Spain (11.2 %), and France (10.1 %). At 9.4 % on average
for the EU, taxes on capital can be split up into those on corporate income (3.4 %), those on capital income of self-
employed (2.1 %) and of households (1.0 %), and those on the stock of capital (wealth) (2.9 %). 

There is a wide interest in the development of capital taxes. A number of reasons contribute to this interest. The
mobility of capital2) makes policymakers fear that excessive levels of taxation would scare away capital or hope to
attract capital from other countries by offering an attractive tax treatment (so-called tax competition3)). Like most
taxes, taxes on capital may have distortive effects on the market4), particularly in highly integrated areas like the EU
Internal Market. These distortions may also impact the personal income taxes because taxes on capital reduce capital
accumulation and therefore negatively impact productivity levels, which in turn depress wages. Next, the fact that
capital is generally more mobile than labour has generated the apprehension that the burden of taxation would be
shifted from the former to the latter. Equity considerations also feature prominently in the debate on the taxation of
capital held by individuals given that capital is, as a rule, both more lightly taxed than labour income and often taxed
at flat rates, which calls for an effective taxation of capital income to avoid emptying the progressivity of the income
tax  of  its  meaning.  Next,  recent  substantial  cuts  in  the  corporate  income  rate  have  highlighted  the  risk  that  a
comparatively light taxation of capital induces individuals to take on the legal form of corporation, only to avoid the
payment of the personal income tax on their labour income (backstop function of the corporate income tax). Finally,
the  relative  mobility  of  capital  has  stimulated  the  apprehension  of  tax  competition  and  a  subsequent  race-to-the-
bottom in capital tax rates.

1)

2)

3)

See Table A.2.2_G in Annex A.

This mobility can assume different forms ranging from foreign direct investments to profit shifting.

See Nicodème (2007) for a recent review with a focus on the European Union.

4) Distortions come from the fact that taxes will deter economic activity. They are usually measured by the size of so-called deadweight losses,
or excess burden of taxation. These represent a loss of economic efficiency that occurs when taxation creates a wedge between supply and
demand by distorting price equilibrium. In other words, there is a loss of consumer and producer surpluses due to the fact that equilibrium
is reached at a lower quantity of inputs.

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Part II

Trends in the implicit tax rate on capital

Table II-4.1

Adjusted top statutory tax rate on corporate income
1995-2009, in %

<@>tII_4.1.pdf

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK
EU-27
EU-25
EA-16

Difference

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1995-2009 2000-2009
-6.2
40.2
-22.5
40.0
-11.0
41.0
-7.0
34.0
-21.8
56.8
-5.0
26.0
-11.5
40.0
-15.0
40.0
-5.0
35.0
-3.3
36.7
-9.9
52.2
-19.0
25.0
-10.0
25.0
-4.0
29.0
-8.9
40.9
1.6
19.6
0.0
35.0
-9.5
35.0
-9.0
34.0
-11.0
40.0
-8.7
39.6
-9.0
38.0
-4.0
25.0
-10.0
40.0
-3.0
25.0
-1.7
28.0
-2.0
33.0
-8.4
35.3
-7.8
35.0
-9.0
37.5

-6.2
-30.0
-21.0
-9.0
-27.0
-5.0
-27.5
-15.0
-5.0
-2.2
-20.8
-15.0
-10.0
-9.0
-12.3
1.6
0.0
-9.5
-9.0
-21.0
-13.1
-22.0
-4.0
-21.0
1.0
-1.7
-5.0
-11.8
-10.7
-11.7

34.0
10.0
21.0
25.0
29.8
21.0
12.5
25.0
30.0
34.4
31.4
10.0
15.0
15.0
29.6
21.3
35.0
25.5
25.0
19.0
26.5
16.0
22.0
19.0
26.0
28.0
30.0
23.6
24.4
26.0

34.0
10.0
20.0
25.0
29.8
21.0
12.5
25.0
30.0
34.4
31.4
10.0
15.0
20.0
28.6
21.3
35.0
25.5
25.0
19.0
26.5
16.0
21.0
19.0
26.0
26.3
28.0
23.5
24.4
25.9

40.2
28.0
31.0
30.0
38.3
26.0
20.0
37.5
35.0
36.4
40.3
28.0
25.0
24.0
37.5
19.6
35.0
35.0
34.0
28.0
35.2
25.0
25.0
29.0
29.0
28.0
30.0
30.7
31.1
33.5

34.0
15.0
26.0
28.0
38.7
24.0
12.5
32.0
35.0
35.0
37.3
10.0
15.0
15.0
30.4
17.5
35.0
31.5
25.0
19.0
27.5
16.0
25.0
19.0
26.0
28.0
30.0
25.5
26.3
28.4

40.2
32.5
31.0
32.0
51.6
26.0
24.0
40.0
35.0
37.8
41.3
29.0
25.0
24.0
37.5
19.6
35.0
35.0
34.0
30.0
35.2
25.0
25.0
29.0
29.0
28.0
30.0
31.9
32.2
34.9

40.2
23.5
31.0
30.0
38.3
26.0
16.0
35.0
35.0
35.4
40.3
28.0
22.0
15.0
30.4
19.6
35.0
34.5
34.0
28.0
33.0
25.0
25.0
25.0
29.0
28.0
30.0
29.3
29.7
32.1

34.0
19.5
28.0
30.0
38.3
26.0
12.5
35.0
35.0
35.4
37.3
15.0
15.0
15.0
30.4
17.6
35.0
34.5
34.0
19.0
27.5
25.0
25.0
19.0
29.0
28.0
30.0
27.0
27.4
29.8

40.2
40.0
39.0
34.0
56.7
26.0
38.0
40.0
35.0
36.7
53.2
25.0
25.0
29.0
40.9
19.6
35.0
35.0
34.0
40.0
39.6
38.0
25.0
40.0
28.0
28.0
33.0
35.3
35.0
37.6

40.2
40.2
39.0
34.0
56.7
26.0
36.0
40.0
35.0
41.7
53.2
25.0
25.0
29.0
39.3
19.6
35.0
35.0
34.0
38.0
39.6
38.0
25.0
40.0
28.0
28.0
31.0
35.2
34.9
37.7

40.2
37.0
35.0
34.0
56.0
26.0
32.0
40.0
35.0
41.7
41.3
25.0
25.0
29.0
37.5
19.6
35.0
35.0
34.0
36.0
37.4
38.0
25.0
40.0
28.0
28.0
31.0
34.1
33.9
36.4

40.2
34.3
35.0
32.0
51.6
26.0
28.0
40.0
35.0
40.0
41.3
25.0
25.0
29.0
37.5
19.6
35.0
35.0
34.0
34.0
37.4
38.0
25.0
40.0
28.0
28.0
30.0
33.5
33.3
35.8

34.0
10.0
24.0
25.0
38.7
22.0
12.5
25.0
32.5
34.4
37.3
10.0
15.0
18.0
29.6
21.3
35.0
25.5
25.0
19.0
26.5
16.0
23.0
19.0
26.0
28.0
30.0
24.5
25.5
27.1

34.0
23.5
31.0
30.0
39.6
26.0
12.5
35.0
35.0
35.4
38.3
15.0
19.0
15.0
30.4
19.6
35.0
34.5
34.0
27.0
33.0
25.0
25.0
25.0
29.0
28.0
30.0
28.3
28.7
30.7

34.0
15.0
24.0
28.0
38.7
23.0
12.5
29.0
35.0
34.4
37.3
10.0
15.0
19.0
29.6
17.5
35.0
29.6
25.0
19.0
27.5
16.0
25.0
19.0
26.0
28.0
30.0
25.3
26.0
28.0

Note: Only the ‘basic’ (non-targeted) top rate is presented here. Existing surcharges and averages of local taxes are included. Some countries also
apply  small  profits  rates  or  special  rates,  e.g.,  in  case  the  investment  is  financed  through  issuing  new  equity,  or  alternative  rates  for
different  sectors.  Such  targeted  tax  rates  can  be  substantially  lower  than  the  effective  top  rate.  Belgium:  a)  A  3 %  ‘crisis’  surcharge  is
applicable since 1993; b) since 1/1/2006 Belgium, applies a system of notional interest (ACE) which reduces the ‘effective tax rate’ with
several  percentage  points,  depending  on  the  difference  between  the  rate  of  return  and  the  rate  of  the  notional  interest  deduction.
Germany:  The rate includes the solidarity surcharge of 5.5 % and the average rate for the trade tax ('Gewerbesteuer', which is also an
allowable  expense  for  the  purpose  of  calculating  the  income  on  which  corporation  tax  is  payable).  From  1995  to  2000  the  rates  for
Germany refer only to retained profits. For distributed profits lower rates applied. As from 2008 enterprises are subject to an overall tax
burden of 29.8 % nominally. This is the result of the reduction of the corporate tax rate from 25 % to 15 % and the reduction of the base
measure for trade tax from 5 % to 3.5 %. The adjusted top statutory tax rate is calculated with an average multiplier of 400 % for the trade
tax. Estonia: As from 2000 the rate for Estonia refers only to the gross amount of distributed profits; the tax rate on retained earnings is
zero.  France:  France  applies  a  standard  CIT  rate  of  33.5 %.  Large  companies  (turnover  over  € 7 630 000  and  taxable  profit  over  €
2 289 000)  are  subject  to  an  additional  surcharge  of  3.3 %  levied  on  the  part  of  aggregate  corporate  tax  which  exceeds  € 763 000.  An
annual minimum lump-sum tax (IFA) based on turnover is payable when turnover is more than € 400 000. Hungary: From 1 September
2006, a solidarity surtax of 4 %  is levied on most of the resident companies.  A local business tax is maximum 2 %. An ‘Innovation tax’ of
0.3 % is due on the same base as the local business tax, but not for all companies. The corporate income tax in Hungary consists of three
components: the standard CIT rate of 16 %, a local tax of maximum 2 % that applies on the gross operating profit (turnover minus costs)
and which is deductible from the tax base, and a surcharge of 4 %. Starting from a gross operating profit of 100, companies would pay the
local tax of 2. The tax base for the surcharge of 4% is the profit before tax, that is 98 (100 minus the local tax paid of 2). The surcharge
amounts then to 3.92. Finally, the CIT base is calculated as the profit before tax of 98 minus the deductible local tax of 2, that is 96. the CIT
rate of 16 % gives a tax of 15.36. In total, the tax paid is 15.36 + 3.92 + 2 = 21.28. This represents 21.714 % of the profit before tax of 98.
Ireland: 25 % for non-trading income, gains and profits from mining petroleum and land dealing activities. Until 2003, Ireland applied a
10 % CIT rate to qualifying manufacturing and services companies. Italy: As from 1998 the rates for Italy include IRAP (rate 3.90 %), a
local  tax  levied  on  a  tax  base  broader  than  corporate  income.  The  rate  may  vary  up  to  1  percentage  point  depending  on  location.
Lithuania: a 'social tax' (applied as a surcharge) has been introduced in 2006 and 2007 (at 4 % and 3 % respectively). Luxembourg: basic
local  tax  (municipal  business  tax)  is  3%  to  be  multiplied  by  a  municipal  factor  ranging  from  2  to  3.5.  The  rate  in  the  table  is  for
Luxembourg City. Portugal: As from 2007 the rate for Portugal includes the maximum 1.5 % rate of a municipal surcharge.

Source: Commission services

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Trends in the implicit tax rate on capital

Part II

Table II-4.2

Adjusted top statutory tax rate on corporate income - EU v. third countries
1995-2009, in %

<@>tII_4.1.1.pdf

EU-27

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1995-2009 2000-2009
-8.4
35.3

-11.8

33.5

30.7

29.3

35.3

35.2

34.1

31.9

28.3

27.1

25.3

24.5

23.6

23.5

25.5

Difference

Non-EU countries
OECD-6
AU
CA
CH
JP
NO
US
BRIC
BR
RU
IN
CN

37.6
33.0
44.6
28.5
51.6
28.0
40.0
38.9
47.7
35.0
40.0
33.0

38.1
36.0
44.6
28.5
51.6
28.0
40.0
34.9
31.5
35.0
40.0
33.0

38.1
36.0
44.6
28.5
51.6
28.0
40.0
34.9
31.5
35.0
40.0
33.0

38.0
36.0
44.6
27.5
51.6
28.0
40.0
34.9
31.5
35.0
40.0
33.0

37.0
36.0
44.6
25.1
48.0
28.0
40.0
34.0
33.0
35.0
35.0
33.0

35.3
34.0
44.6
24.9
40.9
28.0
39.3
35.9
37.0
35.0
38.5
33.0

34.2
30.0
42.1
24.7
40.9
28.0
39.3
35.4
34.0
35.0
39.6
33.0

33.5
30.0
38.6
24.4
40.9
28.0
39.3
31.7
34.0
24.0
35.7
33.0

33.2
30.0
36.6
24.1
40.9
28.0
39.3
31.9
34.0
24.0
36.8
33.0

32.8
30.0
36.1
24.1
39.5
28.0
39.3
31.7
34.0
24.0
35.9
33.0

32.4
30.0
36.1
21.3
39.5
28.0
39.3
31.9
34.0
24.0
36.6
33.0

32.4
30.0
36.1
21.3
39.5
28.0
39.3
31.2
34.0
24.0
33.7
33.0

32.4
30.0
36.1
21.3
39.5
28.0
39.3
31.2
34.0
24.0
34.0
33.0

32.5
30.0
34.6
21.3
42.0
28.0
39.0
29.2
34.0
24.0
34.0
25.0

32.5
30.0
34.6
21.3
42.0
28.0
39.0
28.3
34.0
20.0
34.0
25.0

-5.1
-3.0
-10.0
-7.2
-9.6
0.0
-1.0
-10.7
-13.7
-15.0
-6.0
-8.0

-2.8
-4.0
-10.0
-3.6
1.1
0.0
-0.3
-7.6
-3.0
-15.0
-4.5
-8.0

Note: Rates are those applicable in capital city (e.g. Washington DC for the USA); Brazil applies a variant of an Allowance for Corporate Equity 

(only allowing the tax deduction of notional interest when it is actually paid out to shareholders as ‘‘interest on equity’).

Source: Commission services; OECD Tax Database; KPMG Corporate Tax survey; IBFD; Deloitte domestic rates database; Ministries websites;

World Tax database at office of tax policy research; Klemm, A. (2007), Allowances for Corporate Equity in Practice, CES

Table II-4.1 shows the statutory corporate tax rates for the EU Member States, while Table II-4.2 shows the statutory
rate for six non-EU OECD countries and the BRIC (Brazil, Russia, India and China). Two trends were prominent in
corporate taxation in the Union in the last decade: 

• Firstly, the European Union countries moved towards lowering CIT rates, in one case even abolishing the tax
altogether on retained earnings (Estonia). Taking local taxes and surcharges into account, the average general
corporate  tax  rate  in  the  EU-27  was  reduced  by  11.8  percentage  points  in  the  period  1995  to  2009.  This
reduction is however not a new phenomenon as cuts in corporate tax rates started as early as in the 1980s. We
can however also see that the same trend towards lower statutory corporate tax rates also occurred — albeit
less dramatically — in many third countries.

•  Secondly,  the  scale  of  deductions  and  exemptions  was  reduced.  This  trend  was  also  due  to  the  Code  of
Conduct  for  business  taxation  (which  has  played  a  role  in  limiting  preferential  tax  regime  and  therefore
encouraged Member State to prefer adjusting the tax rate rather then the base) and to the necessity to conform
to EU rules limiting State aid to enterprises (as some State aid may be in the form of tax breaks). There was
also  a  tendency  in  many  Member  States  in  recent  years  to  enlarge  the  corporate  tax  base  via  less  generous
depreciation  rules  and  deductions5).  The  Belgian  ACE  (allowance  for  corporate  equity)  forms  a  striking
exception on the base broadening trend.

• Finally, the EU has by and large become a low-tax area when it comes to statutory corporate tax rates. The EU
average  of  23.5 %  is  lower  than  the  statutory  tax  rate  in  all  selected  OECD  countries  and  the  BRIC,  bar
Switzerland and Russia. 

An analysis of the combined impact of these changes based on the use of simple metrics, such as statutory tax rates
or  simple  tax-to-GDP  ratios,  would  however  not  give  an  accurate  picture.  National  provisions  for  computing  the
taxable base to which the statutory tax rates are applied differ greatly across countries. The simple tax-to-GDP ratio,
while superior to the statutory tax rates in describing the effective tax burden, fails to capture changes in the capital
tax  base6).  Moreover,  the  weight  of  the  base  (total  taxable  capital)  on  GDP  may  differ  considerably  between

5) Devereux et al. (2002) and Griffith and Klemm (2004) provide ground for this latter policy development. Their computations show that

fiscal depreciation rules have indeed become less generous during the past two decades, especially for buildings. 

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Trends in the implicit tax rate on capital

countries. Hence, in this report we compute implicit tax rates (ITRs), which put each tax in relation to its respective
tax base. 

Taxes on capital are a complex class that includes a variety of taxes paid both by enterprises and households: stamp
taxes,  taxes  on  financial  and  capital  transaction;  car  registration  taxes  paid  by  enterprises;  taxes  on  land  and
buildings; the part of personal income paid on earnings from capital, taxes paid on income or profits of corporations
and taxation of capital transfer such as inheritance taxes. It should be noted that under the definition used in this
report, taxes raised on self-employment income are booked as taxes on capital, although stricto sensu earnings from
self-employment include a return to labour as well as to capital. Given this complexity, one should be cautious in
interpreting the available figures as the concept covers many sources of revenues that are of a different nature, and
are earned by different recipients.

Next  to  the  implicit  tax  rate  on  capital,  the  report  contains  three  additional  indicators  of  effective  taxation:  the
implicit tax rate on capital and business income; the implicit tax rate on corporate income, and the implicit tax rate
on capital and business income of households. The first indicator differs from the implicit tax rate on capital to the
extent  that  it  excludes  the  taxes  on  the  stock  of  wealth.  The  last  two  look  at  the  taxation  of  capital  and  business
income  of  corporations  and  households  respectively.  Annex  B  provides  the  definitions  as  well  as  an  extensive
discussion of those indicators.

4.2.

Implicit tax rates on capital: long-term trends 

Although the ITR on capital is only available for the years starting from 1995, an indication of a longer-run trend
starting from the 1970s can be gleaned from a broader indicator, namely the 'tax rate on other production factors'
which was computed in previous editions of this report7). The definition of both numerator and denominator was
different,  somewhat  broader  and  the  data  were  based  on  the  national  accounts  format  ESA79.  In  addition,  the
composition of the Union was also different.

As shown in Graph II-4.1 this indicator shows for the European Union8) an increase until the beginning of the 1980s.
Afterwards, a slight decrease in the effective tax burden took place from the early to the mid-1980s, followed by a
period of stabilisation from the late 1980s to the early 1990s. The methodology was subsequently refined and the
national account systems also moved to the ESA95 format, thus the series are not directly comparable. However, it is
worth  noticing  that  the  'ITR  on  other  factors  of  production'  gave  an  indication  of  increasing  taxation  on  capital
starting from 1995. This trend is consistent with that of the ITR on capital computed starting from 1995 and based
on  the  national  accounts  format  ESA95.  This  indicator  increases  dramatically  between  1995  and  2001,  before
showing a three-year decrease and a new rise since 2003. Interestingly, this evolution corresponds closely to the one
of the business cycle9). The methodology followed for the computation is described in Annex B. 

6)

7)

8)

9)

The rules on computing taxable income can be construed in such a way as to offer a strong incentive to foreign companies. For instance,
allowing for the depreciation of buildings and the amortisation of intangibles and tangible fixed assets. Given that they incorporate such
elements of the tax code in their modelling, effective average tax rates (EATRs) generally allow a more accurate analysis of these aspects,
while suffering from other limitations linked to their forward looking nature. For details see European Commission (2001a). Jacobs et al.
(2004) calculate the EATRs for a German parent company operating a subsidiary in each of the new Member States. Their work highlights
the substantial differences in tax regimes: the spread between the EATR for, say, Malta and Lithuania is found to reach almost 20 percentage
points.

European Commission (2000b).

The evolution of the ITR on other production factors depicted in the Graph is referred to the EU-9 (BE, DK, DE, IE, FR, IT, LU, NL and UK)
from 1970 to 1980 and to the EU-15 afterwards. 

The  computation  of  the  entire  time  series  2000–07  for  the  ITR  on  capital  is  possible  only  for  seven  of  the  NMS-12,  namely  the  Czech
Republic, Estonia, Cyprus, Latvia, Lithuania, Slovenia and Slovakia. Partial data are available for two other countries: Hungary and Poland.

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Trends in the implicit tax rate on capital

Part II

Graph II-4.1 Implicit tax rate on other production factors and implicit tax rate on capital

1970–2007, in %

<@>gII_4_1.gif

Note: All averages are GDP-weighted.

Source: Commission services

Table D.3 in Annex A shows the development of the ITR on capital for all the Member States and years available.
in  seven  Member  States:  Finland
Comparing  2000  and  2007,  the  overall  ITR  on  capital  decreased 
(– 9.3 percentage points),  Sweden 
(– 5.4 percentage points),  Germany
(– 7.5 percentage points),  Slovakia 
(– 4.5 percentage points), the Netherlands (– 4.5 percentage points), the United Kingdom (– 2.0 percentage points),
and Austria (– 1.3 percentage points). In addition, the ITR for Greece decreased between 2000 and 2006, the latest
year available. Alternatively, the ITR on capital has risen10) in other countries with some spectacular increases of 10
percentage  points  or  more  recorded  in  Cyprus  and  Spain.  This  difference  in  trends  has  unsurprisingly  led  to  an
increase in the dispersion of the ITR on capital as measured by the coefficient of variation11) (see Graph II-4.2). This
may be prima facie unexpected given the increased integration of capital markets.

10) A more pronounced increase could be observed for the overall indicator when using a simplified denominator referring to the net operating
surplus of the whole economy. Carey and Rabesona (2002) who used a similar (biased) denominator also reported increases in the implicit
tax rate on capital. The reader should also bear in mind that, because of different methodologies explained in the annexes, the figures for
Ireland and the United Kingdom might be biased upward. Other factors, which could affect/bias comparisons between Member States, are
described in Annex B, Part D. Their importance differs between Member States according — for instance — to a different share of financial
companies making capital gains. Data limitations prevent the computation of the ITRs for Bulgaria, Luxembourg, and Malta.

11) The coefficient of variation is defined as the ratio of the standard deviation on the weighted average of the sample. 

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Trends in the implicit tax rate on capital

Graph II-4.2 Coefficient of variation of the implicit tax rate on capital
Ratio between standard deviation and mean, in %

<@>gII_4_2.gif

Source: Commission services

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report2009.book  Page 109  Thursday, May 28, 2009  1:35 PM

Graph II-4.3 Implicit tax rate on capital

2007, in %

<@>gII_4_3.gif

Trends in the implicit tax rate on capital

Part II

Note: No data for Bulgaria, Luxembourg, Malta and Romania; data for Greece, Hungary and Poland refer to 2006.

Source: Commission services

In terms of levels for 2007, Cyprus tops the ranking with an ITR on capital of 50.5 %. The values for Denmark, the
United Kingdom, Spain, and France are above 40 %. At the other extreme of the scale, Estonia at 10.3 %, Lithuania at
12.1 % and Latvia at 14.6 % display very low levels of ITR on capital.

4.3.

Implicit tax rates on capital and business income.

As explained in the introduction and detailed in the appendix, the implicit tax rate on capital and business income
differs from the ITR on capital as it excludes the taxes on the stock of wealth. It can be broken down further into
corporate  income  or  capital  and  business  income  of  households  and  the  self-employed  (in  the  form  of  rents,
dividends, interest, insurance income, etc.)12).

12) No  data  are  available  for  Bulgaria,  Luxembourg,  Malta  and  Romania.  Data  coverage  for  Greece,  Hungary  and  Poland  stops  in  2006.  In
addition, the coverage of the last two ITRs is lower than for the ITR on capital and business income and some adjustments are necessary. In
particular, estimates for Germany and Ireland are not available. For Austria and Portugal the ITR on corporate income represents the tax
burden  on  all  companies  including  the  self-employed. This  correction  is  necessary because  of the  sectoral  mismatch  in  the  recording of
unincorporated  partnerships  in  national  accounts.  The  profits  of  partnerships,  treated  as  quasi-corporations  in  national  accounts,  are
booked in the corporations sector while the corresponding tax payments are recorded in the households sector, given that the owners of the
partnership  are  taxed  under  the  personal  income  tax  scheme.  In  theory,  also  for  Germany,  where  partnerships  are  an  important  part  of
companies, a similar correction could be calculated. However, owing to reservations regarding comparability with other Member States, it
has been decided not to publish these results.

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Graph II-4.4 Implicit tax rate on capital and business income in EU-25

1995–2007

<@>gII_4_4.gif

Note: GDP-weighted averages of available sample.

Source: Commission services

The ITR on capital and business income for the EU-25 rose from 17.3 % in 1995 to 23.4 % in 2007. The increases for
the  ITRs  for  corporations  and  for  households  have  been  respectively  from  21.9 %  to  30.5 %  and  from  12.2 %  to
16.5 %. From tables D.3.1 to D.3.1.2 in Annex A, the developments in the ITR on capital and business income for the
period 2000-2007 show no clear general pattern in the 21 Member States for which data are available. Rather, one can
distinguish five groups of countries: 

Portugal  and  Sweden  are  the  only  two  Member  States  that  record  a  decrease  in  the  ITR  on  capital  and  business
income and its two components over the 2000-2007 period. In both cases, the ITR has however increased between
2006 and 2007.

A second group of Member States have shown an increase in the ITR on capital and business income and its two
components  over  the  2000-2007  period.  Denmark,  Estonia,  Spain,  Italy,  Cyprus,  Latvia,  Lithuania  and  Slovenia
widely differ however in their levels and trends.

The ITR on capital and business income has also risen in Belgium, Czech Republic and Poland, but it reflects an
increase in the ITR on capital and business income of households and self-employed and a decrease in the ITR on
corporate income between 2000 and 2007.

The opposite situation characterises France as its increased ITR on capital and business income is the conjunction of
an increase in the ITR on corporate income and a decrease in the ITR on households.

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Trends in the implicit tax rate on capital

Part II

Finally, the decrease in the ITR on capital and business income in Greece, Hungary, the Netherlands, Austria, Slovak
Republic, Finland and the United Kingdom between 2000 and 2007 reflects an increase in the ITR on households
and a decrease in the ITR for corporate income.

Graph II-4.5 Implicit tax rate on capital and business income

2007

<@>gII_4_5.gif

Note: No data for Bulgaria, Germany, Luxembourg, Malta and Romania; data for Greece, Hungary, Poland and Portugal refer to 2006.

Source: Commission services

In  terms  of  absolute levels,  the  most  striking features  are  the very  high levels  of the  ITR  on  corporate  income in
Spain, France, Slovenia and Cyprus, and its very low levels in the three Baltic Member States and the Netherlands.
Interestingly,  with  a  few  exceptions,  the  ITR  on  corporate  income  is  always  higher  than  the  ITR  in  capital  and
business income of households and self-employed.

4.4.

Developments of the capital base

Finally, it is interesting to analyse the evolution of the capital base in the various Member States. Table II-4.3 provides
the evolution of the denominator of the ITR on capital in percentage of GDP for each Member State. A first element
is that this ratio varies for most Member States between 25 % and 35 % of GDP. At the low end, Denmark provides a
low and constant ratio of about 20 % while at the high end the ratio of capital base to GDP in Ireland, Greece and the
Netherlands is above 40 %.

Comparing  this  table  with  Table  C.3_G  on  taxes  on  capital  as  percentage  of  GDP  offers  explanations  for  the
evolution of the ITR on capital in the Member States for the most recent period.

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A first group of countries have experienced a relatively stable ITR on capital over the most recent period 2000-2007.
This is because both the taxes collected and the base have been increasing at the same pace (Belgium, Poland and to
some extent France). A second group of countries has seen its ITR declining as the result of a growth in collection of
taxes on capital as percentage of GDP that was inferior to the growth of the capital tax base in percentage of GDP.
Those Member States are Germany, Austria and the United Kingdom. A third group of countries has also seen its
ITR on capital decreased, but the cause was a decrease in the collection of taxes on capital in percentage of GDP,
while  the  capital  base  in  percentage  of  GDP  was  either  stable  or  increasing.  Those  Member  States  are  Greece,
Netherlands, Slovakia, Finland and Sweden. Next, a fourth group has seen its ITR on capital increasing thanks to an
increase in the ratio of capital taxes to GDP which was larger than the increase in the ratio of the capital tax base to
GDP. This is the case for Check Republic, Ireland, Lithuania, Hungary, and Slovenia. Finally, some Member States
have recorded increases in their ITR on capital, which is the combination of increased tax collection combined with
stagnant or  declining capital tax base in percentage  of GDP. This  situation occurred  in  Denmark,  Estonia, Spain,
Italy, Cyprus, and Latvia. In Portugal, both ratios decreased but a slower decrease in tax collection allowed the ITR to
rise.

Table II-4.3

Capital tax base to GDP
1995-2007, in %

<@>tII_4.2.pdf

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995
34.4
-
27.8
21.3
24.9
23.5
-
-
-
25.5
41.7
39.3
18.2
39.2
-
-
-
32.5
23.5
36.1
29.5
-
-
30.8
20.6
24.2
25.8

1996
33.5
-
27.3
20.4
24.9
27.0
-
-
-
25.0
42.4
39.5
20.7
37.8
-
-
-
33.4
23.9
34.0
28.4
-
-
29.3
20.7
21.7
27.3

1997
33.1
-
27.1
20.1
25.6
27.1
-
-
-
25.4
39.9
36.0
22.5
35.3
-
-
-
36.1
24.2
33.6
26.6
-
-
28.7
22.9
21.9
27.9

1998
32.8
-
29.9
17.8
25.6
30.0
-
-
-
26.1
37.9
39.3
19.1
32.5
-
-
-
35.2
24.7
34.1
25.8
-
-
28.4
24.3
20.7
27.6

1999
30.9
-
29.9
17.9
24.5
31.3
-
-
-
25.4
36.7
40.4
20.5
30.5
-
-
-
35.1
24.0
32.4
25.4
-
-
29.9
25.0
19.7
25.3

2000
32.5
-
29.5
20.1
24.0
31.2
-
49.0
29.4
25.7
37.0
41.6
25.9
32.0
-
27.3
-
37.5
25.2
34.9
23.8
-
18.9
30.1
27.6
19.3
24.4

2001
31.8
-
30.1
19.4
24.2
32.0
-
47.2
29.4
25.8
37.4
41.7
29.0
34.3
-
27.2
-
37.3
24.0
34.0
23.6
-
18.6
32.4
30.8
18.0
23.9

2002
30.3
-
29.0
20.0
24.7
32.2
50.2
46.4
29.2
24.9
35.7
39.5
31.9
34.5
-
28.1
-
31.6
24.7
34.6
23.1
-
19.9
31.3
27.9
17.6
24.3

2003
28.9
-
29.1
17.9
25.2
32.0
50.0
46.5
28.7
24.6
35.1
33.9
30.6
35.8
-
27.4
-
32.4
24.9
35.7
23.5
-
20.8
30.6
26.4
17.4
26.5

2004
29.6
-
29.8
17.8
26.7
31.2
48.4
46.1
28.3
24.5
35.1
33.6
31.5
36.2
-
27.4
-
34.0
26.1
39.3
23.9
-
20.7
33.9
27.1
21.1
26.1

2005
30.6
-
30.8
20.2
28.1
30.8
45.9
45.8
27.7
24.1
33.9
33.4
28.9
36.3
-
27.2
-
40.5
28.0
38.8
22.6
-
21.1
33.1
26.5
19.7
26.3

2006
31.8
-
31.9
19.9
29.5
29.2
48.5
45.0
26.7
24.5
32.8
32.8
27.6
34.3
-
29.5
-
41.5
27.9
38.2
22.0
-
22.5
35.9
29.9
25.2
26.6

2007
32.2
-
32.6
17.3
29.8
25.5
50.6
-
26.5
24.9
32.7
28.2
27.2
31.8
-
-
-
43.3
27.7
-
22.5
-
22.9
37.1
29.4
20.3
26.8

-

-

-

-

-

-

-

27.3

29.0

31.9

36.2

36.5

34.3

Source: Commission services

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Trends in environmental taxes

Part II

5.

TRENDS IN ENVIRONMENTAL TAXES

5.1.

Revenue development and structure

The introduction of environmental tax reforms gained increasing support during the 1990s. The basic idea was to
shift the tax burden from the production factor labour towards the use of natural resources and environmentally
harmful goods and activities. With the publication of Jacques Delors' White Paper on Growth, Competitiveness and
Employment in 1993 the idea of such a fiscal reform became politically attractive, as it offered a means to promote
simultaneously growth and jobs and environmental protection, in other words, to achieve a ‘double dividend’. At the
same time, measures needed to be taken to protect producers from any negative effect on competitiveness arising
from increases  in  the  cost of inputs,  most  particularly energy. Offsetting these cost  increases through various  tax
reduction and refund schemes has indeed been one of the key features of the ‘green’ tax reforms that many Member
States have introduced over the last decade. Among others, Denmark, Germany, the Netherlands, Sweden, Finland
and  the  United  Kingdom  have  introduced  elements  of  such  fiscal  reforms.  Some  new  Member  States,  too,  have
followed suit; one example is Slovenia, where a CO2 tax is applied to all energy products since 1997. In Estonia the
increases of excise duties have been used to finance substantial cuts of personal income taxes in the last few years.
The Czech Republic introduced an environmental tax reform in 2008, which would increase the tax rates of most
energy products over the period 2008–2012 and would use the tax revenues to support the state employment policy.
The  idea  of  using  environmental  taxation  to  promote  the  EU  economic  and  environmental  policy  objectives  has
been endorsed also in many strategies and actions taken at the EU level1).

Despite this interest, environmental tax revenues have not been growing in recent years at the EU average level. In
2007, revenues from environmental taxes in the EU-27 (in the GDP-weighted average) accounted for 2.5 % of GDP
and for 6.2 % of total revenues. Compared to 1980, when environmental taxes accounted for 0.5 % of GDP2), the
increase is significant. However, in the EU-15, the main increase took place between 1990 and 1994 and was largely
driven by the above-average increase of energy taxes. In the new Member States the increase in environmental taxes
took place later and was to a large extent driven by the EU accession process, although some of them made use of the
occasion to increase energy tax levels beyond the strict requirement of the EU provisions (see above). Since the year
1999 environmental tax revenues, in the weighted average, have decreased both in relation to GDP and as a share of
total taxation (by – 0.3 % and – 0.8 % respectively). This development measured at the weighted EU average level
reflects, however, largely the trend in the big EU Member States. In fact, the share of environmental taxation out of
total  taxation  has  increased  since  1995  in  a  number  of  the  EU  Member  States  (Denmark,  Estonia,  Latvia,
Netherlands, Austria, Poland and Slovakia). In many of them environmental taxation has been one of the means to
finance the cuts in personal income taxation in accordance with the principles of a ‘green’ tax reform. 

To  understand  the  fall  of  environmental  tax  revenues  in  relation  to  GDP  it  should  be  kept  in  mind  that
environmental taxes are levied per unit of physical consumption (unit taxes) and usually fixed in nominal terms.
Hence, unlike ad valorem taxes, their real value in relation to GDP tends to fall, unless they are adjusted for inflation
or otherwise increased at regular intervals. The problem could be easily solved by indexing the nominal tax rates to
inflation, but so far only one Member State, Denmark, has used this option. There may be several reasons for the real
value erosion of environmental taxation. First, energy demand has a tendency to grow slower than income, which

1)

It is one of the basic principles of the EU Sustainable Development Strategy, adopted in Gothenburg in 2001, that prices should reflect the
real  economic,  social  and  environmental  costs  of  products  and  services.  To  get  prices  'right'  in  this  sense  the  market-based  instruments
should be used. In the area of energy taxation, Council Directive 2003/96/EC of 27 October 2003 provides a common framework for taxing
energy  products  and electricity  in  the Community.  In 2007, the Commission presented  a  Green  Paper on market-based instruments for
environmental and policy purposes (COM(2007) 140 final), which sets the scope for the restructuring the Energy Tax Directive to better
reflect the EU energy and climate policy objectives and make energy taxation more compatible with other market-based instruments, in
particular the EU emissions trading scheme.

2)

European Commission (1996b, p. 60).

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Part II

Trends in environmental taxes

implies that the share of taxes paid on energy goes down, when the economy grows. Secondly, energy tax increases in
recent years, may have also reduced energy consumption and thus eroded the tax base of energy taxation, although
the expenditure on energy as such may not have decreased. Thirdly, the governments may be simply unwilling to
constantly increase the tax rates on products, which affect the energy costs of households and industry. There was no
compelling cause to do so either, as the EU minimum rates on mineral oils was kept constant from 1992 to 2004,
when  the  Energy  Tax  Directive  (2003/96/EC)  came  into  force.  The  growing  popularity  of  non-fiscal  instruments
such as emissions trading, and high world prices for oil in the early 2000s might also have led to a reduced appetite
for additional environmental taxation, at least as far as energy is concerned. 

Table II-5.1

Environmental tax revenues in the Union
1995–2007, in % of GDP

<@>tII_5.1.pdf

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

Difference1)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1995-2007 2000-2007
-0.2
1.0
-0.1
0.6
-0.1
0.6
-0.4
-0.3
-0.4
-0.3
-0.5
0.7
-0.3
-0.6
-0.1
-0.1
0.1
0.0
0.0
0.6
0.2
-1.4
0.1
0.1
-0.4
-0.1
-0.5

-0.1
-
-0.4
1.4
-0.1
1.3
-0.6
-1.1
-0.4
-0.6
-1.0
0.6
0.8
-0.1
-0.3
-0.1
0.6
0.2
0.3
0.9
-0.6
-
-1.2
-0.1
-0.2
-0.1
-0.4

2.5
-
2.7
4.8
2.2
1.5
3.1
3.1
2.2
2.8
3.4
2.8
1.7
1.9
2.9
2.9
3.1
3.8
2.1
1.9
3.5
-
4.4
2.1
3.1
3.1
2.9

2.5
-
2.5
4.9
2.2
1.6
3.0
3.1
2.1
2.6
3.4
2.5
2.2
2.2
3.0
2.9
3.5
3.8
2.4
1.8
3.3
-
4.5
2.1
3.3
2.9
2.9

2.4
-
2.4
5.3
2.1
1.9
3.0
2.9
2.3
2.6
3.3
2.5
3.0
2.6
2.9
3.4
3.9
3.8
2.3
1.8
3.5
3.0
5.1
1.9
3.3
3.0
3.1

2.2
-
2.9
4.5
2.3
1.0
3.1
3.1
2.2
2.7
3.5
2.9
1.2
1.9
3.0
3.0
3.2
3.6
2.1
1.8
3.5
-
4.2
2.3
2.9
2.8
2.9

2.2
2.2
2.5
5.4
2.5
2.0
2.3
2.3
2.1
2.5
2.8
2.9
2.3
2.8
2.8
2.8
3.4
3.7
2.7
2.4
3.2
2.1
3.3
2.4
3.0
2.8
2.7

2.3
2.5
2.6
5.3
2.4
1.7
2.9
2.3
2.2
2.4
3.1
2.7
2.4
2.4
2.8
2.9
3.7
3.9
2.4
2.1
2.7
3.5
2.9
2.2
3.1
2.7
3.0

2.3
2.8
2.6
5.2
2.5
2.1
2.3
2.5
2.1
2.3
3.0
3.0
2.2
2.5
2.8
2.8
3.7
3.8
2.6
2.1
3.0
2.4
3.3
1.9
2.9
2.8
2.8

2.3
3.0
2.6
5.2
2.7
1.9
2.3
2.2
2.1
2.5
2.9
3.7
2.5
2.8
2.8
2.6
3.4
3.7
2.7
2.5
3.1
2.4
3.3
2.6
3.2
2.9
2.7

2.4
3.4
2.6
5.6
2.5
2.1
2.5
2.1
2.0
2.4
2.8
4.0
2.6
2.7
3.0
2.7
3.1
3.9
2.7
2.6
3.1
2.4
3.3
2.7
3.2
2.8
2.6

2.3
3.1
2.7
6.0
2.5
2.3
2.5
2.1
1.9
2.3
2.7
3.5
2.7
2.3
3.0
2.7
3.3
3.9
2.6
2.7
3.1
2.0
3.2
2.6
3.1
2.8
2.5

2.2
3.1
2.6
6.2
2.4
2.2
2.5
2.0
1.9
2.3
2.7
3.3
2.4
1.8
2.6
2.8
3.4
4.1
2.5
2.8
3.0
1.9
3.0
2.4
3.0
2.7
2.4

2.1
3.4
2.5
5.9
2.2
2.3
2.4
2.0
1.8
2.1
2.6
3.4
2.1
1.8
2.6
2.9
3.7
3.9
2.4
2.7
2.9
2.1
3.0
2.3
2.8
2.6
2.5

2.5
2.3
2.6
5.4
2.3
1.7
3.0
2.7
2.3
2.6
3.4
2.5
2.5
2.9
2.8
3.3
4.1
3.9
2.3
2.1
3.4
3.9
4.2
2.0
3.4
2.8
3.1

-

-
-

EU-27 averages
weighted
arithmetic
EU-25 averages
weighted
arithmetic
EA-16 averages
weighted
arithmetic

2.8
2.8

2.7
2.9

-

-
-

2.8
2.8

2.7
2.9

-

-
-

2.7
2.8

2.7
2.9

-

-
-

2.8
3.0

2.7
3.0

-

-

-

3.3

3.2

3.2

3.0

3.0

2.9

2.8
3.0

2.8
3.0

2.7
3.0

2.7
2.8

2.7
2.8

2.6
2.8

2.7
2.7

2.7
2.8

2.6
2.7

2.7
2.7

2.7
2.8

2.6
2.8

2.7
2.8

2.7
2.8

2.7
2.8

2.7
2.9

2.7
2.9

2.6
2.9

2.6
2.8

2.6
2.8

2.5
2.8

2.5
2.7

2.6
2.8

2.5
2.7

2.5
2.7

2.5
2.7

2.4
2.6

-

-
-

-0.3
-0.1

-0.4
-0.3

-

-0.3
-0.1

-0.3
-0.1

-0.3
-0.1

Source: Commission services

Environmental taxes can be divided into four broad categories (energy, transport, pollution and resource taxes; see
Annex  B  for  details).  Energy  taxes  are  by  far  the  most  significant,  representing  around  three  quarters  of
environmental tax receipts and around one twentieth of total taxes and social contributions. In the EU-27, transport
taxes correspond to, on average, slightly less than one quarter of total environmental tax revenues and 1.5 % of total

116

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report2009.book  Page 117  Thursday, May 28, 2009  1:35 PM

Trends in environmental taxes

Part II

taxes and social contributions (in the weighted average). The remaining two categories, pollution taxes and resource
taxes, raise only a marginal amount of revenue: together they make up just 4 % of total environmental taxes.

Graph II-5. 1 shows the environmental tax-to-GDP ratio by Member State and breaks it down by type of tax. The
relative importance of each type varies across countries, but in general, most Member States tend to fall in a band
ranging from 2 % to 3 % of GDP, or slightly higher. Only two Member States show levels below 2 % of GDP, while in
three  countries  environmental  tax  revenues  exceed  3.5 %  of  GDP.  At  5.9 % in  2007,  Denmark  displays  by  far  the
highest level of ‘green’ taxes followed by the Netherlands (3.9 %). The lowest environmental tax revenues in relation
to GDP are instead found in Lithuania and Spain, both below 2 % in 2007. 

The predominance of energy taxes is common to most Member States; however, in some countries the contribution
of  transport  taxes  is  significant:  for  instance,  in  Ireland,  Cyprus  and  Malta  they  account  for  around  half  of
environmental taxes. In Denmark, transport taxes raise almost the same amount of revenue as energy taxes, but on
account  of  the  high  level  of  pollution  and  resource  taxes  in  that  country,  constitute  only  a  good  third  of
environmental taxes. 

Graph II-5.1 Environmental tax revenues by Member States and type of tax

2007, in % of GDP, weighted averages

<@>gII_5_1.gif

Source: Commission services

In the 1995–2007 period the levels of environmental taxation in the EU-15 and the new Member States converged.
While several of the old Member States showed moderate declines in their tax-to-GDP ratio, leading to a decline in
the EU-27 average, many new Member States, which initially had lower environmental taxes, witnessed a general
increase in their level with an average increase of well above half a percentage point (see Table II-5.1). 

Graph  II-5.2  shows  the  evolution  in  the  structure  of  environmental  taxes  between  2000  and  2007.  The  graph
highlights that the moderate decrease in the EU average conceals a number of opposing changes in composition in
some  Member  States.  For  instance,  the  overall  slight  decline  in  energy  taxation  should  be  put  in  the  context  of

Taxation trends in the European Union                 117

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Part II

Trends in environmental taxes

marked increases in several countries; in one of them (Bulgaria) the increase is about 1 % of GDP, and in four others
(Cyprus,  Denmark,  Poland  and  Estonia)  well  above  0.5 %  of  GDP.  On  the  other  hand,  there  has  been  a  strong
decrease of energy taxes in Romania amounting to 1.4 % of GDP. Amongst the biggest changes in non-energy taxes,
it is worth highlighting the steep increase in pollution taxes in Denmark, due to the strong increase in corporate
hydrocarbon taxes, and in Malta, where the decrease of transport taxes is more than offset by increases in energy and
pollution/resource taxes.

Graph II-5.2 Evolution of the structure of environmental taxes

2000–2007, differences in % of GDP, weighted averages

<@>gII_5_2.gif

Source: Commission services

5.2.

Transport fuel taxes

Energy taxes comprise taxes for both transport and stationary use of energy products. Graph II-5.3 shows the energy
tax-to-GDP  ratio  by  Member  State  and  displays  which  share  is  stemming  from  transport  fuel  taxes.  The  graph
highlights that the vast majority of energy taxes is levied on transport fuels. 

The predominance of transport fuel taxes is particularly striking for the new Member States; most of which levy well
above 90 % of their energy taxes on transport fuels. The exceptions are Cyprus and Poland, who — in line with the
old  Member  States  —  only  collect  about  80 %  of  energy  taxes  on  transport  fuels.  The  relative  homogeneity  with
respect to high transport fuel shares in energy taxation in the new Member States is explained by the fact that they
enjoy  exemptions  or  at  least  considerably  reduced  rates  from  the  minimum  excise  duty  for  the  taxation  of  other
products  in  the  category  energy  taxes  such  as  electricity  and  natural  gas  (Council  Directive  2004/74/EC).  As
electricity and natural gas are hardly taxed their energy tax revenue from any other source but mineral oil taxes is
very low. Poland represents the exemption with a tax rate exceeding the minimum excise duty on electricity by 10
times; it generates more than 10 % of its energy tax revenues on taxation of electricity.

118

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report2009.book  Page 119  Thursday, May 28, 2009  1:35 PM

Graph II-5.3 Energy tax revenues by Member States 

2007, in % of GDP

<@>gII_5_4.gif

Trends in environmental taxes

Part II

Note: Romania: 2006. Bulgaria: no data available

Source: Commission services

In  contrast  to  the  new  Member  States,  the  relative  importance  of  fuel  taxes  varies  considerably  across  the  old
Member States. The band spreads from a fuel tax revenue share in energy taxes of above 90 % for Ireland, Greece,
Portugal and the United Kingdom to only slightly above 50 % for Denmark and Sweden. The difference in the shares
is due to the tax revenues on natural gas and electricity. While the latter two countries receive significant revenues
from  taxes  on  electricity  and  natural  gas  (about  30 %  of  energy  taxes),  Ireland,  Greece,  Portugal  and  the  United
Kingdom only collect negligible revenues on these items (less than 2 % of energy taxes). Hence, differences in the
taxation of natural gas and electricity still persist, despite the attempt to reduce differences in the level of taxation in
Member  States  by  the  introduction  of  minimum  tax  rates  on  energy  products  and  electricity  in  the  Energy  Tax
Directive  (2003/96/EC).  The  difference  results  from  the  choices  made  by  the  individual  Member  States.  While
Denmark exceeds the minimum excise duty on electricity by more than 150 times (Sweden still by 60 times), the
other countries enjoy derogations for compliance with the minimum excise duty, reflected in zero tax rates. Zero
excise  duty  rates  do  not  necessarily  imply  that  no  taxes  are  levied  on  the  use  of  electricity  at  all.  Some  of  these
countries like the United Kingdom levy more general taxes like a climate change levy, taxing ‘energy products for
lighting, heating and power for the business and public sector’, also comprising the tax on electricity.

Focusing  on  mineral  oil  taxes  only,  which  account  for  the  major  part  of  energy  taxes,  reduces  the  differentiation
between old and new Member States. Most of the EU Member States raise the largest part (more than 90 %) of their
mineral oil taxes on the transport use of these fuels. 

This is nothing but the mirror image of the minimum excise tax rates set up in the Energy Tax Directive (2003/96/
EC). Minimum tax rates for petrol, which is almost exclusively used for transport purposes, are the highest among all
products covered by this Directive. On the other hand, minimum rates for heavy fuel oil, used for heating purposes,

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Trends in environmental taxes

are very low. Tax rates for product categories, which are used for both transport and stationary purposes, are heavily
diversified. The minimum excises duty for e.g. gas oil used as a propellant is almost 15 times higher than if it is used
for stationary purposes. Hence, even for countries, which use only about 60 %–80 % of the final energy consumption
of diesel/gas oil for transport purposes, their revenue on the transport use of fuels is usually well above 90 % of total
tax  revenues  on  diesel/gas  oil.  Of  course,  the  exact  revenue  shares  depend  on  how  the  individual  Member  States
chooses its tax rate in line with the minimum rates. While some countries do not vary the rates according to different
use  at  all  (Czech  Republic,  Greece,  Hungary,  Romania)  others  use  the  full  spread  available  (Belgium,  Latvia,
Luxembourg).

Even though the shares of transport fuel taxes in energy taxes vary considerably between countries, the shares are
relatively stable over time within countries. Strong fluctuations are only observed for Cyprus, the Netherlands and
Romania. For most countries, time series are too short to identify a trend in the share of transport taxes in energy
taxes.  Only  for  Belgium  the  share  of  transport  taxes  in  energy  taxes  is  decreasing  which  is  mainly  due  to  the
introduction of the ‘federal contribution on electricity and natural gas’. The increasing share in transport fuel taxes in
Slovenia is the result of decreasing importance of other energy taxes.

5.3.

The implicit tax rate on energy; properties and trends

A high ratio of environmental tax revenue to total taxation as such does not necessarily represent an indication of a
high  priority  being  attributed  to  environmental  protection.  Energy  taxes  were  originally  used  purely  as  revenue
raising  instruments,  without  environmental  purposes.  Furthermore,  the  level  of  this  indicator  also  says  nothing
about the achievement of environmental policy goals, as revenue increases could conceivably result from changes in
the  economy  towards  production  and  consumption  patterns  that  are  resource  intensive  and  lead  to  even  higher
pollution.

Moreover, if green taxes act as an efficient disincentive, they will over time reduce the recourse to environmentally
harmful  goods  and  thereby  erode  the  tax  base,  leading  to  a  gradual  fall  in  revenue.  In  addition,  if  tax  breaks  on
environmentally friendly products or processes are granted, the same objective — protecting the  environment —
results  in  lower  tax  revenues.  In  either  case  we  would  witness  a  falling  tax-to-GDP  ratio  for  environmental  taxes
despite an increase in environmental protection. 

It is also worth pointing out that the decrease in environmental tax revenues on GDP in recent years could be due in
part to innovations in policy instruments. An example of this could be represented by an increased recourse to road
pricing  systems  accompanied  by  a  reduction  in  lump  sum  car  circulation  taxes,  which  would  lead  to  lower  tax
revenues, since  road charges are not booked as taxes. Another example of innovative  instruments  is the EU  CO2
emissions trading system, which is likely to ‘crowd-out’ energy taxation in the sectors covered by the scheme. 

The paradoxes outlined above suggest the introduction of an effective or implicit tax rate (ITR) for environmental
taxes for analytical purposes. The interpretation of an ITR is generally more straightforward because this class of
indicators  is  not  affected  by  the  erosion  in  the  base  due  to  the  disincentive  effect  of  the  tax;  a  properly  defined
implicit tax rate would remain constant3). 

Constructing an implicit tax rate for environmental taxes overall is a daunting task: there is no easily identifiable
denominator for the ratio because the diversity of environmental taxes leads to a multiplicity of bases. However, for
energy  taxes,  which,  as  mentioned  above,  represent  three  quarters  of  environmental  tax  revenues,  an  appropriate
indicator  for  the  potential  tax  base  can  be  identified.  Eurostat  publishes  data  on  final  energy  consumption  by

3) Although even this indicator has its weaknesses; for instance, environmental policies that have the consequences of reducing tax revenue,
such as the emissions trading or road pricing schemes mentioned in the previous paragraph, would still lead to a (misleading) decline in the
indicator. 

120

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report2009.book  Page 121  Thursday, May 28, 2009  1:35 PM

Trends in environmental taxes

Part II

country,  aggregating  the  different  sources  of  energy  utilised  in  a  single  indicator.4)  The  data  include  energy
consumed in the transport, industrial, commercial, agricultural, public and households sectors excluding the energy
transformation  sector  and to  the  energy  industries  themselves.  The  various  energy  sources are  aggregated  on the
basis of their net calorific value, and expressed in tonnes of oil equivalent; this measure is taken as the denominator
of the ITR on energy published in this report, while the numerator is constituted by the revenue from all energy
taxes.

This indicator is an appropriate measure of the policy stance in terms of taxation. Note that the ITR on energy treats
equally all kinds of energy consumption, regardless of their environmental impact; an energy unit produced from
hydroelectric  power  has  the  same  weight  as  a  unit  produced  from  coal.  In  many  countries,  however,  renewable
energy  sources  are  subject  to lower  tax rates  than exhaustible energy  sources,  or altogether  exempted  in  order to
provide incentives to switch from fossil fuels towards these more environmentally-friendly sources of energy. Thus,
paradoxically,  a  country  with  a  large  share  of  renewable  energy  will  have  a  lower  ITR  on  energy  than  a  country,
which relies largely on carbon-based energy sources. 

Table II-5.2 shows the amount of energy tax, in euro, levied per unit of final energy consumption. In recent years,
Denmark displays the highest ratio by a wide margin, followed by Italy, the United Kingdom and Sweden. Generally,
the new Member States display markedly lower levels of taxation. However, all of the Member States in this group
have been increasing energy taxes significantly; Cyprus, Poland and Estonia, in particular, show a very high growth
compared with 1995. Cyprus and Slovenia are the new Member states with the highest absolute level of taxation. 

4) At the data cut-off date, data was available up to 2006.

Taxation trends in the European Union                 121

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Part II

Trends in environmental taxes

Table II-5.2

Energy tax revenues in relation to final energy consumption (nominal ITR on 
energy)
Euro per tonne of oil equivalent

<@>tII_5.2.pdf

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
GDP-weighted
base-weighted
arithmetic
EU-25 averages
GDP-weighted
base-weighted
arithmetic
EA-16 averages
GDP-weighted
base-weighted
arithmetic

Difference1)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 1995-2006 2000-2006
22.6
97.6
91.7
31.5
37.4
-
47.5
74.6
39.0
15.5
336.0
202.9
17.0
211.6
168.3
54.7
45.9
6.5
27.9
147.3
112.2
-2.7
110.8
157.7
8.0
141.5
128.1
5.4
176.8
168.5
-2.6
237.5
237.9
103.5
64.4
26.4
27.8
48.2
10.1
25.4
75.6
12.3
30.3
169.7
140.9
24.8
92.8
58.5
-2.2
135.4
52.0
61.7
164.4
112.4
15.2
152.1
123.1
42.3
77.4
20.7
59.9
157.7
164.6
9.1
36.6
-
29.1
144.5
126.0
40.6
44.1
29.9
3.1
113.7
96.7
35.9
194.4
138.3
-9.7
247.3
142.6

90.7
-
42.0
221.7
149.6
17.9
139.4
157.0
128.9
168.6
272.1
26.4
26.7
25.0
142.7
62.2
72.1
125.6
137.1
27.6
152.5
-
138.5
32.1
106.6
168.0
185.9

90.9
-
41.6
216.5
151.9
13.4
121.0
161.3
134.3
166.8
261.6
27.1
18.1
16.4
138.6
53.1
60.8
110.8
117.0
26.0
163.5
-
126.1
29.5
96.2
169.2
148.2

91.2
-
46.0
251.4
150.3
30.5
140.4
138.6
138.5
169.7
260.9
29.3
44.7
38.9
151.2
76.9
126.8
131.2
130.2
37.7
159.4
36.2
177.2
32.2
104.6
172.7
211.5

23.5
-
64.4
126.2
41.4
80.4
56.2
-43.1
17.7
9.9
8.3
120.1
66.0
71.1
53.7
45.9
88.0
103.7
34.7
80.8
7.0
-
21.4
53.0
15.0
79.6
97.2

97.4
49.4
73.4
335.7
225.3
51.0
152.1
111.1
141.4
172.1
243.6
125.1
51.7
79.7
173.8
96.5
120.3
169.1
152.4
72.1
167.7
43.8
141.4
59.3
112.4
204.7
227.1

109.4
64.1
81.7
337.0
219.0
63.4
171.4
115.4
141.2
177.5
236.2
145.4
60.8
77.7
185.8
96.8
120.4
179.9
165.0
75.3
155.3
54.8
145.7
70.2
113.1
208.9
238.4

116.3
62.0
96.8
332.9
212.8
77.4
169.6
115.7
140.3
175.0
236.6
146.0
72.2
81.6
194.0
100.9
118.3
197.9
160.5
95.9
167.5
59.5
144.9
77.3
115.8
210.7
235.2

115.2
67.8
103.3
329.2
209.7
86.9
168.4
114.6
145.8
178.4
246.2
146.5
76.1
83.4
194.6
104.4
140.0
216.1
157.8
101.4
171.7
67.4
147.4
83.0
111.8
217.9
239.7

92.5
29.0
52.0
289.6
177.5
30.8
144.6
132.2
144.0
175.9
264.5
31.9
41.6
54.4
158.8
79.3
139.3
146.4
136.5
48.1
151.4
56.1
155.0
33.2
109.8
178.3
225.7

92.5
36.4
55.9
313.7
192.7
32.2
140.5
117.3
137.8
173.0
248.7
43.0
48.3
58.0
164.3
79.6
142.2
154.4
142.6
59.2
111.8
58.3
118.2
42.4
108.7
182.0
249.5

92.4
46.2
65.5
326.1
200.4
44.2
123.7
118.0
134.6
160.4
240.4
61.1
43.2
64.7
164.3
82.3
176.4
160.0
148.2
66.7
133.4
37.9
135.8
37.1
112.7
181.6
238.7

-

-
-
-

-

-
-
-

-

-
-
-

-

-
-
-

158.6
143.7
102.7

165.2
161.2
121.0

160.0
144.8
106.4

165.1
159.3
122.3

167.8
152.4
112.7

168.3
162.0
127.5

172.2
158.4
121.7

167.5
162.0
133.2

-

-

-

164.8

160.6

143.2

161.9

171.7

184.1
167.3
121.4

184.8
170.7
127.7

179.2
173.7
137.1

189.1
171.9
122.3

189.9
175.3
128.3

179.1
173.3
133.1

185.8
170.0
125.8

186.7
173.7
132.5

177.6
172.2
137.4

193.9
177.8
130.9

195.0
181.9
138.5

185.5
180.0
141.8

193.6
178.3
135.2

194.7
182.2
142.3

189.7
184.5
147.8

195.4
180.3
141.1

196.4
184.1
147.6

189.1
184.4
153.2

193.8
181.2
144.9

195.0
184.8
151.7

187.7
184.0
155.5

196.6
184.4
149.1

198.0
187.9
155.6

190.5
187.0
159.2

-

-
-
-

39.4
44.2
52.9

25.2
25.8
38.2

-

7.5
12.5
26.7

8.1
12.6
27.2

11.3
13.7
26.0

Source: Commission services

Table  II-5.2  is  based  on  nominal  tax  revenues.  This  has  two  consequences:  first,  for  non-euro  area  countries,  the
value  shown  reflects  exchange  rate  movements.  An  appreciation  of  the  currency,  for  instance,  would  result  in  an
increase in the ratio at unchanged taxation levels. Second, given positive euro inflation, a constant value of the ratio
over time implies a slow decline in taxation in real terms. 

To address the second issue a 'real' ITR on energy has been calculated, deflating tax revenues by the deflator of final
demand (Table II-5.3). This adjustment shows that in real terms, taxation on energy has been trending downward,
on  average,  since  2000;  the  real  burden  of  taxation  on  energy  has  been  declining  in  several  old  Member  States
(Denmark, Italy, France, Spain, Greece, United Kingdom), offsetting increases in most new Member States and a few
old Member States (the Netherlands, Germany, Sweden). Overall, in the EU-27 at the (weighted) average level the
real ITR on energy was in 2006 clearly lower than six years before. 

122

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report2009.book  Page 123  Thursday, May 28, 2009  1:35 PM

Trends in environmental taxes

Part II

Table II-5.3

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)

<@>tII_5.3.pdf

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
GDP-weighted
base-weighted
arithmetic
EU-25 averages
GDP-weighted
base-weighted
arithmetic
EA-16 averages
GDP-weighted
base-weighted
arithmetic

Difference1)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 1995-2006 2000-2006
10.2
95.2
102.0
16.8
35.5
-
45.0
74.7
50.4
-18.5
326.0
221.9
7.9
208.3
172.4
36.7
42.5
9.9
6.3
134.1
134.1
-21.3
104.7
206.1
-18.6
133.5
147.5
-11.1
172.8
176.4
-38.3
225.6
270.5
82.5
62.1
30.4
4.5
45.8
13.7
16.5
77.4
15.4
3.5
172.2
167.8
7.0
85.8
110.7
-16.3
134.7
60.7
39.2
157.7
122.9
1.9
149.1
128.8
28.3
73.0
35.0
36.3
150.0
190.6
-32.2
22.3
-
-3.8
126.8
181.2
26.6
40.8
40.1
-3.4
111.8
103.4
17.4
186.9
144.7
-38.3
239.0
152.3

0.7
-
50.4
73.3
28.3
58.9
12.8
-110.1
-28.2
-14.6
-60.1
95.1
39.2
59.1
0.0
-24.1
65.2
70.7
15.7
52.5
-42.5
-
-66.8
28.9
1.9
54.7
58.8

99.9
-
50.2
233.3
154.9
17.1
142.6
197.1
150.3
172.2
287.4
30.4
21.3
18.0
158.1
82.9
69.5
119.9
120.9
37.9
184.9
-
162.9
37.2
101.9
177.4
154.0

97.1
-
48.7
264.3
152.1
33.3
156.2
152.5
148.7
173.0
274.8
31.3
47.3
38.9
169.0
91.5
140.6
138.5
133.6
43.0
170.2
77.2
203.2
37.3
108.2
178.3
217.8

96.9
-
47.3
233.8
151.3
20.3
159.3
181.2
140.5
172.3
291.9
28.8
29.1
25.3
160.4
83.1
81.7
133.0
141.4
35.0
166.6
-
166.9
38.0
111.7
173.8
192.3

102.8
53.2
100.8
295.2
200.7
68.9
146.9
96.0
119.2
161.9
210.4
125.5
52.8
74.5
167.8
86.6
125.8
193.6
144.5
87.5
148.1
26.1
114.4
69.0
105.3
199.3
211.1

94.9
46.8
73.2
323.8
221.3
46.4
138.0
101.9
129.8
166.1
226.4
116.6
47.0
83.1
177.6
86.0
119.3
160.5
148.2
66.6
156.7
22.0
119.0
53.0
110.8
195.2
214.1

104.0
57.8
79.3
319.1
213.7
55.9
153.6
102.9
125.0
168.8
213.9
131.9
51.3
80.0
181.0
85.0
117.3
169.1
157.9
66.7
141.7
24.4
118.7
60.2
110.5
198.8
220.8

98.1
31.8
53.7
301.4
179.7
32.4
153.1
141.6
151.3
179.9
274.2
33.2
43.6
55.3
170.6
87.9
152.6
153.4
139.1
51.8
158.3
79.6
169.4
36.8
113.8
182.3
229.4

107.0
53.0
94.5
305.5
205.5
65.5
151.3
100.2
119.3
162.7
208.2
128.4
55.1
78.2
178.0
87.5
112.3
181.5
150.3
84.2
148.8
24.7
115.0
66.0
111.5
196.9
212.4

92.5
36.4
55.9
313.7
192.7
32.2
140.5
117.3
137.8
173.0
248.7
43.0
48.3
58.0
164.3
79.6
142.2
154.4
142.6
59.2
111.8
58.3
118.2
42.4
108.7
182.0
249.5

90.6
44.4
64.4
319.0
198.3
42.0
116.7
114.5
130.6
158.2
234.2
59.5
42.6
65.4
167.3
77.8
179.3
155.4
146.3
64.8
129.9
28.0
126.0
35.2
111.0
176.7
235.0

-

-
-
-

-

-
-
-

-

-
-
-

-

-
-
-

171.2
157.0
119.6

178.1
174.7
139.7

170.0
154.9
119.3

175.5
169.8
136.9

175.5
160.0
122.5

176.1
169.9
138.9

178.6
164.7
130.0

173.7
168.3
142.9

-

-

-

166.5

158.3

134.5

142.5

141.5

189.2
172.6
127.9

189.8
175.7
133.7

184.4
179.0
144.1

189.1
171.9
122.3

189.9
175.3
128.3

179.1
173.3
133.1

182.4
166.6
122.7

183.3
170.5
129.6

174.3
169.0
134.6

187.5
171.6
125.5

188.6
175.9
133.2

179.5
174.2
136.2

184.6
169.6
127.6

185.7
173.8
135.0

181.5
176.5
140.0

183.0
168.4
130.0

184.2
172.5
137.1

177.9
173.4
141.9

177.4
165.4
129.8

178.7
169.3
137.0

172.7
169.2
140.4

175.6
164.3
129.2

177.2
168.2
136.3

171.2
168.1
139.5

-

-
-
-

6.0
11.2
16.8

-6.9
-6.7
-0.2

-

-13.4
-7.7
6.8

-12.7
-7.1
8.0

-8.0
-5.2
6.3

Source: Commission services

5.4.

Have green tax reforms had any visible impact on the energy intensity of GDP?

Graph II-5.4 juxtaposes trends in the energy intensity of the economy, the real ITR on energy and the ITR on labour.
In  the  graph,  the  energy  intensity  of  the  economy  is  shown  on  an  inverted  scale,  meaning  that  if  the  line  slopes
upwards, the economy is becoming more energy efficient and vice versa.

From 1995 to around 2000, as taxation of energy increased rapidly, final energy consumption grew at a much lower
rate  than  the  economy  overall,  leading  to  a  rapid  increase  in  energy  efficiency5).  Around  2000,  however,  the  real
burden  of  energy  taxes  started  declining,  and  at  the  same  time  the  growth  in  energy  efficiency  slowed  down

5) Data on energy efficiency in the EU-15 are given in European Communities 2002b.

Taxation trends in the European Union                 123

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Part II

Trends in environmental taxes

suggesting  that  taxation  may  have  played  a  role  in  stimulating  energy  conservation,  alongside  other  structural
factors. From 2003 onwards, however, energy efficiency has improved again at a faster rate, while the effective tax
burden on energy has continued to fall. 

Graph II-5.4 Evolution of energy efficiency, ITR on energy and on labour

Index 1995 = 100; EU-25; all series GDP-weighted

<@>gII_5_3.gif

Source: Commission services

As for the idea of financing cuts in the labour taxation from increases in environmental taxation, its implementation
would  imply  an  opposite  development  of  the  ITRs  on  energy  and  on  labour  in  the  graph:  as  the  ITR  on  energy
increases, taxation of labour should fall. This has not really been the case; as can be seen, the two trends are parallel
rather  than  opposite,  with  the  ITR  on  labour  showing,  in  fact,  a  slight  increase  from  2004  onwards.  These
developments at  the  EU  average level are, however, an outcome of diverging trends  in  individual Member  States.
Thus the effective tax burden on labour has been reduced, and that on energy increased in a number of them. Taking
into account only the changes between 2000 and 2007 these countries include Germany, Estonia, Ireland, Lithuania,
the Netherlands, Slovakia and Sweden.

124

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1.

DEVELOPMENTS IN THE MEMBER STATES

III

Developments in the
Member States

report2009.book  Page 126  Thursday, May 28, 2009  1:35 PM

Part III

Developments in the Member States

<@>TAB_PRINT_AT.pdf

Austria

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
14.4
7.7
2.5
1.1
3.0

14.4
7.7
2.6
1.2
3.0

Ranking 1)
12
14
20
16
4

15.3
8.1
2.7
1.2
3.2

13.2
10.1
2.2
0.9

14.8
7.1
6.0
1.6

22.3
3.3
5.1
12.0
0.6

12.4

24.0
21.7
9.7
12.0
2.3

6.9
5.8
2.2
0.9
2.7
1.1

0.0

15.3
8.1
2.7
1.2
3.3

15.1
10.8
3.3
1.0

14.9
7.0
6.1
1.7

24.2
3.4
5.2
12.0
0.5

12.4

24.3
21.9
9.7
12.2
2.5

8.6
7.4
3.3
0.9
3.2
1.1

0.0

15.4
8.2
2.7
1.1
3.3

13.9
10.5
2.4
1.0

14.7
6.9
6.0
1.7

23.6
3.2
4.9
11.9
0.4

12.5

24.2
21.7
9.5
12.2
2.5

7.3
6.1
2.4
0.9
2.8
1.1

0.1

15.3
8.0
2.8
1.2
3.3

13.8
10.5
2.3
1.0

14.7
6.9
6.1
1.8

23.7
3.1
4.7
11.9
0.4

12.4

24.4
21.8
9.6
12.2
2.6

7.1
5.9
2.3
0.8
2.8
1.1

0.1

15.1
8.0
2.8
1.2
3.1

13.6
10.2
2.4
1.0

14.7
6.9
6.0
1.9

23.4
3.1
4.7
11.9
0.3

12.4

23.9
21.4
9.4
11.9
2.5

7.1
6.1
2.4
0.8
2.9
1.1

0.1

14.8
7.9
2.7
1.1
3.1

12.9
9.6
2.3
1.0

14.6
6.8
5.9
1.8

22.5
3.0
4.6
11.9
0.3

12.1

23.4
21.0
9.3
11.6
2.4

6.8
5.8
2.3
0.8
2.7
1.0

0.1

13.0
9.7
2.3
1.0

14.4
6.8
5.9
1.8

13.5
10.0
2.6
1.0

14.2
6.7
5.8
1.8

% of GDP
22.3
3.1
4.7
11.7
0.3

22.1
3.0
4.6
11.8
0.3

% of GDP
11.7

11.7

23.3
20.9
9.3
11.6
2.4

6.8
5.8
2.3
0.9
2.6
1.0

0.1

23.2
20.8
9.2
11.6
2.4

7.2
6.2
2.6
1.1
2.5
1.0

0.1

€ bn
39.0
21.0
6.8
3.1
8.1

36.7
27.0
7.1
2.6

38.5
18.1
15.6
4.8

60.5
8.3
12.7
31.8
0.8

31.7

62.9
56.4
24.9
31.5
6.5

19.5
16.8
7.1
2.9
6.8
2.8

113.9

6.6
4.5

2.1
0.1

10
7
23
7

4
12
4
6

15
4
10
11
16

15

3
4
7
7
6

18
12
24
8
6
21

7

16
21
17
9
18

12
8

TOTAL

43.2

45.3

43.9

43.8

43.4

42.2

41.7

42.1

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.4
1.6
1.2
0.8
0.0

22.1
40.1
27.3
22.9
26.6
8.1

3.7
2.0

2.6
1.7
1.3
0.9
0.0

22.1
40.6
35.8
31.0
37.1
9.0

0.5
0.2

2.7
1.7
1.3
0.9
0.0

22.5
40.8
29.3
24.9
28.3
9.8

1.6
-0.4

2.7
1.8
1.4
0.9
0.0

22.2
40.8
28.3
23.9
26.8
8.8

0.8
-1.8

2.7
1.9
1.4
0.8
0.0

22.1
41.0
27.4
23.3
26.0
7.8

2.5
-1.4

2.6
1.8
1.4
0.8
0.0

21.7
40.8
24.2
20.6
22.9
6.8

2.9
-0.6

% of GDP
2.4
1.6
1.3
0.8
0.0

2.5
1.6
1.3
0.8
0.0

%
21.6
41.0
26.1
22.4
24.8
8.5

3.1
1.5

21.2
40.8
24.4
20.7
23.0
7.1

3.4
0.7

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

126

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Developments in the Member States

Part III

AUSTRIA

Overall trends in taxation

Structure and development of tax revenues

In Austria, the overall tax burden (including social contributions) is more than four percentage points of GDP above
the EU average (42.1 %, EU-27 37.5 %), with the Nordic Countries, Belgium, France and Italy recording higher rates.

Austria derives 34.2 % of tax revenues from indirect taxes (EU-27 38.4 %), of which VAT accounts for more than
half. Austria raises a substantial amount from other taxes on production (7.1 % of total taxation, EU-27 3.9 %), in
particular from an employer's contribution to the fund for equalisation of family burdens and a payroll tax payable to
communes. By contrast, excise duties account for relatively little revenue. This reflects the moderate rates imposed,
in particular on alcoholic beverages. Direct taxes account for a proportion of revenue (32.2 %) in line with the EU
average although they rely relatively more heavily on PIT (23.7 %, EU-27 20.6 %) than on CIT (6.2 %, EU-27 9.5 %).
Social contributions account for one third of total tax receipts (33.8 %, EU-27 29.5 %).

Among the federal countries in the EU, Austrian states receive the lowest proportion of total tax revenues (7.3 % as
against  21.6 %  in  Spain,  22.6%  in  Germany  and  24.4 %  in  Belgium).  The  share  of  local  governments  (11.1 %)  is
identical to the EU-27 average.

The political goal of achieving a balanced budget position in 2001 resulted in a hike of the tax-to-GDP ratio by 2.1
percentage points. The rise of total tax revenues to 45.3 % of GDP in 2001 was due to base-broadening measures,
reductions in tax credits and above all significantly increased tax pre-payments, stimulated by the introduction of
interest charges on tax arrears. Reforms enacted since then have resulted in a continuous decline of the tax-to-GDP
ratio  until  2006.  In  particular  the  two  steps  of  the  Steuerreform  2004/05,  focusing  on  the  reduction  of  wage  and
corporate taxation, lead to an estimated tax relief of about € 3 billion (1.2 % of GDP). The increase of the tax-to-GDP
ratio by 0.4 percentage points to 42.1 % of GDP in 2007, is due to an increase in direct tax revenues. However, this
rather  reflects  the  strong  economic  growth  (increases  in  the  wage  sum  and  sustained  corporate  profits)  than
significant changes in the tax system.

Taxation of consumption, labour and capital; environmental taxation

Taxes on consumption as a percentage of GDP (11.7 %) are slightly below the EU-27 average (12.4 %). The same
holds  for  the  implicit  tax  rate  on  consumption  (21.6 %,  EU-27  22.2 %).  In  contrast  to  the  EU-27  and  euro  area
averages, the Austrian ratio has somewhat decreased since 2000.

Taxes on employed labour represented 20.8 % of GDP in 2007, constituting around one half of the total tax burden.
As in most EU countries, the tax burden on employed labour consists mainly of social contributions. In addition to
the personal income tax, levied in the form of a withholding tax on wages and salaries, indirect labour taxes — such
as the contribution by employers to the Family Burdens Equalisation Fund and the payroll tax — also contribute
substantially to the overall taxation burden. The Austrian implicit tax rate on labour was more than six percentage
points above the EU-27 average in 2007 (41.0 %, EU-27 34.4 %). Despite the Steuerreform 2004/05 it has remained
more or less stable in recent years. 

The share of taxes on capital in GDP (7.2 %) is below the EU-27 average and well below the euro area average (EU-27
8.0 %, EA-16 9.1 %). This is in part due to the fact that the tax on capital stocks and wealth yields less than half of the
average  amount  in  the  euro  area  (1.0 %  of  GDP,  EA-16  2.3 %  of  GDP).  Base-broadening  measures  and  increased
prepayments, in reaction to the introduction of interest payments on tax arrears, led to a dramatic rise of revenues in

Taxation trends in the European Union                 127

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Part III

Developments in the Member States

2001  before  falling  back  in  the  following  years,  as  is  reflected  in  the  implicit  tax  rate  on  corporate  income  (2000
26.6 %, 2001 37.1 %, 2003 26.8 %). The fall of the ITR by more than three percentage points in 2005 is mainly driven
by the fall in the ITR on corporations, in line with the decrease in the corporate income tax rate from 34 % to 25 %.
Taxes raised on corporate income in relation to GDP are in general low (2.6 %, EU-27 3.7 %) because of the large
number of unincorporated companies in Austria.

Environmental taxes gradually increased until 2003 but have fallen back to their 2000 ratio since, despite the increase
in mineral oil taxes on gasoline and diesel in July 2007 (Abgabenänderungsgesetz 2007). Their revenues are below
the EU-27 average (2.4 % of GDP, EU-27 2.7 %), which is also true for the implicit tax rate on energy. Transport taxes
are relatively important in Austria, contributing nearly one third to the overall revenue from environmental taxes,
compared to an EU-27 average share of only one quarter.

Current topics and prospects; policy orientation

The tax reform law 2009 (Steuerreformgesetz 2009) adopted in March 2009, which has been applied retroactively
from January 2009 onwards, targets an annual tax relief of about € 3 billion (1.1 % of GDP). In light of the financial
and economic  crises it intends to  promote growth  and stabilise the  economy.  Its key  elements  are changes  in the
income tax system (€ 2.3 billion) and the relief of families (€ 0.5 billion). The four brackets system is retained, but the
marginal  rates  of  the  second  and  third  brackets  are  lowered.  The  width  of  the  zero  rate  bracket  is  increased  by
€ 1 000, and the tax bracket for the top rate of 50 % is increased by € 9 000. The family tax relief package comprises
increases  in  child  allowances  and  child  related  tax  credits,  tax  allowances  for  childcare  costs,  as  well  as  wage  tax
exemptions for childcare subsidies paid by employers.

The tax relief achieved by the increase in the tax allowances for enterprises from 10 % to 13 % from 2010 onwards
will  be  partly  offset  by  the  cancellation  of  tax  favourable  treatment  for  retained  earnings.  As  a  contribution  to
counteract cyclic decline an increased depreciation of 30 % in the year of investment was introduced for the years
2009 and 2010 which will lead to a tax relief of about € 700 million for both years. Donations to human charities have
been made deductible and the tax deductibility for contributions to religious denominations was increased.

Main features of the tax system

Personal income tax

Between 1988 and 2000 income tax rates were slashed and the base was broadened. The consolidation package of
2001  included  the  reduction  of  tax  credits  and  other  tax  increasing  measures.  In  2004  Step  1  of  a  tax  reform
(Steuerreform 2004/05) focused on the reduction of the income and wage tax of low and middle income earners.
Under Step 2 a new system with four brackets came into force in 2005 replacing the old five bracket system. Further
changes  referred  to,  inter  alia,  the  introduction  of  an  additional  children's  tax  credit  for  single  parents  and  sole
earners.  To  counteract  high  inflation,  the  commuter  tax  credit  and  the  negative  income  tax  for  low  income
commuters, first introduced in 2007, were increased further in 2008. Additionally, tax exemptions for compensations
on  overtime  hours  were  broadened  and  the  limits  on  income  tax  deductible  savings  in  building  societies
(Bausparkassen) were increased. 

Austria has a comprehensive and progressive personal income tax scheme. From 2005-2008, the four brackets had
marginal rates of 0 %, 38.333 %, 43.596 % and 50 %; as from 2009 the marginal tax rates applied for the brackets are:
0 %,  36.5 %,  43.2143 %  and  50 %.  In  2009,  the  zero-rate  bracket  goes  up  to  a  taxable  income  of  € 11 000  (2008:
€ 10 000),  which  means  that  —  as  a  result  of  other  tax  credits  —  annual  gross  earnings  of  about  € 16 800  for
employees and € 15 000 for pensioners are tax-free (2008: € 15 800 and € 13 500, respectively). The top rate of 50 %
applies as of a taxable income of € 60 000 (2008: € 51 000). For partnerships and other unincorporated enterprises
only half of the average tax rate is applied to the first € 100 000 of retained profits. The tax relief will be abolished in

128

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Developments in the Member States

Part III

line with the increase in the tax allowance for profit income to 13% beginning with 2010. As a substantial proportion
of enterprises are unincorporated, the reform of PIT affects both individuals and enterprises to a greater extent than
elsewhere.

Capital gains are usually not included in taxable income. However, this does not apply for gains realised as part of
commercial  activity  or  on  speculative  gains  (e.g.  from  shares  within  a  one-year  holding  period  and  immovable
property within a 10-year period) and in the case of substantial shareholdings. Dividends, interest and investment
fund income are subject to a final withholding tax of 25 % while royalties are taxed at the normal progressive rates.

Corporate taxation

In  2005  the  corporate  tax  rate  was  lowered  from  34 %  to  25 %,  partly  financed  by  broadening  the  tax  base  and
abolishing the 10 % subsidy for the increment in investment in machinery and equipment, which had existed since
2002.  A  further  consequence  is  that  the  deductibility  of  notional  interest  payments  on  additional  own-capital
(introduced in 2001) is rendered redundant as, while profits after deduction had been subject to the standard rate,
notional interest was subject to 25 %. Since 2001 tax arrears have been subject to an interest charge. This led to a
jump in corporate tax receipts in that year. As part of the base broadening measures undertaken, depreciation rates
for  buildings  have  been  cut  and  now  stand  at  2 %.  In  recent  years  R&D  allowances  and  tax  credits  have  been
increased. There is an R&D allowance of 25 % with an option for an 8 % tax credit. The training allowance is 20 % of
the qualifying expenses with an optional tax credit of 6 %.

The deduction of losses of former years is restricted to 75 % of taxable profits, but there is an indefinite loss carry-
forward  period.  Similar  rules  apply  to  personal  income  tax.  In  2005  the  group  relief  system  (Organschaft)  was
replaced by a system of optional group taxation. Since then, foreign losses are deductible in computing the domestic
income tax base, making Austria one of the few countries in Europe in which this is permitted. If a group breaks up
within three years the effects of group treatment is reversed.

A number of taxes and contributions are based on payroll and borne by the employer, among them the municipal tax
(3 % on salaries and wages paid) and the contribution to the Family Burdens Equalisation Fund (payable at a rate of
4.5 % on gross wages and salaries).

VAT and excise duties

The standard VAT rate is 20 %. A reduced rate of 10 % applies to basic foodstuffs, books and newspapers, public
transport,  renting  of  residential  immovable  property  and  since  December  2008,  also  to  pharmaceuticals.  The
quantitatively most important excise duties are on mineral oil, tobacco and the excise duty on electricity ,gas and
coal (Energieabgabe) (3.2 %, 1.3 % and 0.7 % of total taxation, respectively).

Wealth and transaction taxes

The real estate tax is levied at a basic federal rate (0.2 %), multiplied by a municipal coefficient (up to 500 %), which
means a tax rate of 1% on the tax values (Einheitswerte), in general. The real estate transfer tax stands in general at
3.5 %. Inheritance and gift tax was abolished in August 2008. There is no net wealth tax. 

Social contributions

In principle, all employees must be insured under the social security system. Both they and their employers must pay
contributions  as  a  percentage  of  their  earnings  up  to  a  ceiling  of  € 56  280  (2008:  € 55 020).  The  general  overall
employee's contribution rate is about 18 %. The rate for the employers is slightly above 21 ½ %. However, in certain
cases additional contribution rates or reduced rates, such as reduced unemployment insurance contributions for old
and low income earners, apply.

Taxation trends in the European Union                 129

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Part III

Developments in the Member States

<@>TAB_PRINT_BE.pdf

Belgium

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
13.5
7.1
2.2
2.5
1.7

13.8
7.1
2.2
2.5
2.0

Ranking 1)
15
20
25
8
10

13.8
7.2
2.4
2.3
1.9

17.5
13.2
3.2
1.1

13.9
8.4
4.3
1.2

16.6
10.3
1.9
15.5
0.8

11.4

24.3
22.3
8.4
13.9
2.0

9.5
6.2
3.2
0.5
2.4
3.4

0.0

13.3
6.9
2.3
2.2
1.9

17.7
13.5
3.1
1.1

14.2
8.5
4.5
1.2

15.7
11.0
2.1
15.6
0.8

11.0

24.8
22.7
8.5
14.2
2.1

9.4
6.1
3.1
0.6
2.4
3.3

0.0

13.3
6.9
2.3
2.2
1.8

17.6
13.3
3.0
1.2

14.4
8.7
4.5
1.2

15.7
10.5
2.2
16.2
0.6

11.0

24.9
22.8
8.7
14.1
2.1

9.3
5.9
3.0
0.5
2.4
3.4

0.0

13.4
6.8
2.4
2.3
1.9

17.2
13.0
2.9
1.3

14.3
8.7
4.4
1.2

15.0
10.8
2.3
16.0
0.7

11.0

24.7
22.6
8.7
13.9
2.1

9.2
5.7
2.9
0.5
2.3
3.5

0.0

13.6
6.9
2.5
2.3
1.9

17.4
12.8
3.2
1.5

14.0
8.5
4.3
1.2

14.7
10.6
2.3
16.8
0.6

11.2

24.1
22.3
8.5
13.9
1.8

9.7
5.9
3.2
0.4
2.4
3.8

0.0

13.7
7.1
2.4
2.4
1.8

17.5
12.7
3.4
1.5

13.7
8.3
4.2
1.2

14.3
10.8
2.2
16.9
0.6

11.2

23.8
22.0
8.3
13.7
1.8

9.9
6.2
3.5
0.4
2.3
3.7

0.0

17.2
12.1
3.7
1.3

13.5
8.2
4.1
1.2

16.9
12.0
3.6
1.3

13.6
8.3
4.1
1.2

% of GDP
13.3
10.7
2.3
17.0
0.7

14.0
10.7
2.2
16.9
0.7

% of GDP
11.0

11.2

23.0
21.3
8.2
13.1
1.7

10.2
6.4
3.7
0.4
2.3
3.8

22.9
21.2
8.3
13.0
1.7

10.0
6.3
3.6
0.5
2.2
3.7

0.0

0.0

€ bn
45.1
23.9
7.3
8.3
5.5

56.7
40.2
12.1
4.4

45.5
27.7
13.8
4.0

44.4
35.9
7.7
56.9
2.3

36.9

76.8
71.1
27.7
43.4
5.7

33.5
21.1
12.1
1.5
7.5
12.4

147.2

7.0
4.5

2.0
0.5

4
4
9
5

6
9
8
12

25
1
18
2
1

20

4
3
10
2
9

8
11
11
17
8
3

3

22
25
23
11
7

11
3

TOTAL

45.2

45.2

45.3

44.9

45.0

44.9

44.5

44.0

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.3
1.4
1.4
0.6
0.2

21.8
43.9
29.3
19.0
23.6
13.0

3.7
1.9

2.3
1.4
1.3
0.7
0.2

21.0
43.5
29.6
19.2
23.6
13.3

0.8
0.5

2.2
1.4
1.3
0.7
0.2

21.4
43.6
30.9
19.7
23.1
13.9

1.5
0.1

2.3
1.4
1.3
0.7
0.2

21.3
43.4
31.9
19.7
22.0
14.5

1.0
-0.7

2.4
1.5
1.3
0.7
0.2

22.0
44.0
32.9
20.1
22.2
14.8

3.0
0.4

2.3
1.5
1.3
0.7
0.2

22.2
43.8
32.4
20.3
22.1
15.1

1.8
0.2

% of GDP
2.1
1.3
1.2
0.6
0.1

2.2
1.4
1.2
0.6
0.2

%
22.0
42.3
31.1
19.6
20.7
14.9

2.8
1.4

22.3
42.7
32.0
20.0
21.6
14.9

3.0
1.0

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

130

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Developments in the Member States

Part III

BELGIUM

Overall trends in taxation

Structure and development of tax revenues

Belgium  traditionally  belongs  to  the  group  of  EU  countries  with  the  highest  tax  levels,  alongside  the  Nordic
countries, France and Italy. At 44.0 % in 2007, the total tax ratio was the third highest in the EU after Denmark and
Sweden (EU-27 37.5 %).

The structure of the tax system, in terms of the share of revenue raised by the different taxes, has remained relatively
stable since 2000, in spite of a far-reaching tax reform of direct taxation, introduced over the period 2000–2006. The
structure is characterised by a relatively high share of direct taxes (38.5 %, EU-27 32.3 %), reflecting a broad reliance
on corporate and households income tax. By contrast, with 30.6 %, the share of indirect taxes is the second lowest in
the  EU  (EU-27  38.4 %)  after  the  Czech  Republic.  Since  the  2002  corporate  tax  reform  the  share  of  corporate  tax
revenue has significantly increased, mainly due to the favourable profit evolution. The tax reform was complemented
by successive targeted reductions in employers' social security contributions.

In  2001  an  institutional  reform  granted  further  fiscal  autonomy  to  the  regions.  This  resulted  in  several  non-
symmetrical changes in registration duties and inheritance and estate taxes. About a quarter of tax revenues benefit
the regions and communities. Local government accounts for a modest share of the tax burden. Since 2002, revenue
of social security funds has overtaken federal government revenue to account for the largest share of revenues, while
federal government revenue markedly declined. 

A  fiscal  moratorium  caused  the  tax-to-GDP  ratio  to  stabilise  around  45 %  between  2000  and  2004.  The  ratio
decreased from 44.9 % to 44.0 % between 2005 and 2007 due to a reduction in personal income tax revenues and
revenues from social security contributions, but remains 6.5 percentage points higher than the EU-27 average. 

Taxation of consumption, labour and capital; environmental taxation

The 2007 implicit tax rate on consumption was marginally higher than the rate in 2000. At 22.0 %, it was slightly
below the EU average for the first time since 2000 (EU-27 22.2 %). 

Belgium imposes relatively heavy taxes on labour with an implicit tax rate of 42.3 %. The tax reforms initiated since
2000  have  only  marginally  influenced  this  feature.  Throughout  the  whole  period,  targeted  rebates  in  employers'
social contributions were used as the main instrument to reduce labour cost1)s. The 2000–2006 reform programme
paved the way for easing the tax burden on labour and led to a decrease in the ITR by 1.7 percentage points in 2007
compared to 202)04. Nonetheless, the ITR on labour remains the third highest in the EU behind Italy and Sweden.

The ITR on capital somewhat increased from 29.3 % in  2000 to 31.1 % in the year 2007. The ITR on capital and
business income of households exhibits an upward trend, while the trend was reversed for the ITR on corporations.
On  the  household  side,  part  of  the  increase  might  be  explained  by  the  boom  in  the  real  estate  market  that  has
resulted  in  an  increase  of  registration  duties.  The  2004  tax  amnesty  also  affected  revenue  streams,  as  well  as  the

1) However, some of theses rebates are considered as wages subsidies according to the Belgian National Accounts and are consequently not

deducted from the tax revenue.

2) When accounting with the amount of rebates that are considered as wage subsidy in the national accounts, an additional drop of 0.5 % GDP

should be taken into account in 2007.

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Part III

Developments in the Member States

securitisation of tax revenues started at the end of 2005. In 2007, taxes on stocks of capital/wealth amounted to 3.7 %
of GDP, the third highest value in the EU.

Revenue from environmental taxation has remained roughly stable since 2000. In 2007 environmental tax revenue
amounted to 2.1 % of GDP, well below the EU-27 average (2.7 %).

Current topics and prospects; policy orientation

Since 1999, tax policy has been oriented at maintaining a (non-binding) tax moratorium, introducing a multi-annual
tax  reform  (2000–2006).  Up  to  2008  achieving  budgetary  equilibrium  and  a  further  reduction  of  public  debt
remained a priority for the government in order to prepare the public finances for the budgetary impact of an ageing
population. In spite of a steady decline between 1999 and 2007, the debt to GDP ratio remains well above the EU
average and has been rising again in 2008 due to the economic slowdown.

As of 1 January 2007, the Belgian government introduced a tax deduction of 80 % under the corporate income tax
for  income  derived  from  patents  licensed  by  a  company  based  in  Belgium  (no  possible  carry-forward).  For  both
corporations and partnerships, the rates of investment allowances were reduced by one percentage point due to a
lower rate of inflation for the reference period. As from 1 April 2008, the deductibility of business car expenses is
computed according to CO2 emissions and varies from 60 % to 90 %. These deduction levels also differ according to
the type of  vehicle (petrol or  diesel-driven  cars). Capital  gains  and losses related  to such  cars  are only taken  into
account up to an equal percentage of the deduction. 

The exemption of up to € 4 930 (in income year 2008) for each additional employee, granted on certain profits made
by companies with less than 11 employees, which used to be  temporary, has been made permanent as from last year.
From 1 July 2008, the reduction for the wage withholding tax for scientific personnel was increased to 65 % for all
categories (generalisation of the maximum rate3)) . As from 1 January 2009, a deduction of 120 % of the costs relative
to safety measures applies to costs incurred by small and medium-sized companies.

As of income year 2008, the basic allowance has been increased for taxpayers with an income below €22 870. The
basic  allowance  is  € 6 150,  increased  to  € 6 400  for  low  or  middle-income  taxpayers.  For  taxable  income  between
€ 22 870 and € 23 120, a phasing-out rule has been introduced to decrease progressively the increased allowance for
income just above the limit. 

In response to the economic downturn several measures were announced at the end of 2008. The ‘recovery plan’
includes a VAT rate reduction (from 21 % to 6 %) for the construction of private (for € 50 000) and social dwellings.
The general reduction as well as some targeted reductions for the wage withholding tax were increased. The general
reduction  increases  from  0.25 %  to  0.75 %  from  1  June  2009  and  to  1 %  as  from  1  January  2010,  whereas  the
reduction  for  scientific  personnel  increased  to  75%  (from  1 January  2009),  and  the  reduction  for  night  and  shift
workers  increases  from  10.7 %  to  15.6 %  (from  1  June  2009).  In  addition,  the  number  of  overtime  hours  which
qualify for reduced wage withholding tax was also increased from 65 hours to 100 hours in 2009 and to 130 hours in
2010.  Moreover,  an  acceleration  of  VAT  restitutions  and  a  temporary  prolonged  payment  delay  for  the  wage
withholding tax was approved.  

3)

The reductions on the withholding tax on wages do not affect the PIT liability of the wage earner; they operate as a wage subsidy for the
employer. In ESA95, they are booked as a transfer from the government to the corporate sector.

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Developments in the Member States

Part III

Main features of the tax system

Personal income tax

There are four categories of income: financial, real estate, professional (including labour income) and other various
income.  In  principle,  the  general  rates  are  applied  to  each  category,  but  there  are  exceptions,  e.g.  in  relation  to
financial income, income from private pension arrangements and other various income.

In  practice,  the  basis  for  taxation  at  the  marginal  rate  consists  of  (deemed)  property  and  professional  income.
Spouses are taxed separately, although a marital quotient exists: 30 % of the higher income is transferred to the lower
one, provided it does not exceed € 8 880. A major reform was implemented in 2000–2006, introducing changes in
brackets, rates, deductions and exemptions as well as a reimbursable tax credit for lower incomes.

Dividends and interest are taxed at a modest flat rate at source so financial income is no longer considered in the
annual calculation. Taxation of private capital gains is almost non-existent (except for those on some capitalisation
vehicles),  interest  on  ordinary  saving  accounts  is  exempt  and  pension  savings  enjoy  a  special  regime  resulting  in
negative effective rates, as in other EU countries. 

Corporate taxation

Companies in Belgium and the subsidiaries of foreign companies are subject to a fixed tax rate of 33.99 % (crisis
surcharge  included)  regardless  of  the  origin and  the destination of the  profits.  There  is  no  fiscal consolidation  of
companies.  Under  certain  conditions,  a  special  scheme  applies  to  SMEs  having  an  assessed  income  lower  than
€ 322 500: a tax rate of 24.98 % is applied on the part from € 0 to € 25 000, 31.93 % on the part of € 25 000 to € 90 000
and 35.54 % on the remaining part up to € 322 500. 

An allowance for corporate equity (ACE), referred to as 'notional interest on corporate capital', was introduced in
2006  to  stimulate  the  self-financing  capability  of  companies.  The  tax-free  presumptive  rate  of  return  on  equity
applied under the ACE system amounts to 4.473 % in 2009 (4.973 % for SMEs). In 2003 a tax-free reserve for new
investments financed by retained earnings was introduced for SMEs benefiting from reduced rates.

VAT and excise duties

There are four VAT rates. The standard rate has remained unchanged at 21 % since 1996. A reduced 6 % rate applies
to  public  housing,  refurbishment  of  old  housing,  food,  water,  pharmaceuticals,  animals,  art  and  publications  and
some labour intensive services; the 2009 ‘recovery plan’ also includes the above-mentioned temporary reduction of
the  VAT  rate  to  6 %  for  a  maximum  amount  of  € 50 000  on  invoices  of  newly  constructed  private  dwellings.  An
intermediate rate of 12 % applies to a limited number of transactions. A zero rate applies to newspapers and certain
weeklies. Excise duties in a strict sense yield relatively low revenue in Belgium, but this is supplemented by above
average levels of other taxes on products.

Wealth and transaction taxes

There are no wealth taxes. Transaction taxes are generally levied at the regional level.

Social contributions

The social security system is financed by contributions from employees and employers and government subsidies.
The amounts are calculated based on the gross salary (including bonuses, benefits in kind, etc). The standard rate is
approximately 13 % for employees and 35 % for employers but there are rebates for low wage earners and some target
groups.

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Part III

Developments in the Member States

<@>TAB_PRINT_BG.pdf

Bulgaria

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
18.9
12.1
5.9
0.4
0.4

19.4
12.4
5.2
1.2
0.6

Ranking 1)
2
1
1
24
24

15.0
9.7
3.7
1.0
0.5

7.0
4.1
2.7
0.2

11.0
8.1
1.6
1.2

18.7
n.a.
3.2
11.0
n.a.

14.4

14.0
13.5
8.4
5.1
0.6

4.6
4.2
2.8
0.1
1.3
0.4

0.4

14.6
9.1
4.1
0.8
0.5

7.6
3.6
3.8
0.2

10.0
7.3
1.5
1.2

18.7
n.a.
3.4
10.0
n.a.

14.0

12.6
12.1
7.5
4.6
0.6

5.6
5.2
3.9
0.1
1.1
0.4

1.3

14.4
9.2
3.7
0.8
0.6

6.4
3.2
2.9
0.2

9.5
6.6
1.8
1.1

17.5
n.a.
3.3
9.5
n.a.

13.7

11.8
11.3
6.8
4.5
0.5

4.8
4.3
3.1
0.1
1.1
0.5

0.7

15.8
9.8
4.5
0.9
0.7

6.7
3.3
3.1
0.3

10.6
7.4
1.9
1.2

22.0
n.a.
0.5
10.6
n.a.

15.1

12.9
12.4
7.7
4.7
0.5

5.0
4.4
3.2
0.1
1.1
0.6

0.8

17.5
10.7
5.1
1.0
0.7

6.0
3.2
2.4
0.4

10.5
7.4
1.9
1.2

23.0
n.a.
0.5
10.5
n.a.

16.8

12.8
12.2
7.6
4.6
0.6

4.5
3.8
2.6
0.1
1.1
0.7

1.0

18.7
12.1
4.9
1.0
0.6

5.7
2.9
2.4
0.4

10.3
6.8
2.2
1.3

23.8
n.a.
0.6
10.3
n.a.

18.0

12.2
11.6
7.0
4.6
0.6

4.5
3.8
2.5
0.1
1.2
0.7

0.7

6.0
2.7
2.7
0.6

8.7
5.4
2.2
1.1

7.2
3.2
3.2
0.7

8.7
5.4
2.3
1.0

% of GDP
24.7
n.a.
0.9
8.7
0.4

24.6
n.a.
0.8
8.7
n.a.

% of GDP
18.4

18.7

10.5
10.0
5.6
4.4
0.5

4.8
4.0
2.9
0.1
1.0
0.8

0.9

10.8
10.3
5.5
4.9
0.5

5.5
4.5
3.4
0.1
0.9
1.0

0.5

€ bn
5.5
3.5
1.7
0.1
0.1

2.1
0.9
0.9
0.2

2.5
1.6
0.7
0.3

7.1
n.a.
0.3
2.5
n.a.

5.3

3.1
3.0
1.6
1.4
0.1

1.6
1.3
1.0
0.0
0.3
0.3

9.9

1.0
0.9

0.1
0.0

25
26
14
15

21
18
20
14

9
n.a.
23
19
n.a.

1

25
26
19
26
18

21
21
14
24
18
22

20

4
1
n.a.
20
10

8
23

TOTAL

32.5

30.9

29.6

32.2

33.1

34.0

33.2

34.2

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.5
2.3
-
0.2
0.0

19.7
38.7
-
-
-
-

5.4
-1.3

2.8
2.6
-
0.2
0.0

18.9
34.3
-
-
-
-

4.1
-0.1

2.2
2.0
-
0.2
0.1

18.7
32.9
-
-
-
-

4.5
1.0

3.0
2.6
-
0.2
0.1

20.6
35.5
-
-
-
-

5.0
0.7

3.4
3.0
-
0.2
0.2

23.2
36.3
-
-
-
-

6.6
1.6

3.1
2.7
-
0.2
0.1

24.4
34.7
-
-
-
-

6.2
1.6

% of GDP
3.4
3.0
-
0.3
0.1

3.1
2.7
-
0.3
0.1

%
25.4
29.9
-
-
-
-

6.2
1.5

25.5
30.6
-
-
-
-

6.3
1.8

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

BULGARIA

Overall trends in taxation

Structure and development of tax revenues

At 34.2 % in 2007, 3.3 percentage points below the EU average, Bulgaria ranks 20th in the EU in terms of the total
tax-to-GDP  ratio.  Compared  to  neighbouring  Romania,  Bulgaria's  total  tax  ratio  is  almost  4.8 percentage  points
higher, while the difference from the remaining Central and Eastern European Member States is most marked with
Hungary, 5.6 percentage points lower. 

Bulgaria is the EU Member State most reliant on indirect taxation. The share of indirect taxes on total taxation is the
highest in the Union, amounting to 55.1 %, i.e. 16.7 percentage points above the average. In terms of its share on GDP
the level of indirect taxation is also well above the EU average (18.9 %, EU 14.3 %); this value is the second highest in
the EU and, except for 2007, has been rising rapidly, growing by almost one third in five years. Both VAT and excise
duties contribute to the high level of indirect taxes. Direct taxes conversely account for only 20.9 % of total taxation,
the second lowest value in the Union. The low share of direct taxation is mainly due to the modest PIT revenues,
which yield only 40 % of the EU average. Social security contributions have been reduced significantly over the last
seven years; as of 2007 they represent only 25.3 % of total taxation (EU 29.5 %). 

Central government accounts for 72.3 % of total tax revenues, followed by social security funds (25.3 % of total tax
revenues), while local government revenues are marginal. This is due to the abolition of the local CIT surcharge and
discontinuing of PIT sharing as of 2003. As a result, local government revenues fell from 3.3 % of GDP in 2002 to
0.5 % the following year. A recently observed marginal pick-up is due to the boom in the property sector. 

The total tax-to-GDP ratio in 2007 (34.2 %) is almost two percentage points higher than in 2000. The decrease of the
ratio in 2001 and 2002 was mainly due to cuts in PIT and social security contributions rates. Strong unpredicted
deficits in the social security funds, notably in 2001, resulted both from personnel restructuring in a number of large
privatised  companies,  and  possibly  from  a  growth  of  the  shadow  economy.  These  developments  resulted  in  the
introduction of minimum social security thresholds in 2003, which led to a stabilisation of social security revenues.
In  2006  and  2007,  a  decline  in  revenues  from  social  contributions  was  offset  by  further  growth  in  receipts  from
indirect taxes as well as from the PIT and the CIT, so that the overall tax-to-GDP ratio remained almost unchanged.

Taxation of consumption, labour and capital; environmental taxation

Taxes on consumption in Bulgaria amounted to 18.4 % of GDP in 2007, the highest value in the EU. This is mainly
due to a high share of domestic final consumption in GDP — nearly three quarters, the third highest in the EU; the
rate of taxation contributes less to this high level as shown by the ITR on consumption which — at 25.4 % — is only
the eighth highest in the EU. The ITR on consumption is driven up to well above the VAT standard rate by a high
level of excise duties which yield nearly 50 % of VAT revenues. The increase of the ITR from 2003 onwards is notably
due  to  the  continuous  increase  of  excise  duty  rates,  the  lowering  of  the  VAT  registration  threshold  and  the
introduction of VAT accounts.

In 2007, revenue from labour taxation amounted to only 10.8 % of GDP, the third lowest value in the Union and 6.4
percentage points below the EU average. Among other factors, this is due to the relatively low level of compensation
of employees (34.5 % of GDP). At 29.9 %, the ITR on labour, is also well below the EU average (34.4 %). 

Revenues from taxes on capital amounted to 5.5 % of GDP in 2007, 2.5 percentage points below the EU average. The
ratio decreased gradually from 2001 to 2005, but picked up in 2006 owing to higher proceeds from corporate income

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Part III

Developments in the Member States

taxation. It is worth noting that the ratio of taxes on capital income of households is underestimated since personal
income taxes (e.g. on dividends) withheld at source by the companies are not shown separately in the data used, and
are thus attributed to the estimate for taxes on capital income of corporations. 

At  3.4 %  of  GDP,  revenues  from  environmental  taxes  are  well  above  the  EU  average  (2.7 %).  This  is  due  to  high
revenues from energy taxation, which — at 3 % of GDP — are the highest in the EU (EU 1.9 %), while transport
taxes are of lesser importance (0.3 % of GDP).

Current topics and prospects; policy orientation

Since 1998 fiscal policy has been targeted towards lowering the direct taxation burden and increasing reliance on
indirect taxation. Other major objectives include equal treatment and simplification of procedures. All this, coupled
with  stricter  tax  controls  and  targeted  anti-fraud  measures  drove  a  number  of  businesses  out  of  the  grey  sector,
broadening the tax base. The corporate income tax rate has been slashed by two thirds since 2000. More preferential
depreciation allowances were introduced, especially for initial investment and ITC equipment. PIT tax brackets were
also 'flattened' in the course of the years. The recently adopted new tax laws have mainly been targeted towards full
compliance  with  the  taxation  acquis  communautaire,  as  well  as  towards  simplification  of  the  legal  texts  and
procedures. 

As  from  1  January  2008,  Bulgaria  introduced  a  10 %  flat  PIT  rate  with  no  minimum  allowance,  replacing  the
previous  progressive  tax  schedule.  Simultaneously,  the  law  abolished  the  tax  credit  for  dependents  and  only  an
allowance for disabled persons was retained. Sole traders are subject to a 15 % rate instead of the regular 10 %; the
law also decreased a number of fixed deductions. 

Main features of the tax system

Personal income tax

The applicable tax brackets have been continuously lowered, most significantly since 2001. The broadening of the tax
base and an increase in employment prevented significant revenue losses. In 2006 and 2007 three tax brackets with
rates of 20 %, 22 % and 24 % respectively were in place (the latter down from 40 % in 1998). Since 2008, however, a
10 % flat rate applies.

The flat tax is levied on income from six sources and only very few tax reliefs are in force. The flat tax applies to both
the income of resident physical persons on their worldwide income and the income of non-resident physical persons
on  their  income  in  Bulgaria.  Residents  receiving  local  or  inbound  dividends  and  non-residents  receiving  local
dividends are subject to a 5 % final withholding tax. A withholding tax of 10 % applies to certain types of income.

The net income of sole proprietors is taxed separately by way of 15 % final flat tax. In certain sectors small businesses
operated by natural persons, including sole proprietors, are subject to a lump sum ('patent') tax provided that they
are not registered for VAT. 

Pensions  and  other  social  security  payments  are  exempt  from  taxation.  Similarly,  interest  income  on  savings
accounts in banks resident in Bulgaria or another EEA country, on Bulgarian government securities, on state or state-
guaranteed loans, and on corporate bonds and debentures is also exempt. 

Corporate taxation

In  the  course  of  the  last  decade,  corporate  income  taxation  in  Bulgaria  has  become  increasingly  favourable  to
business. Starting from the 40 % rate in 1995 for large enterprises, the rate was lowered almost every year to reach the
10 % rate applicable as from 1 January 2007. Initial investment, computers and software as well as mobile phones

136

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Developments in the Member States

Part III

benefit  from  a  special  50 %  depreciation  rate.  Moreover,  the  50 %  depreciation  rate  is  applicable  to  any  type  of
investment in new assets, if made to promote energy efficiency. 

The taxable result is derived from the accounting result, amended for tax purposes. Losses are carried forward for
five  years.  Dividends  distributed  between  resident  commercial  companies  are  exempt.  As  of  1  January  2009,  any
dividends  paid  to/received  from  companies  and  other  entities  resident  in  an  EEA  country  are  exempt  from
withholding  tax.  Otherwise,  a  5 %  withholding  tax  is  levied  on  outbound  dividends.  Other  income  paid  to  non-
resident companies is subject to a 10 % withholding tax.

As  of  1  January  2009,  a  tax  holiday  for  investment  was  introduced.  It  is  in  the  form  of  a  corporate  income  tax
exemption for five years and applies, under certain conditions, to profits from agriculture, processing, production,
high-tech industry and the building of infrastructure. The tax holiday, which is considered State aid, would apply
only in case the measure is approved by the European Commission.

VAT and excise duties

The VAT system has been in place in Bulgaria since 1994 and follows the one adopted by the EU Member States. The
reduced rates have been repealed and the general rate has been lowered from 22 % to 20 %. Only one reduced rate of
7 % is applicable to hotel accommodation if the latter is a part of an organised trip. 

Excise duty rates have been increased nearly every year and the hike will continue in accordance with the transitional
periods negotiated with the European Commission. For 2009 the increase of the rates affects the kerosene, coke and
coal, electricity and cigarettes. 

Wealth and transaction taxes

There is no net wealth tax. No inheritance or gift tax is levied on inheritances/donations received by the spouse and
relatives in the direct line. The tax is levied at rates set by the municipalities within the limits set by law. The rates
may  vary  between  0.4 %  and  0.8 %  (if  received  by  relatives  in  the  lateral  line)  and  between  3.3 %  and  6.6 %  (if
received by any other beneficiary). A real estate tax applies at rates of 0.05 % to 0.2 % of the value of the immovable
property,  depending  on  the  municipality.  A  50 % discount  is  granted  if the  property  is  the  main  residence  of  the
taxpayer.

Social contributions

Contributions are due for the public social insurance funds, covering pension rights, general sickness and maternity,
health,  and  unemployment.  In  2009,  the  different  contributions  sum  up  to  a  maximum  of  30.5 %  of  the  income,
subject to monthly income minimum and ceiling. Currently, over half (60 %) of the contribution payments are paid
by the employer and 40 % by employees. As from 1 January 2009, the State transfers annually to the Pensions Fund
an amount equal to 12 % of the social insurance income of all insured people for the calendar year. Social insurance
contributions to the Pensions Fund are 10% for employers and 8% for employees of the social insurance income. 

Furthermore,  the  employer  has  to  pay  additional  contributions  to  the  Labour  Accident  and  Professional  Disease
Fund (0.4 %–1.1 %) and to the Guaranteeing the Receivables of Workers and Employees in Case of Insolvency of
Employers Fund (0.1 %).

Taxation trends in the European Union                 137

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Part III

Developments in the Member States

<@>TAB_PRINT_CY.pdf

Cyprus

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
20.0
11.3
3.7
1.9
2.9

17.9
10.4
3.9
1.4
2.2

Ranking 1)
1
2
5
11
5

12.4
5.8
2.5
3.0
1.1

11.0
3.6
6.2
1.2

6.5
4.4
1.8
0.3

23.0
n.a.
0.4
6.5
n.a.

13.0
6.2
3.2
2.7
1.0

11.2
3.9
6.2
1.1

6.8
4.5
1.9
0.3

23.7
n.a.
0.5
6.8
n.a.

10.6

11.8

9.4
9.2
4.6
4.7
0.2

9.9
7.5
6.2
0.8
0.4
2.5

0.0

9.9
9.7
4.7
5.0
0.2

9.2
7.4
6.2
0.7
0.4
1.8

0.0

13.3
7.1
2.8
2.3
1.0

11.2
4.3
6.0
0.9

6.7
4.5
1.9
0.3

24.1
n.a.
0.4
6.7
n.a.

12.4

10.0
9.9
4.7
5.2
0.1

8.9
7.3
6.0
0.8
0.5
1.5

0.0

16.4
8.8
3.8
2.0
1.7

9.6
4.4
4.3
0.9

7.0
4.7
1.9
0.3

25.5
n.a.
0.4
7.0
n.a.

14.7

10.7
10.6
5.5
5.1
0.1

7.6
5.9
4.3
1.1
0.5
1.7

0.0

17.0
9.1
4.4
1.7
1.9

8.7
3.5
3.7
1.5

7.7
5.3
2.1
0.3

25.1
n.a.
0.5
7.7
0.2

15.2

10.5
10.5
6.2
4.3
0.1

7.7
5.3
3.7
1.1
0.5
2.5

0.0

17.1
9.7
4.1
1.4
1.9

10.2
3.9
4.6
1.7

8.3
5.9
2.1
0.3

26.6
n.a.
0.4
8.3
0.2

15.2

11.3
11.2
6.7
4.5
0.1

9.0
6.3
4.6
1.2
0.5
2.7

0.0

10.8
4.6
5.5
0.7

7.8
5.5
2.0
0.3

14.0
6.3
6.9
0.8

7.7
5.2
2.1
0.4

% of GDP
33.2
n.a.
0.5
7.7
0.2

27.9
n.a.
0.5
7.8
0.2

% of GDP
16.4

15.4

11.1
11.0
6.4
4.6
0.1

10.0
7.7
5.5
1.7
0.5
2.3

11.0
10.9
6.1
4.8
0.1

14.2
10.8
6.9
3.4
0.5
3.5

0.0

0.0

€ bn
3.1
1.8
0.6
0.3
0.5

2.2
1.0
1.1
0.1

1.2
0.8
0.3
0.1

5.2
n.a.
0.1
1.2
0.0

2.6

1.7
1.7
1.0
0.8
0.0

2.2
1.7
1.1
0.5
0.1
0.5

6.5

0.5
0.3

0.3
0.0

7
16
1
12

23
20
22
19

4
n.a.
25
20
25

2

24
24
18
27
24

1
1
1
1
22
5

8

5
17
15
3
24

14
26

TOTAL

30.0

30.9

31.2

33.0

33.4

35.5

36.5

41.6

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.7
0.7
-
2.0
0.0

12.7
21.5
23.8
17.9
25.2
7.0

5.0
2.2

3.0
1.0
-
2.0
0.0

14.3
22.8
22.0
17.7
24.3
6.3

4.0
3.0

2.9
1.0
-
1.9
0.0

15.4
22.2
22.5
18.6
24.7
8.8

2.1
1.7

3.7
1.9
-
1.8
0.0

18.9
22.7
22.5
17.4
22.1
11.1

1.9
-0.2

4.0
2.1
1.5
1.9
0.0

20.0
22.7
23.1
15.7
18.9
10.5

4.2
-0.7

3.5
1.9
1.6
1.6
0.0

20.0
24.5
27.0
18.9
23.6
11.0

3.9
-1.1

% of GDP
3.4
1.8
1.4
1.6
0.0

3.3
1.8
1.4
1.5
0.0

%
21.4
24.0
50.5
38.2
38.7
27.1

4.4
0.0

20.4
24.1
30.6
23.5
26.8
15.3

4.1
-0.8

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

CYPRUS

Overall trends in taxation

Structure and development of tax revenues

In  2007,  the  overall  tax  burden  (including  social  contributions)  increased  significantly  (by  5.1  percentage  points)
reaching 41.6 % of GDP. Cyprus' tax burden is now more than four percentage points of GDP above the EU average
(EU-27 37.5 %), with the Nordic Countries, Belgium, France, Italy and Austria recording higher rates.

The tax structure of Cyprus' tax system stands out in several respects. Cyprus displays the second highest reliance on
indirect taxes in the EU-27 after Bulgaria. It derives 47.9 % of tax revenues from indirect taxes (EU-27 38.4 %), of
which VAT accounts for more than half. This is due to the high share of consumption in the economy, as VAT rates
are moderate. Direct taxes account for a proportion of revenue (33.6 %) in line with the EU average; however, they
are  more  heavily  based  on  CIT  revenues  (16.6 %)  than  in  all  other  EU-27  countries  except  for  Malta.  On  the
contrary, PIT taxes only contribute three quarters of EU-27 average to the total tax revenues (15.1 %, EU-27 20.6 %).
Social contributions account for a less than one fifth of receipts, well below EU-27 average. The share of revenue
received by the social security funds have decreased markedly since the late 1990s.

The  share  of  taxes  received  by  local  government  is  negligible  (1.3 %  of  total  taxation  in  2007);  only  Greek  local
government receives a lower share in tax revenues. 

The tax-to-GDP ratio has increased substantially (more than 11 percentage points) since 2000, albeit starting from a
very low level. The increase was steady, but was most notable in 2005 and 2007, when the pick-up amounted to more
than  five  percent  of  GDP.  Compared  to  2000,  revenue  went  up  in  all  major  tax  categories,  but  the  increase  was
strongest  in  indirect  taxes  —  in  particular  in  VAT  —  which  almost  doubled.  However,  the  spike  in  direct  tax
revenues in 2007 appears to be temporary. It seems to be rather due to the high level of activity in the construction
and property sector, the improved profitability of the corporate sector as well as improved tax collection methods,
than changes in the tax system. 

Taxation of consumption, labour and capital; environmental taxation

Revenues from taxes on consumption as a percentage of GDP (16.4 %) are well above the EU-27 average (12.4 %).
This level of revenues is largely due to a high consumption share in the economy, ten percentage points above the
EU-27 average. In addition, Cyprus has been following a strategy of raising primarily consumption taxes. VAT and
excise duties revenues were boosted by increases in minimum tax rates prescribed by the acquis; furthermore, several
VAT base broadening measures were introduced since EU accession. 

In  2000,  the  implicit  tax  rate  on  consumption  was  the  lowest  of  the  EU-27  Member  States;  it  now  ranks  at  the
median. Despite low VAT rates, the ITR on consumption is currently only 0.8 percentage points lower than the EU-
27 average, reaching 21.4 %. This discrepancy is likely to be at least partly due to the construction boom of the last
years, as VAT spent on building and renovation is counted as consumption tax revenue is this report1). 

1)

The  numerator  of  the  ITR  comprises  VAT  revenue  on  construction,  whereas  the  denominator,  in  line  with  national  accounts,  excludes
expenditure in construction, as that is considered investment rather than consumption. This results in an upwardly biased measure of the
ITR on consumption. Owing to lack of data, it is at present not possible to correct for this effect.

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Part III

Developments in the Member States

Taxes on employed labour represented 11.0 % of GDP in 2007, constituting roughly one quarter of the overall tax
burden.  Despite  an  increase  in  the  ITR  on  labour  by  2.5  percentage  points  since  2000,  Cyprus  still  exhibits  the
second lowest ITR on labour in the Union after Malta. The value is 24 % compared with 34.4 % in the EU-27 average.

The share of taxes on capital in GDP (14.2 %) is highest in the EU, almost twice the EU-27 average. This is mainly due
to the capital income taxation of corporations, which includes the Defence Contributions, and the capital income
taxation of households, which is four times higher than the EU-27 average.  Since 2004, the ITR on capital more than
doubled, reaching 50.5 % in 2007 — more than 20 percentage points above EU-25 and euro area averages. However,
the major part of this increase (about 20 percentage points) took place in 2007 when tax revenues soared due to the
booming  real  estate  and  construction  sector.  The  observed  rise  in  the  ITR  most  likely  overstates  the  underlying
development  because,  while  capital  gains  taxes  from  real  estate  sales  form  part  of  the  nominator  of  the  ITR  on
capital,  capital  gains  are  not  part  of  profits  in  national  accounts  and  hence  are  not  comprised  in  the  ITR's
denominator.

The share of environmental taxes in GDP in Cyprus (3.4 %) is the fifth highest in the Union, following Denmark, the
Netherlands,  Malta  and  Bulgaria.  This  is  mainly  due  to  the  large  share  of  transport  taxes  (1.6 %  of  GDP),  0.9
percentage  points  above  the  EU-27  average.  Revenue  from  energy  taxes  has  more  than  doubled  since  2000  as  a
proportion of GDP, but has been trending downwards in the past few years.

Current topics and prospects; policy orientation

The  restructuring  of  the  tax  system  in  order  to  achieve  a  more  efficient  allocation  of  resources  and  support  the
supply side  of the economy, is a key policy priority for Cyprus. To this end, a major step was the comprehensive
2002–04 reform, which aimed at harmonising the tax system with the EU's code of conduct on business taxation,
simplifying income tax law, and bringing VAT and excise rates in line with EU requirements.  

As the jump in tax revenues in 2007 was due to extraordinary economic developments, in particular in the real estate
sector, revenue growth is expected to decelerate considerably in the coming years. Moreover, several tax reducing
measures have been taken such as the increase in the zero-rate income bracket, a reduction of several VAT rates as
well as cuts in energy and transport taxes. To combat the global economic crisis, further tax cuts were introduce in
2009,  amounting  to  0.2–0.3 %  of  GDP.  To  improve  the  competitive  situation  of  the  Cypriot  tourism  sector,  the
government reduced temporarily VAT for hotel accommodation by three percentage points to 5 %, decreased airport
landing fees levied on airline companies and cancelled overnight stay fees levied by local authorities.

Furthermore, the government decided to reduce the corporate tax rate for semi-governmental organisations from
25 % to 10 %, bringing it in line with the corporate tax rate applied to non-governmental corporations. 

Main features of the tax system 

Personal income tax

Cyprus applies a personal income tax with a progressive rate structure. After 1991, three brackets were used, with
rates  set  at  20 %,  30 %  and  40 %.  The  rates  were  reduced,  however,  in  2003  to  20 %,  25 %  and  30 %.  There  is  a
standard relief (basic allowance) which has been progressively raised from € 8 500 in 1995 up to € 19 500 in 2009, as
a result of which the number of people subject to personal income tax has decreased substantially. 

Capital gains are, in general, not taxable. Gains on the disposal of immovable property located in Cyprus are taxed at
20 %. The capital gain is the difference between the sales proceeds and the original cost, adjusted to take into account
increases in the cost of living index.

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Developments in the Member States

Part III

Corporate taxation

Cyprus has lowered its corporate tax rate from 20–25 % (stable since 1991) to 10 % from 1 January 2003. For semi-
governmental bodies the tax rate has remained 25 % until 2009. In the years 2003 and 2004, there was an additional
5 % corporate tax for chargeable income exceeding € 1.7 million. Alongside the reduction of the tax rate, several tax
incentives have been abolished. Special regimes apply, however, to the shipping sector. Companies can carry forward
trading losses indefinitely (up to 2002 a five-year limit applied), but carrying back is not allowed. Inventories may be
valued at the lower of cost or net realisable value.

VAT and excise duties

The current VAT rate is 15 % (the standard rate was 10 % until the second half of 2002, but was increased to 13 % on
1 July 2002 and to 15 % in January 2003). Reduced rates range from 0 % to 8 %. Cyprus has requested transitional
measures,  a  zero  VAT  rate  on  foodstuffs  and  pharmaceuticals,  a  reduced  VAT  rate  on  restaurants  and  a  VAT
exemption for land. During the years 2007–09, several amendments to the VAT law aimed at applying reduced VAT
rates, or applying the lowest reduced VAT rate on a number of services. 

The excise duties on energy, in particular on unleaded petrol and on diesel fuel will be gradually aligned with the EU
minima using the derogations provided.

Wealth and transaction taxes 

There are neither net wealth taxes nor inheritance and gift taxes in Cyprus. Immovable property located in Cyprus is
subject to a real estate tax, which is levied on the estimated market value of the property in 1980. Rates range from
0 % to 0.4 %. 

Social contributions

Employers'  social  security  contributions  are  due  for  the  Social  Security  Fund,  redundancy  insurance  and  for  the
Training Development Fund. Altogether, the employers' contribution rate amounts to 8 %. Employers must also pay
a payroll tax (2 % of gross wage) to the social cohesion fund, which is not deductible for corporate income purposes.
Employees pay 6.3 % of their salary as social security contribution up to a ceiling of € 46 023. The self-employed pay
11.6 % of notional income as social security contribution.

Other taxes

All  residents  are  subject  to  the  Defence  Contribution,  which  is  a  final  levy  and  not  deductible  for  income  tax
purposes. It is applied with different rates on dividends, interest, rental payments and the taxable income of public
corporate  bodies.  Dividends  are  subject  to  the  Defence  Contribution  at  a  rate  of  15 %,  with  the  contribution  on
domestic dividends withheld at source. Interest payments not accruing from ordinary business activities are subject
to the Defence Contribution at a rate of 10 %. Individuals with an annual income not exceeding € 11 960 may apply
for a 7 % refund. A 3 % rate applies to interest on savings certificates issued by the government; however, dividends
and interest are not subject to personal income tax. Rental payments are subject to the Defence Contribution at a rate
of 3 %. Defence Contributions have gone through many permutations and the current system has existed only since
1 January 2003. This reform changed the tax from a levy on earned income (salaries and profits) to the current levies
on unearned income.

Taxation trends in the European Union                 141

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Part III

Developments in the Member States

<@>TAB_PRINT_CZ.pdf

Czech Republic

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
11.3
6.6
3.8
0.5
0.4

11.3
6.6
3.7
0.5
0.4

Ranking 1)
27
23
3
22
25

11.3
6.5
3.3
1.0
0.6

8.3
4.6
3.5
0.3

14.2
9.9
3.5
0.7

25.7
n.a.
4.1
4.1
n.a.

10.6

17.1
17.1
9.9
7.2
0.0

6.2
5.1
3.5
0.2
1.5
1.0

0.0

11.0
6.3
3.3
0.8
0.6

8.8
4.5
4.1
0.2

14.2
9.9
3.5
0.8

26.2
n.a.
3.8
4.0
n.a.

10.2

17.0
17.0
9.9
7.1
0.0

6.7
5.8
4.1
0.2
1.5
1.0

0.0

10.8
6.3
3.2
0.8
0.5

9.1
4.7
4.3
0.2

14.9
10.4
3.6
0.8

26.3
n.a.
4.3
4.2
n.a.

10.1

17.8
17.8
10.4
7.4
0.0

6.9
6.0
4.3
0.1
1.6
0.9

0.0

11.1
6.4
3.4
0.8
0.5

9.6
4.9
4.6
0.2

15.0
10.5
3.7
0.9

26.9
n.a.
4.5
4.3
n.a.

10.4

18.1
18.1
10.5
7.6
0.0

7.2
6.3
4.6
0.2
1.6
0.9

0.0

11.8
7.3
3.5
0.5
0.4

9.6
4.8
4.7
0.1

16.0
10.3
3.6
2.1

27.1
n.a.
4.7
5.4
0.2

11.2

17.9
17.8
10.3
7.5
0.0

8.3
7.7
4.7
0.1
2.8
0.7

0.0

11.8
7.2
3.7
0.5
0.4

9.2
4.6
4.5
0.1

16.1
10.3
3.6
2.1

25.9
n.a.
5.4
5.5
0.3

11.3

18.0
17.9
10.3
7.6
0.0

7.9
7.2
4.5
0.1
2.6
0.7

0.0

9.2
4.2
4.8
0.1

16.3
10.3
3.6
2.3

9.3
4.3
4.8
0.1

16.3
10.3
3.6
2.4

% of GDP
25.7
n.a.
5.2
5.7
0.3

25.5
n.a.
5.2
5.7
0.3

% of GDP
10.7

10.7

17.8
17.7
10.3
7.4
0.0

8.3
7.6
4.8
0.1
2.7
0.7

0.0

17.8
17.8
10.3
7.5
0.0

8.4
7.7
4.8
0.1
2.7
0.7

0.0

€ bn
14.3
8.4
4.8
0.6
0.5

11.8
5.5
6.2
0.2

20.7
13.1
4.6
3.0

32.6
n.a.
6.6
7.2
0.4

13.6

22.6
22.6
13.1
9.5
0.0

10.6
9.7
6.2
0.1
3.5
0.9

46.9

3.2
2.9

0.2
0.0

19
24
4
25

1
3
10
5

7
n.a.
7
21
10

23

12
11
5
17
27

11
6
4
25
3
24

14

14
5
2
25
19

13
5

TOTAL

33.8

34.0

34.8

35.7

37.4

37.1

36.7

36.9

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.6
2.1
-
0.3
0.1

19.4
40.7
20.9
17.4
26.2
9.2

3.6
-1.7

2.6
2.3
-
0.3
0.0

18.9
40.3
22.3
19.1
28.3
9.5

2.5
-1.7

2.5
2.2
-
0.3
0.0

19.3
41.2
23.7
20.7
30.3
10.3

1.9
-2.9

2.6
2.3
-
0.3
0.0

19.6
41.4
24.8
21.8
32.0
10.5

3.6
-3.0

2.6
2.4
2.3
0.2
0.0

21.8
41.8
28.0
25.7
29.8
18.2

4.5
-2.6

2.7
2.5
2.3
0.2
0.0

22.2
41.7
25.6
23.3
25.4
17.3

6.3
-0.6

% of GDP
2.5
2.3
2.2
0.2
0.0

2.6
2.4
2.2
0.2
0.0

%
21.4
41.4
25.6
23.5
24.1
18.7

6.0
2.9

21.1
41.1
25.9
23.7
25.6
17.6

6.8
1.7

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

CZECH REPUBLIC

Overall trends in taxation

Structure and development of tax revenues

In 2007, the Czech Republic's total fiscal revenue was 36.9 % of GDP. This tax ratio is marginally below the EU-27
average (37.5 %). Compared to neighbouring countries, the ratio is lower than in Austria and Germany but higher
than in Slovakia and Poland.

The main source of tax revenue is social security contributions, which reach 44.2 % of total taxes and are over 14
percentage points above the EU-27 average (29.5 %). The share of Czech social contributions in total revenues is the
highest  in  the  EU,  followed  by  France  and  Germany.  The  share  of  direct  taxes  (25.3 %  of  total  taxation)  is  7.0
percentage points below the Union average (32.3 %), as these levies play a  less important role than indirect taxes
(30.5 %). Given the predominance of social security contributions, the other sources of revenues tend to fall below
the EU average. In particular, indirect tax revenue is the lowest in the EU as a percentage of GDP. Moreover, PIT
revenue  stands  at  4.3 %  of  GDP,  among  the  lowest  values  of  the  EU.  The  Czech  Republic  is  one  of  only  four  EU
countries where CIT revenues are more sizeable than PIT revenues. In 2007, CIT revenue, which is relatively high in
the Czech Republic (1.3 percentage points above the EU-27 average), exceeded PIT revenue by 0.5 percentage points
of GDP. Despite the forceful cut in the CIT rate from 55 % in 1991 to 20 % in 2009, CIT revenues have not markedly
reduced until now.

Since the structure of the tax system is quite centralised, local government receives a rather small proportion of total
tax  revenues  (14.1 %),  although  this  amount  increased  compared  to  the  beginning  of  the  century.  The  central
government receives 69.6 % of total taxes, over 10 percentage points more than the EU-27 average (59.4 %). This
level is the eighth highest in the EU.

The total tax burden rose steadily from 2000 to 2004 peaking at 37.4 % of GDP. In the 2005–2007 period the tax-to-
GDP  ratio  has  remained  below  this  level  (being  36.9 %  in  2007  in  line  with  the  EU-27  average),  although  GDP
growth was stronger than in the early 2000s. 

Taxation of consumption, labour and capital; environmental taxation

The tax mix by economic function is consistent with the structure described above: taxation on labour is the main
source of revenue (48.3 %, 2.9 percentage points above the EU-27 average), followed by consumption (29.0 %) and
capital (22.7 %). The greater part of the taxes on capital is borne by corporations.

The implicit tax rate (ITR) on consumption is 0.8 percentage points below the EU-27 average (22.2 %). The implicit
tax  rate  (ITR)  on  consumption  has  substantially  grown  in  recent  years,  due  to  the  2004  revision  of  consumption
taxation. Selected goods and services earlier taxed at a reduced 5 % VAT rate were made subject to the standard EU
rate in two steps; from 1 January 2004 (e.g. telecommunications) and from 1 May (e.g. construction works). On the
other hand, from 1 May 2004, the standard VAT rate was cut from 22 % to 19 %. The ITR dropped by 1.1 percentage
points in 2006 and picked up again by 0.3 percentage points in 2007 being nevertheless broadly in line with the EU-
27 average.

The ITR on labour income has dropped from its peak level of 41.8 % in 2004 but not very much remaining above the
41 %  level.  This  level is  comparatively  high,  7.0  percentage  points  above  the  EU-27  average.  The elevated  ratio  is
linked to the high level of social security contributions.

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Part III

Developments in the Member States

The ITR on capital increased gradually from 2000 to 2004, but then the trend inverted. During 2005–2007, the ITR
on capital declined to 25.6 % (3.1 percentage points below the EU-25 average).

Environmental taxes represent 2.5 % of GDP.  This value is slightly below the EU average (2.7 %) and has remained
roughly constant during the past seven years. However, in 2008 the Czech Republic introduced an environmental tax
reform that will lead to an increase of excise revenue on electricity, natural gas and solid fuels.

Current topics and prospects; policy orientation

The 2008 tax reform introduced important changes in the tax system of the country. In addition to introducing a
15 % flat personal income tax rate and reducing the corporate income tax rate from 24 % to 21 %, there will be a
further gradual cut in the CIT rate in accordance with the approved legislation: to 20 % in 2009 and further to 19 %
in 2010. 

A  series  of  measures  aiming  at  reducing  social  security  contributions  were  introduced.  From  2008,  a  ceiling  was
introduced for the annual assessment base for social and health insurance premiums amounting to four times the
average  annual  wage  in  the  national  economy.  As  of  2009,  the  social  security  contributions  paid  by  employees  is
lowered  by  a  total  1.5  percentage  points  while  as  regards  employers,  in  accordance  with  the  new  Act  of  Sickness
Insurance, the rate is lowered by 1.0 percentage point. From 2010 another cut in the rate of the contributions paid on
the  side  of  employers,  by  0.9  percentage  points,  is  planned.    The  Czech  Republic  is  set  to  implement  an
environmental tax reform, in line with EU requirements. New taxes on electricity, natural gas and solid fuels were
introduced in 2008. During the first phase, tax rates will be set at the level of the minimum tax rates under European
legislation. In the second phase, gradual increases in the rates may be considered. 

In  response  to  the  economic  crisis,  among  other  measures,  the  Czech  Republic  lowered  the  VAT  rate  for  labour
intensive local services and introduced a VAT deduction on passenger cars for entrepreneurs. 

Main features of the tax system

Personal income tax

Until 2007, the Czech Republic applied progressive personal income taxation with four brackets, where the top rate
was  32 %.  A  flat  tax  rate  of  15 %  was  introduced  in  2008.  From  1  January  2008,  the  employee's  taxable  income
includes the social security and health insurance contributions payable by the employer. The personal tax credit, the
tax credit for non-earning spouses, the tax credit for dependant children as well as other tax credits were significantly
increased in 2008.

Corporate taxation

The corporate income tax rate was gradually reduced from 24 % in 2007 to 20 % in 2009. The rate for all withholding
taxes is 15 %, and the reduced rate is 5 %.  A 15 % rate applies to interest, dividends and royalties for both resident
and  non-resident  and  for  both  corporations  and  individuals.  Dividends  paid  and  capital  gains  derived  by  parent
companies registered in an EU Member State are exempt from the withholding tax. In general, dividends paid to
non-residents  are  subject  to  15 %  withholding  tax,  unless  a  double  tax  treaty  provides  otherwise.  Dividends  and
interest paid to qualifying foreign pension may be exempt from the withholding tax. In addition, qualifying foreign
pension funds may benefit from a reduced 5 % corporate income tax rate. 

VAT and excise duties

The VAT regime was brought in line with the sixth Directive in 2004. The standard VAT rate is 19 % and applies to
most goods and services; the reduced rate is 9 % and applies to certain services and essential goods (e.g. food, drugs,

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Developments in the Member States

Part III

construction  works  for  housing).  Certain  services  (e.g.  banking  services,  insurance,  financial  operations)  are
exempted. 

Excise tax is imposed on mineral oils, lubricants, spirits, beer, wine and tobacco products. A suspension regime has
been in place since 2004. The transitional period for delayed implementation of the excise duty rates on cigarettes
and other tobacco products ended in 2007. Starting in 2008, taxes on cigarettes and tobacco were increased. Another
change  in  excise  taxes  is  the  introduction  of  an  environmental  tax  on  electricity,  natural  gas  and  solid  fuels.
Reductions  in  taxation  are  available  for  renewable  and  alternative  electricity,  biogas  and  CHPs  and  specified
environmentally sound vehicles. A tax refund is available also for public transportation using green electricity.

Wealth and transaction taxes

There is an inheritance and gift tax, a real estate transfer tax and a real property tax. For movable assets, the tax base
is  the  market  price.  For  immovable  assets,  the  tax  base  is  in  most  cases  the  official  valuation  of  the  assets.  The
acquisition of movable property by inheritance is exempt from taxes for direct and indirect (since 2008) relatives and
spouses of the owner. The tax rate is based on the value of property. This ranges for the gift tax from 7 % to 40 % and
from 3.5 % to 20 % for the inheritance tax. The real estate transfer tax rate is 3 % of the price of the property. 

Social contributions

Employers,  employees  and  self-employed  persons  must  make  social  security  contributions  that  cover  health,
occupational disability, old-age pension and unemployment insurance. Since the introduction of the flat rate, social
security contributions are fully taxable. From 1 January 2009 the employees' total rate for premiums to social security
contributions was reduced from 8 % to 6.5 % (comprised of 6.5 % contributions to pension insurance). Employers'
contributions total rate was reduced from 35 % to 34 % (reduction in the rate of sickness insurance contributions
from 3.3 % to 2.3 %). The maximum assessment base is CZK 1 034 880 (€ 40 600). 

Taxation trends in the European Union                 145

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Part III

Developments in the Member States

<@>TAB_PRINT_DK.pdf

Denmark

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
18.0
10.4
3.2
2.6
1.8

18.1
10.3
3.4
2.6
1.7

Ranking 1)
3
3
12
7
9

17.2
9.6
4.1
2.0
1.6

30.5
25.6
3.3
1.6

1.8
0.0
1.8
0.0

31.0
n.a.
16.5
1.8
0.2

15.7

26.6
21.7
0.5
21.3
4.9

7.2
4.8
3.3
0.4
1.1
2.4

0.1

17.4
9.6
4.1
1.8
1.8

29.5
26.0
2.8
0.7

1.7
0.0
1.7
0.0

29.7
n.a.
17.0
1.7
0.2

15.7

26.9
22.1
0.6
21.5
4.8

6.0
3.4
2.8
-0.6
1.2
2.6

0.1

17.5
9.6
4.1
2.0
1.8

29.3
25.7
2.9
0.7

1.2
0.0
1.2
0.0

29.5
n.a.
17.1
1.2
0.2

15.8

26.1
21.2
0.5
20.7
4.9

6.1
3.4
2.9
-0.5
1.0
2.7

0.1

17.4
9.6
4.0
1.9
1.8

29.5
25.6
2.9
1.1

1.2
0.0
1.2
0.0

29.6
n.a.
17.2
1.2
0.2

15.6

26.0
20.9
0.5
20.4
5.1

6.6
3.8
2.9
-0.1
1.0
2.8

0.1

17.6
9.8
3.8
2.2
1.8

30.4
24.9
3.2
2.3

1.2
0.0
1.1
0.0

30.9
n.a.
16.9
1.2
0.2

15.8

25.2
20.3
0.5
19.8
4.9

8.2
5.4
3.2
1.2
1.0
2.8

0.1

18.0
10.1
3.5
2.6
1.7

31.9
24.9
3.9
3.1

1.1
0.0
1.1
0.0

32.8
n.a.
16.9
1.1
0.2

16.2

24.8
20.0
0.5
19.5
4.8

10.0
7.3
3.9
2.3
1.1
2.8

0.2

30.6
24.8
4.4
1.5

1.0
0.0
1.0
0.0

29.8
25.2
3.6
1.0

1.0
0.0
1.0
0.0

% of GDP
35.8
n.a.
11.8
1.0
0.2

31.8
n.a.
16.7
1.0
0.2

% of GDP
16.2

16.3

24.5
20.0
0.5
19.5
4.5

8.9
6.2
4.4
0.8
1.1
2.8

0.2

24.8
20.4
0.5
19.9
4.4

7.8
5.0
3.6
0.4
1.1
2.7

0.1

€ bn
40.9
23.6
7.3
5.8
4.0

67.5
57.1
8.2
2.2

2.3
0.0
2.2
0.0

81.0
n.a.
26.8
2.2
0.5

36.8

56.2
46.2
1.2
45.0
10.0

17.6
11.4
8.2
0.8
2.4
6.2

110.3

13.4
5.1

5.0
3.2

1
1
10
6

27
27
25
27

1
n.a.
2
25
24

3

2
5
27
1
1

13
19
10
18
16
9

1

1
6
22
1
1

1
10

TOTAL

49.4

48.4

47.8

48.0

49.0

50.8

49.6

48.7

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

5.3
2.6
-
1.8
0.8

33.4
41.0
36.0
23.8
24.4
19.6

3.5
2.4

5.2
2.7
1.3
1.7
0.8

33.5
40.8
30.8
17.5
21.9
7.7

0.7
1.1

5.4
2.7
1.3
1.9
0.8

33.7
38.8
30.7
17.2
21.1
7.8

0.5
-0.2

5.2
2.7
1.3
1.8
0.8

33.3
38.1
36.7
21.3
23.2
13.3

0.4
-1.4

5.6
2.6
1.3
2.0
1.0

33.3
37.5
45.8
30.2
26.7
29.8

2.3
-0.8

6.0
2.5
1.3
2.2
1.3

33.9
37.1
49.8
36.1
29.1
42.0

2.4
-0.1

% of GDP
5.9
2.3
1.2
2.2
1.4

6.2
2.4
1.2
2.3
1.6

%
33.7
37.0
44.9
29.1
30.8
19.5

1.6
1.2

34.0
37.1
44.8
31.0
32.3
21.9

3.3
1.6

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

146

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Developments in the Member States

Part III

DENMARK

Overall trends in taxation

Structure and development of tax revenues

Although the tax-to-GDP ratio has dropped by over two percentage points from 2005 to 48.7 % in 2007, Denmark
still shows the highest ratio in the EU. The drop primarily reflects the fact that the tax on pension fund yield was at
an exceptionally high level in 2004 and 2005, contributing thus to the high ratio in those years. The tax on pension
fund yield depends on financial market developments and may fluctuate considerably from one year to the next. It
should also be noted that the tax-to-GDP ratio overestimates the Danish tax burden somewhat in relation to other
countries, since transfer incomes (for example, pensions) are taxed, and not paid out on a net basis, although no
corresponding income is taken into account when measuring GDP.

The  Danish  tax  structure  stands  out  in  a  number  of  respects.  Social  contributions  are  very  low  as  most  welfare
spending is financed out of general taxation, notably personal income taxation. Correspondingly direct taxes form
61.2 % of total tax revenues (EU-27 32.3 %). Personal income taxes form the bulk of direct taxes, representing 51.8 %
of total taxation in 2007. In contrast, the proportion of indirect taxes was 37.1 %, which is slightly below the EU-27
average (38.4 %). This is not due to a low absolute level of indirect taxation, however, but rather to the fact that the
revenues from other taxes are high in comparison with other countries. 

In terms of the distribution of revenue between levels of government, Denmark differs substantially from the EU
average  because  of  the  small  role  played  by  social  security  funds.  As  a  result,  the  share  of  taxes  raised  by  central
government  and  particularly  local  government  is  elevated,  respectively  73.5 %  and  24.3 %  (EU-27  59.4 %  and
11.1 %).

Taxation of consumption, labour and capital; environmental taxation

The implicit tax rate on consumption, at 33.7 % (EU-27 22.2 %), remains the highest amongst the Member States.
The rate is slightly lower than in the previous year (34.0 %).

Despite  the generally  high  level  of  taxation, the  ITR on  labour,  at 37.0 %,  is not amongst the  EU's  highest, but  is
exceeded in nine other Member States. It has been steadily falling since 2000, resulting at least partly from labour tax
cuts introduced in 1999–2002 and 2004.

The overall ITR on capital (44.9 %) is currently among the highest in the EU, but has decreased considerably from its
peak of 49.8 % in 2005. The ITR on capital displays a strong fluctuation over the years, reflecting the fluctuation in
the yield from pension scheme assets and thus the tax on these.

Particularly  since  the  environmental  tax  reform  implemented  in  1994–2002,  Denmark  has  a  comprehensive  and
ambitious energy tax system. All energy products, including coal, natural gas and electricity, are subject to both CO2
tax and energy tax. VAT registered companies do not pay energy tax for the energy used in industrial processes, and
are also entitled to a refund of their CO2 tax, the amount of which depends on whether the process is defined as
heavy or light and whether the company has concluded an energy saving agreement with the government or not. In
2007 environmental taxes yielded 5.9 % of GDP, the highest proportion in the EU by a wide margin.

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Part III

Developments in the Member States

Current topics and prospects; policy orientation

In 2009 the economic prospects in Denmark have weakened largely due to the turmoil in financial markets and the
economic  recession  in  its  main  export  markets.  The  GDP  growth  is  expected  to  turn  slightly  negative  in  2009
(–0.2 %), unemployment is expected to increase from its currently very low level (1.7 % in 2008) to about 3.5 % in
2010 and general government fiscal surpluses are shrinking to reach balance in 2009 and turn to a deficit of 1.2 % of
GDP  in  2010.  These  developments  are  not,  however,  likely  to  jeopardise  the  long-term  objective  of  fiscal
sustainability.

Under  these  conditions  fiscal  policy  is  expansionary  due  to  growth  of  public  expenditure  and  cuts  in  personal
income  taxes.  Also  automatic  stabilisers  contribute  to  stimulate  the  economy.  In  2009  the  tax  cuts  consist  of  the
increase of the earned income tax credit from 4 % to 4.25 %, the increase of personal allowance from DKK 42 400
(€ 5 700)  to  DKK 42 900  (€ 5 750)  and  the  increase  of  the  middle  tax  bracket  basic  allowance  from  DKK 289 300
(€ 38 850)  to  DKK 34 200  (€ 46 600).  Furthermore,  savings  of  almost  DKK 50  billion  in  the  compulsory
supplementary pension scheme in place from 1998–2003 can be withdrawn in 2009 with a favourable tax treatment.

The government has initiated a major tax reform to be phased in from 2010 to 2019. The reform aims at reducing the
high marginal tax rates on personal income and thus to stimulate labour supply in the medium to long-term. The
main measures is to reduce the rate of the bottom bracket tax from 5.26 % to 3.76 %, abolish the medium tax bracket
with the 6 % rate altogether, and increase the allowance of top tax bracket to DKK 389 900 in 2010 and DKK 424 600
in 2011. The ceiling of the top marginal tax rate will be reduced from the current 59 % to 51.5 % in 2011. The impact
of these measures on the government tax revenues is about DKK 24 billion (€ 3.2 billion) in 2010.

The tax reform is planned to be revenue neutral as a whole, but is stimulating the economy by DKK 14 billion (€ 1.9
billion) in 2010. The reform is partly financed by higher energy, transport and environmental taxes to support the
energy and climate policy objectives of the government, and also by increases of excise rates on health-related goods
(fat, candy, sugary  drinks,  tobacco). These  increases  are  partly  compensated  to  the  households  by  giving  a  ‘green
check’ of DKK 1 300 (€ 175) to everybody above 18 years and DKK 300 per child for up to two children. The ‘green
check’  is  phased  out  for  income  above  DKK 360 000  (€ 48 300).  These  measures  will  increase  government  tax
revenues  by  about  DKK 9.5  billion  (€ 1.3  billion)  in  2011.  Broadening  of  the  tax  base  is  another  main  source
financing the reform. The measures include a gradual reduction of the tax value of assessment oriented deductions
and limitations of the tax deductibility of net interest payments over a certain threshold. Also the deductibility of
payments to individual pension insurance schemes is limited, as well as tightening of the tax treatment of company
cars  and  other  fringe  benefits.  Also  certain  other  measures,  which  will  increase  the  tax  burden  on  enterprises  by
around DKK 5 billion, are proposed.

Main features of the tax system

Personal income tax

Personal income taxation in Denmark is characterised by relatively high average and marginal tax rates. As in the
other Nordic countries, local taxes play an important role in personal income taxation. Local tax rates are flat and
vary from one municipality to the next. The average local PIT rate is 25.5 % in 2009 (including the church tax).

State  income  taxation  is  progressive  and  consists  of  three  tax  brackets.  The  lowest  rate  is  5.26 %  and  is  paid  on
personal  income  (income  minus  labour  market  contribution)  after  the  deduction  of  a  personal  allowance
(DKK 42 900 in 2009, equivalent to € 5 750). In 2009 the medium rate is 6 % and is paid on the part of personal
income,  which  exceeds  an  allowance  corresponding  to  the  top  bracket  tax  allowance  (DKK 347 200  in  2009,
€ 46 600). The top 15 % rate is also paid on the share of personal income plus individual contributions to capital
pension schemes which exceeds the top bracket basic allowance. Because of the tax ceiling set at the 59 % marginal

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Developments in the Member States

Part III

tax rate, the full 15 % is not paid in all municipalities. In addition to local and state income taxes, individuals pay an
8 % labour market contribution, calculated on the gross wage before deduction of any allowance, and since 2007 an
8 % health care contribution. Overall, the system is highly progressive with marginal rates ranging from 8 % (up to
the amount of personal allowance) to 63 % (the upper ceiling plus the labour market contribution and the average
church tax). The highest marginal tax rate will drop to 56.1 % in 2010 as a result of the new tax reform. However,
only a minority of taxpayers pay progressive state taxes: in 2006 approximately 25 % of taxpayers fell in the medium
bracket, while 20 % paid top tax bracket taxes.

Net  capital  income  (positive  or  negative)  is  included  in  the  tax  base  for  both  state  taxes  and  local  income  taxes.
However, though interest payments are a part of negative capital income, they are generally deductible from the flat
local  taxes,  and  not  from  the  progressive  state  income  taxes.  Also  the  earned  income  allowance  and  some  other
deductions are taken into account only in calculating the local income tax base.

At the personal level, dividend income is taxed at two different rates: 28 % for the dividend income not exceeding a
threshold (DKK 48 300, € 6 500 in 2009) and 43 % for income above this level. Also capital gains on selling shares are
generally  taxed  at  the  same  two  rates  (28 %  or  43 %  depending  on  whether  the  net  gains  are  below  or  above  the
threshold) according to new rules adopted in 2006. As an element of the corporate tax reform of 2007, from 2008 a
third rate at 45 % applies for dividend income and capital gains on selling shares above DKK 106 100 (€ 14 250).

Corporate taxation

The corporate tax rate has been gradually reduced from 30 % in 2005 to 25 % in 2007. There are no local taxes on
corporations, but municipalities receive a share of corporate income tax revenue. Since 2004 there are mandatory
national tax consolidation rules for permanent establishments and resident subsidiaries, while resident group-related
subsidiaries  of  non-resident  companies  may  apply  for  international  consolidation.  Loss  carry-forward  is  allowed
without  limitation,  but  no  carry-back  is  permitted.  The  CIT  reform  of  2007  introduced  a  limitation  of  interest
deductibility through an EBIT rule and a ceiling over deductible interest (corresponding to 6.5 % of the tax assets
except shares plus 20 % of the cost price of shares in foreign subsidiaries).

Tax depreciation is straight line over a 20 years period for buildings used for business purposes (not offices) and at a
declining base for machinery and equipment (up to 25 %). The depreciation rate for buildings was reduced from 5 %
to 4 % in 2008 as a part of the corporate tax reform, extending the depreciation period to 25 years. The depreciation
rate for infrastructure was also reduced from 25 % to 7 % in 2008. Tax depreciation for ships, drilling rigs, aircrafts,
and  trains  will  gradually  be  lowered  from  25 %  in  2007  to  15 %  in  2016.  Inventories  are  valued  on  a  FIFO  basis.
Acquired  goodwill  and  the  acquisition  costs  of  know-how,  patents,  copyrights  and  other  intangibles  may  be
depreciated over seven years using the straight-line method.

VAT and excise duties

The VAT rate is 25 % and only newspapers are taxed at a zero rate. From 2008 onwards excise duties on energy are
price-indexed  and  increased  by  1.8 %  annually.  The  proposed  tax  reform  would  further  increase  environment-
related taxes and also introduce or increase taxes on certain goods harmful to health (see above).  

Wealth and transaction taxes

Immovable property situated in Denmark is subject to municipal real estate tax. The rates vary between 1.6 % and
3.4 %.

Social contributions

As mentioned above, social security contributions play a limited role in Denmark.

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Part III

Developments in the Member States

<@>TAB_PRINT_EE.pdf

Estonia

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
14.2
9.3
3.8
0.5
0.7

13.8
9.3
3.5
0.4
0.6

Ranking 1)
13
4
4
23
21

12.4
8.5
3.0
0.2
0.7

7.8
6.9
0.9
0.0

11.0
10.8
0.0
0.2

22.6
n.a.
4.3
4.3
n.a.

11.8

17.6
17.3
10.8
6.4
0.4

1.9
1.2
0.9
0.2
0.1
0.7

0.0

12.4
8.2
3.3
0.2
0.8

7.3
6.6
0.7
0.0

10.7
10.6
0.0
0.1

22.1
n.a.
4.1
4.2
n.a.

11.8

17.0
16.8
10.6
6.2
0.3

1.6
1.0
0.7
0.1
0.2
0.6

0.0

12.5
8.4
3.2
0.2
0.7

7.6
6.4
1.1
0.0

11.0
10.6
0.3
0.2

22.5
n.a.
4.0
4.6
n.a.

11.9

17.1
16.7
10.6
6.2
0.4

2.1
1.4
1.1
0.2
0.2
0.6

0.0

12.2
8.2
3.1
0.2
0.7

8.1
6.5
1.6
0.0

10.6
10.2
0.3
0.1

22.3
n.a.
4.0
4.6
n.a.

11.6

16.8
16.4
10.2
6.2
0.3

2.5
1.9
1.6
0.2
0.1
0.6

0.0

12.3
7.7
3.6
0.3
0.6

8.0
6.3
1.7
0.0

10.4
10.0
0.3
0.1

21.8
n.a.
4.0
4.6
0.2

11.7

16.4
15.9
10.0
6.0
0.5

2.5
1.9
1.7
0.1
0.1
0.6

0.0

13.5
8.7
3.7
0.4
0.6

7.0
5.6
1.4
0.0

10.3
9.9
0.3
0.1

21.9
n.a.
4.0
4.6
0.3

12.9

15.5
15.1
9.9
5.1
0.5

2.5
1.9
1.4
0.3
0.1
0.6

0.0

7.2
5.7
1.5
0.0

10.3
10.0
0.2
0.1

7.8
6.1
1.7
0.0

11.0
10.7
0.2
0.1

% of GDP
23.4
n.a.
4.4
4.9
0.4

22.3
n.a.
4.1
4.5
0.4

% of GDP
13.6

13.3

15.7
15.2
10.0
5.2
0.4

2.4
1.9
1.5
0.2
0.1
0.5

0.0

16.8
16.4
10.7
5.7
0.4

2.6
2.1
1.7
0.3
0.1
0.6

0.0

€ bn
2.2
1.4
0.6
0.1
0.1

1.2
0.9
0.3
0.0

1.7
1.6
0.0
0.0

3.6
n.a.
0.7
0.7
0.1

2.1

2.6
2.5
1.6
0.9
0.1

0.4
0.3
0.3
0.0
0.0
0.1

5.0

0.4
0.3

0.0
0.1

24
17
26
27

17
2
27
24

11
n.a.
11
23
6

6

14
13
4
23
19

27
27
27
21
26
27

21

18
11
7
27
3

9
15

TOTAL

31.3

30.5

31.1

30.9

30.7

30.9

31.3

33.1

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

1.7
1.2
-
0.2
0.3

19.8
37.8
6.0
3.8
4.1
2.8

9.6
-1.9

2.1
1.6
-
0.2
0.3

19.9
37.3
4.9
3.0
3.0
2.5

7.7
-0.3

2.0
1.5
-
0.2
0.3

20.0
37.8
6.4
4.5
4.7
3.3

7.8
0.7

1.9
1.5
0.0
0.0
0.3

19.9
36.9
7.8
6.0
6.5
3.4

7.1
0.5

2.1
1.8
1.7
0.1
0.2

19.8
36.1
8.1
6.1
6.9
2.6

7.5
1.1

2.3
1.9
1.9
0.1
0.3

22.2
34.1
8.0
6.1
5.9
5.3

9.2
3.5

% of GDP
2.3
1.9
1.8
0.1
0.4

2.2
1.8
1.8
0.1
0.3

%
24.4
33.8
10.3
8.1
8.8
5.1

6.3
7.7

23.4
33.9
8.3
6.5
6.5
4.5

10.4
7.1

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

ESTONIA

Overall trends in taxation

Structure and development of tax revenues

The tax-to-GDP ratio of Estonia (including social security contributions) rose to 33.1 % in 2007, which is nearly two
percentage  points  higher  than  the  previous  year.  Increases  were  recorded  in  all  revenue  categories  —  direct  and
indirect taxation, as well as social security contributions. The ratio lies over four percentage points below the EU
average, but is somewhat higher than in the other Baltic States. 

As in many other new Member States, the share of indirect taxes in total taxation is relatively high in Estonia (43 %
in 2007); social security contributions also form an important proportion of total taxation (33.3 % in 2007, almost
four percentage points above the Union average). The share of direct taxes, 23.7 % in 2007, has fallen by more than
six percentage points since the late 1990s, following reforms that increased the basic allowance and decreased the tax
rates on both personal and corporate income.

Local governments receive 13.4 % of tax revenues, which is the ninth highest proportion in the EU-27. Since 2004,
the funding of local authorities is calculated based on gross income of residents before deductions instead of actual tax
revenue, as was the case previously. This implies that the basic exemption and other deductions from taxable income
impact only on the central government budget. Central government revenue accounts for 70.8 % of total taxation.

The overall tax burden in Estonia dropped by over 5 % of GDP between 1995 and 2000. After 2000, the overall tax
ratio remained roughly constant at around 31 % up to 2006. The rise in 2007 is largely explained by the accumulated
effects of several years of rapid economic growth. From 2008 onwards, as growth decelerates, the tax-to-GDP ratio is
expected to decrease again towards the level of 31 %; projections are, however, difficult given the current economic
situation. 

Taxation of consumption, labour and capital; environmental taxation

The ITR on consumption displays an increasing trend since 2004, and is now at 24.4 % the ninth highest in the EU.
Consumption tax revenues in relation to GDP show a similar trend, with a rapid increase from 2004 onwards. These
developments reflect higher VAT and excise duty revenues due to rapidly growing private consumption, but are also
influenced by the technical adaptation of the VAT system following accession to the European Union. This one-off
measure resulted in a one-month shift in tax receipts and VAT revenues therefore decreased significantly in 2004. 

The  ITR  on  labour  has  been  declining  steadily  since  2000,  reflecting  the  cuts  in  personal  income  tax  rates  and the
gradual increase in the basic allowance introduced by the tax reform. In 2007 it is at 33.8 %, below the EU-27 average
(34.4 %), while four years earlier it still exceeded it. 

Taxes on capital represent only 7.9 % of total tax revenues, the lowest proportion in the EU-27, in accordance with the
very low effective taxation of capital income. The ITR on capital (10.3 %) is one of the lowest in the EU, although its
level has steadily increased from 2001 onwards.

Revenue from environmental taxes is, at 2.3 % of GDP, clearly below the EU average (2.7 %). However, it is expected
to increase in the future, as the government aims at financing reductions in personal income and corporate taxation
partly through increases in environmental taxes and excise duties on alcohol and tobacco.

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Developments in the Member States

Current topics and prospects; policy orientation

The  global  economic  crisis  has  affected  the  Estonian  economy  quite  heavily  in  2008.  After  many  years  of  rapid
expansion, GDP growth turned negative in 2008, due to the decrease of private consumption and investment, and is
expected to remain so also in 2009. On the positive side, the inflation rate is expected to drop significantly, from
10.6 % to 0.7 % in 2009. The general government budget has shown hefty surpluses since 2002, but deteriorating
economic conditions led to a budget deficit in 2008 (1.7 % of GDP), which is expected to repeated also in 2009 and
2010. The government goal is to restore the budget balance in the medium term, as well as to preserve the currency
board system with a fixed exchange rate, in view of fulfilling the criteria required to become a full member of the
European Economic and Monetary Union, which remains the main policy objective of the Estonian government. 

The prudent fiscal policy stance is reflected also in tax policy. The long-term plan to cut the income tax rate by one
percentage point annually has been postponed by one year. Thus the personal and corporate tax rates will be kept at
21 %  in  2009,  the  level  reached  in  2008.  Also  the  basic  allowance  (the  amount  of  tax-free  income)  will  remain
EEK 27 000 (€ 1 730) in 2009. The increased basic allowance is applicable only from the second child (and not from
the first child as in 2008).

The income tax cuts are part of a broader tax reform, the aim of which is to shift the tax burden from labour and
production  costs  towards  consumption,  use  of  natural  resources  and  the  environment.  Thus  the  excise  duties  on
transport fuels were increased to the level of EU minimum rates already in 2008, two years earlier than the transition
periods  granted  to  Estonia  would  require.  Taxes  on  natural  gas  and  electricity  were  introduced  (the  latter  being
considerably above the current EU minimum level) and the tax exemption of shale-driven fuel has been abolished.
The excise duty on alcohol was increased twice during 2008 (by 10 % and 20 %), and the excise duty on tobacco was
increased to the level of EU minimum rates in 2008. 

The  tax  burden  on  consumption  is  also  due  to  some  extent  by  the  simplification  of  the  VAT  system,  including
notably the removal of reduced rates on certain products (medical equipment, distant heating) and by the hike in the
reduced VAT rate from 5 % to 9 % in 2009. This reduced rate is applied on a narrow range of goods, which essentially
includes books, periodicals, accommodation services, medicines and medical equipment for the personal use of the
disabled.

Main features of the tax system

Personal income tax

Estonia is one of the Member States applying a flat-rate system to the PIT. The single tax rate, 21 % in 2008 and 2009,
is applied on all labour and personal capital income (dividends, interests, capital gains, royalties etc.). Only income
exceeding a given threshold is taxed. The amount of the basic allowance has been increased yearly from EEK 12 000
(approximately  € 770)  in  2003  to  EEK 24 000  (€ 1 535)  in  2006  and  EEK 27 000  (€ 1 730)  in  2008.  An  additional
allowance (same amount as basic allowance) is given to one resident parent for each child of up to 17 years of age,
starting with the second child.  An increased basic allowance is also applied on pension income (€ 2 300). Mortgage
interest payments and training expenses can also be deducted from taxable income. The total amount of allowances
is limited to € 3 195 per taxpayer during the period of taxation, or to no more than 50 % of the taxpayer's income.

These basic allowances make the personal income tax system as a whole progressive, in the sense that the average tax
rate increases with the income level, although the marginal tax rate remains constant.  

Personal income tax is shared between the central and local governments; these receive 11.9 % of taxable income
(from 2007), the remainder goes to the State level. The State is entitled to the entirety of the income tax paid by non-
residents and to the income tax paid on pensions.

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Corporate taxation

The  corporate  tax  system  was  reformed  in  2000  with  the  aim  of  providing  more  funds  for  investment  and
accelerating economic growth. The basic idea of the reform was to postpone the taxation of corporate income until
the distribution of profits. Hence, the tax rate on retained earnings is zero, and distributed profits in gross terms are
taxed  at  the  same  rate  as  personal  income,  i.e.  at  21 %  in  2008  and  2009.  This  tax  rate  is  applied  also  to  gifts,
donations, non-enterprise expenses and fringe benefits. The system is applied to Estonian resident companies and
permanent establishments of non-resident companies. The 21 % withholding tax applied on the dividends paid to
non-residents  was  removed  as  of  1  January  2009.  A  withholding  tax  may  still  apply  to  other  payments  to  non-
residents, if they do not have a permanent establishment in Estonia or unless the tax treaties provide otherwise. The
measures  to  reduce  fraud  and  tax  evasion  include  CFC  rules  and  regulations  for  minimising  the  use  of  transfer-
pricing schemes. 

Estonia was granted a transitional period with respect to the application of the EC Parent-Subsidiary Directive until
31 December 2008, during which it could continue to apply its domestic rules. The Interest and Royalty Directive
and the Savings Directive have been implemented through a parliamentary Act adopted in May 2004.

VAT and excise duties

The VAT regime has been brought in line with the sixth Directive. The standard rate has been stable since 1992 at
18 %. A 9 % reduced rate applies to a limited list of goods (see above). 

Excise  duties  on  alcoholic  beverages  and  tobacco  were  increased  substantially  in  2008,  and  now  exceed  the  EU
minimum  levels,  in  the  case  of  alcohol  by  wide  margins.  The  excise  duties  on  unleaded  petrol  and  diesel  were
increased to the EU minimum levels from 1 January 2008, implying a rise in rates by 25 % and 35 % respectively. The
excise duty on light heating oil, which already exceeded the EU minimum level, was increased by nearly 40 %, and
taxes on natural gas (at the EU minimum level) and electricity (well above the EU minimum level) were introduced
as part of the green tax reform, as explained above.

Social contributions

Social security is financed largely through a social tax, which is paid by the employer, generally at a rate of 33 % of
gross  salary  for  each  employed  person.  The  self-employed  also  pay  the  social  tax.  A  13 %  quota  from  the  tax  is
transferred  to  the  state  health  insurance  system  and  the  remaining  20 %  to  the  state  pension  insurance  system.
Employees who have joined the second pension pillar (obligatory for those born after 1983) pay an additional 2 % of
their salary to the personal pension account. In this case, the 20 % for the pension insurance system is divided as
16 % to the state pension insurance system (the first pillar) and 4 % to the mandatory funded pension system (the
second pillar).

In 2002 an unemployment insurance premium was introduced. Since the beginning of 2006, the rate for employees
has been 0.6 % of gross wage and for employers 0.3 % of the employees' gross wage. From 1 July 2009 the rates will be
1 %  for  employees  and  0.5 %  for  employers.  The  social  tax,  comparable  to  the  employers'  social  security
contributions in other countries, is a fiscally important tax in Estonia. In 2007 these contributions represented 33 %
of  total  taxation,  which  is  by  far  the  highest  proportion  in  the  EU.  Employees'  social  contributions,  in  contrast,
represented only 0.5 % of tax revenues.

Taxation trends in the European Union                 153

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Part III

Developments in the Member States

<@>TAB_PRINT_FI.pdf

Finland

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
13.3
8.3
3.4
1.3
0.2

13.8
8.6
3.7
1.3
0.2

Ranking 1)
16
9
9
14
27

13.9
8.2
4.3
1.2
0.2

21.4
14.5
5.9
1.0

11.9
8.8
2.2
1.0

25.6
n.a.
10.2
11.0
0.5

13.6

23.7
20.8
8.8
12.0
2.9

9.9
8.6
5.9
1.1
1.6
1.3

0.0

13.4
8.0
4.1
1.2
0.2

19.2
14.0
4.2
1.0

12.0
8.9
2.2
0.9

23.2
n.a.
9.9
11.1
0.4

13.1

23.7
21.0
8.9
12.0
2.7

7.8
6.6
4.2
0.9
1.6
1.2

0.0

13.7
8.1
4.2
1.2
0.2

19.1
13.9
4.2
1.0

11.9
8.9
2.1
0.8

23.9
n.a.
9.6
10.9
0.3

13.4

23.6
20.9
8.9
11.9
2.8

7.7
6.4
4.2
0.6
1.7
1.3

0.0

14.2
8.5
4.3
1.2
0.2

18.0
13.7
3.4
1.0

11.8
8.9
2.1
0.8

23.7
n.a.
9.3
10.8
0.3

13.9

23.3
20.5
8.9
11.7
2.7

6.8
5.6
3.4
0.6
1.6
1.2

0.0

14.0
8.5
3.9
1.3
0.3

17.8
13.3
3.5
1.1

11.7
8.8
2.1
0.8

23.5
n.a.
9.1
10.7
0.2

13.6

22.7
20.0
8.8
11.2
2.7

7.1
5.8
3.5
0.7
1.5
1.4

0.0

14.1
8.7
3.8
1.4
0.2

17.9
13.5
3.3
1.0

12.0
9.0
2.2
0.8

23.6
n.a.
9.1
11.1
0.2

13.7

23.2
20.4
9.0
11.4
2.8

7.1
5.7
3.3
0.8
1.6
1.4

0.0

17.5
13.2
3.4
1.0

12.1
8.9
2.3
0.9

17.8
13.0
3.9
0.9

11.9
8.8
2.3
0.9

% of GDP
22.5
n.a.
9.2
11.0
0.3

22.8
n.a.
9.2
11.2
0.3

% of GDP
12.8

13.4

22.9
20.1
8.9
11.2
2.8

7.2
5.9
3.4
0.9
1.6
1.3

0.0

22.3
19.7
8.8
10.9
2.7

7.8
6.5
3.9
1.0
1.6
1.3

0.0

€ bn
23.8
15.0
6.0
2.4
0.4

32.0
23.4
7.0
1.6

21.4
15.7
4.1
1.6

40.5
n.a.
16.5
19.8
0.5

23.0

40.1
35.3
15.7
19.6
4.8

14.1
11.7
7.0
1.9
2.9
2.4

77.2

4.9
3.0

1.8
0.1

3
3
7
9

13
8
21
15

14
n.a.
3
14
23

10

6
6
9
8
4

12
10
7
10
11
16

6

9
20
16
6
15

6
4

TOTAL

47.2

44.6

44.6

44.0

43.5

44.0

43.5

43.0

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

3.1
2.0
-
1.1
0.0

28.6
44.1
36.0
31.2
30.3
23.1

5.0
3.2

2.9
1.9
-
1.0
0.0

27.6
44.1
25.5
21.5
18.4
21.2

2.6
2.0

3.0
2.0
1.4
1.0
0.0

27.7
43.8
27.4
22.9
21.2
19.4

1.6
0.2

3.2
2.0
1.4
1.2
0.0

28.1
42.5
25.8
21.1
18.7
18.7

1.8
-1.4

3.2
1.9
1.4
1.2
0.0

27.7
41.5
26.4
21.3
18.6
18.5

3.7
-0.9

3.1
1.9
1.4
1.2
0.1

27.6
41.5
26.9
21.5
17.9
21.1

2.8
-1.3

% of GDP
2.8
1.7
1.3
1.0
0.1

3.0
1.8
1.3
1.1
0.1

%
26.5
41.4
26.7
22.2
17.9
24.2

4.5
1.6

27.2
41.6
24.0
19.6
15.1
23.2

4.9
0.3

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

FINLAND

Overall trends in taxation

Structure and development of tax revenues

In Finland the overall tax burden (including social security contributions) was 43 % of GDP in 2007, slightly below
the level of the previous year and down by more than four percentage points from 2000. Although the tax ratio is still
among the highest in the EU, it has fallen slightly in relative terms and is now exceeded by five countries (Denmark,
Sweden, Belgium, France and Italy).

Direct taxes, in particular on personal income, represent the most important  category of revenue, accounting for
41.4 %  of  total  taxation.  The  share  of  indirect  taxes  (30.9 %)  is  below  the  EU-27  average  (38.4 %).  Social
contributions, mainly paid by employers, account for 27.7 %, which is less than in most other Member States.

Local  governments  receive  a  rather  large  proportion  of  total  tax  revenues  (21.3 %  in  2007).  These  taxes  consist
mainly of municipal income and real estate taxes. In this regard the tax structure of Finland is similar to those of
Denmark and Sweden, where roughly a third of tax receipts go to the municipalities. Central government collects
roughly half of all tax revenues and social security funds a quarter.

Since 2000 the overall tax burden has displayed a rather sustained downward trend. In both 2006 and 2007 the tax-
to-GDP  ratio  fell  by  0.5  percentage  points  from  the  previous  year  in  spite  of  a  pick  up  of  GDP  growth  rate
contributing to boosting tax revenues. The reduction has come both from direct and indirect taxation, but in recent
years the reductions of indirect taxation have played a more important role than those of direct taxation.

Taxation of consumption, labour and capital; environmental taxation

The tax structure by economic factor in Finland (consumption 29.8 %, labour 52 % and capital 18.2 %) is marked by
a  somewhat  higher  share  of  labour  and  a  correspondingly  lower  shares  of  consumption  and  capital  taxation
compared with the EU-27 averages (33.6 %, 45.2 % and 21.3 %).

The lower share of consumption taxation, however, reflects the high level of other taxes rather than a low tax burden
on  consumption.  Indeed,  the  implicit  tax  rate  (ITR)  on  consumption  (26.5 %)  is  the  sixth  highest  in  the  Union,
although it has fallen somewhat relative to other countries and from the levels of late 1990s (29.4 % in 1999).

Labour taxes represented 22.3 % of GDP in 2007 (EU-27 17.2 %), which is close to four percentage points lower than
in 1995, but still among the six highest ratios in the EU. In the 2000s the decline in labour tax revenues has somewhat
slowed down compared with the late 1990s, but nevertheless, thanks to regular reductions in income taxes and social
contributions, the drop in the ITR on labour has been significant, from 44.1 % to 41.4 % in six years.

The  revenue  from  taxes  on  capital  relative  to  GDP  has  dropped  from  its  2000  peak  level  (9.9 %)  and  remained
relatively constant at around 7 % between 2003 and 2006, but rose again to 7.8 % in 2007. The ITR on capital was
also  at  its  record  level  in  2000  (36 %),  mainly  due  to  the  strong  economic  upswing,  after  which  it  has  fluctuated
around 26 %. From 2005 to 2006 the ITR on capital displays a decline from 26.9 % to 24.0 %, but from 2006 to 2007
the  overall  ITR  on  capital  rose  again  to  26.7 %  mirroring  a  similar  increase  in  the  ITR  on  capital  and  business
income,  corporate  income  and  capital  income  of  households  and  self-employed.  These  developments  reflect  the
economic upswing and the high profitability of companies in 2007.

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Developments in the Member States

Environmental tax revenues represent 2.8 % of GDP in 2007, close to the EU-27 average level (2.7 %) and the ninth
highest in EU-27. The tax revenues have declined steadily since 2004 reflecting the fact that nominal tax rates have
been kept constant and were raised only in 2008. The level of energy taxation in relation to GDP (1.7 %) is lower
than the EU average (1.9 %) in 2007, while that of transport taxes (1 %) is somewhat higher due to relatively heavy
vehicle taxation in the Finland.

Current topics and prospects; policy orientation

Due to the global economic crisis Finnish economic growth is predicted to slow down considerably and, according
to recent forecasts, will turn negative in 2009. To stimulate the economy the government 2009 budget introduces a
series of measures, the size of which corresponds to 1.7 % of GDP. Out of these measures a relatively large share,
representing about 1.2 % of GDP, consists of tax cuts of various kinds, part of which were already included in the
government programme. The two main tax measures are a PIT cut, and a lowering of companies’ labour costs by
removing the national pension contribution paid by employers. The contribution will be lowered by 0.8 percentage
points  as  of  1  April  2009  and  will  be  entirely  abolished  as  of  1  January  2010.  In  personal  income  taxation,  as  in
previous  years,  the  tax  rates  of  all  the  four  state  income  tax  brackets  are  reduced,  but  this  year  the  reduction  is
somewhat more important than in the previous year, between 1 and 1.5 percentage points. A new labour income tax
credit, targeted at low and medium-income earners, is introduced, replacing the former earned income tax credit in
state taxation. These measures are estimated to reduce the state income tax revenues by € 1 030 millions in 2009. In
addition the state income tax scale is adjusted for inflation by 4 %. In addition, the taxation of pension income is
alleviated  by  adjusting  pension  income allowances  in  state and  municipal  income  taxation, which  is  estimated  to
reduce tax revenues by over € 200 million. 

Personal income taxation is slightly lightened also by an increase of the tax credit for paid household work to € 3 000
per taxable person. This implies that if a household pays a registered company for the work done in its own principal
or secondary residence, or in those of parents or grandparents, it can deduct the costs up to € 3 000 (or up to € 6 000
in  case  of  two  earners)  from  income  taxes.  The  eligible  work  includes  all  kind  of  household  work,  as  well  as  the
maintenance and renovation of houses.  

In the field of indirect taxation, the VAT rate on food will be reduced from 17 % to 12 % as of 1 October 2009 in
accordance  with  previous  decisions  and  the  government  programme.  The  effect  of  the  measure  on  government
revenues is estimated € 500 million annually. The excise duties on alcohol and tobacco are increased by 10 %, which
will increase government revenues by approximately € 100 million.  

Main features of the tax system

Personal income tax

Since 1993 the taxation of personal income has been based on a dual system. Personal income is divided into two
separate components, earned income and capital income, taxed according to different rates and principles.

Central  government  taxation  of  earned  income  is  progressive.  From  2007  onwards  there  are  four  tax  brackets.
Marginal  rates  range  from  7 %  to  30.5 %,  the  taxable  income  threshold  being  € 13 100  in  2009.  The  municipal
income  tax  is  levied  at  flat  rates  on  earned  income  and  the  estates  of  deceased  persons.  The  rate  varies  between
16.5 % and 21 %, the average being 18.59 %. The church tax rate varies between 1 % and 2 %.

An earned income allowance in municipal taxation was introduced in 1997 with the intention of increasing the take-
home pay of low-income earners. It reaches its maximum at a low income level, and gradually decreases thereafter.
Since  2006  an  earned  income  tax  credit  targeted  to  low-income  earners  has  also  been  granted  in  state  income
taxation. In 2009 the earned income tax credit in state income taxation is replaced by labour income tax credit.

156

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Developments in the Member States

Part III

Capital income  is taxed at a uniform  flat rate  of 28 % and is levied on dividends,  rental income, interest income,
capital  gains,  income  from  the  sale  of  timber  and  a  share  of  business  income.  All  expenses  from  acquiring  or
maintaining capital income, including interest payments, are deductible from taxable capital income. In addition,
interest  payments  on  owner-occupied  housing  and  student  loans  guaranteed  by  the  state  are  deductible.  If  these
deductions exceed taxable capital income, 28 % of the deficit, up to a € 1 400 limit, can be credited against taxes paid
on earned income.

Corporate taxation

Corporate tax is  levied at  a  26 % rate on  all corporate income, out  of which  expenses  incurred  for  the purpose of
acquiring  or  maintaining  business  income  are  deducted.  Exceptions  to  this  rule  are  certain  capital  gains  and
dividends  which  are  not  included  in  taxable  corporate  income,  certain  expenses  related  to  tax-free  income  and
certain capital losses. No local taxes are levied on corporate income so that 26 % is the final tax rate. Depreciation
allowances for fixed assets are calculated according to the pool basis declining balance method; the maximum annual
rates with regard to the most common items are: 25 % for machinery and equipment and between 4 % and 7 % for
buildings. The acquisition costs of intangible assets may be depreciated using a straight-line method over a period of
10 years. Losses are carried forward and set off in the subsequent ten tax years. No loss carry-back is allowed.

VAT and excise duties

The standard VAT rate has been 22 % since 1998. In addition there are two reduced rates: 17 % for food and 8 % for a
list of goods, including medicines, books and subscriptions for newspapers. The VAT rate on food is reduced to 12 %
as of 1 October 2009. For the years 2007–2010, the 8 % rate also applies to labour-intensive services (hairdressing,
small repair services).

Finland has excise duties rates on beer, wine, petrol and tobacco which are among the highest in the EU. The excise
duty  on  alcohol  was  reduced  by  33 %  in  2004  in  an  attempt  to  prevent  further  tax  base  erosion  following  the
cessation  of  import  restrictions  formerly  applicable  to  trade  with  the  new  EU  Member  States,  but  was  increased
again by 11.5 %, on average, in 2008.

Wealth and transaction taxes

Municipalities levy a real estate tax on land and buildings at rates that usually vary between 0.5 % and 1 % (0.22 and
0.5  for  permanent  residents).  The  rates  are  lower  for  residential  buildings,  and  higher  for  other  buildings,  power
plants  and  vacant building sites. The  state levies  a  property  transfer tax  on the  purchases  of  real estate  or  shares;
purchases  of  the  first  owner-occupied  dwelling  are  exempt.  Inheritance  and  gift  tax  is  levied  by  the  state  at  rates
ranging between 7 % and 32 % for inheritance tax and 10 % and 32 % for gift tax. Inheritance tax rates were cut by
three percentage points in the first tax class (close relatives) in 2009. The threshold for taxable income was increased
to € 20 000 in 2008. The wealth tax was abolished in 2006.

Social contributions

Social  security  contributions  are  paid  both  by  employers  and  employees.  The  health  insurance  contribution  for
medical  care  is  also  paid  by  pensioners.  In  2009  the  rate  is  1.28 %  on  employment  income  and  1.45 %  on  other
income (pension and other benefits). Employees also pay an unemployment insurance contribution (0.20 % of gross
income) and pension insurance contribution (5.4 % out of gross income for those above 53 years, 4.3 % for others),
and a health insurance contribution for daily allowance (0.7 % of gross income for wage-earners and 0.79 for the self-
employed). These contributions are deductible from income taxes.

Taxation trends in the European Union                 157

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Part III

Developments in the Member States

<@>TAB_PRINT_FR.pdf

France

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
15.3
7.2
2.0
1.9
4.2

15.5
7.2
2.3
1.8
4.2

Ranking 1)
7
19
27
12
2

15.8
7.3
2.6
1.7
4.2

12.5
8.4
2.8
1.3

16.1
11.1
4.0
1.0

18.6
n.a.
4.3
21.0
0.6

11.6

23.0
22.3
12.1
10.1
0.7

9.8
5.3
2.8
0.9
1.7
4.5

0.3

15.4
7.2
2.5
1.6
4.1

12.6
8.2
3.1
1.4

16.1
11.0
4.0
1.1

18.1
n.a.
4.1
21.3
0.6

11.3

22.9
22.2
12.1
10.1
0.7

10.0
5.5
3.1
0.8
1.7
4.5

0.3

15.4
7.1
2.6
1.7
4.1

11.8
7.9
2.5
1.3

16.2
11.0
4.0
1.1

17.5
n.a.
4.1
21.2
0.5

11.3

22.8
22.1
12.1
10.0
0.7

9.3
4.9
2.5
0.8
1.6
4.4

0.2

15.3
7.1
2.5
1.7
4.1

11.4
7.9
2.1
1.3

16.4
11.1
4.1
1.1

17.1
n.a.
4.2
21.4
0.3

11.1

22.9
22.2
12.2
10.0
0.7

9.0
4.6
2.1
0.8
1.6
4.4

0.1

15.5
7.2
2.3
1.9
4.2

11.6
7.9
2.3
1.4

16.2
11.0
4.0
1.2

18.2
n.a.
4.5
20.4
0.2

11.2

22.8
22.1
12.1
10.0
0.7

9.3
4.7
2.3
0.8
1.6
4.6

0.2

15.6
7.3
2.2
1.9
4.3

11.8
8.0
2.3
1.4

16.3
11.0
4.1
1.2

17.6
n.a.
4.8
21.1
0.3

11.2

23.1
22.3
12.2
10.1
0.7

9.4
4.8
2.3
0.8
1.6
4.7

0.1

12.2
7.9
2.8
1.4

16.4
11.1
4.1
1.2

11.9
7.5
3.0
1.5

16.3
11.0
4.0
1.2

% of GDP
16.2
n.a.
4.9
22.2
0.3

16.8
n.a.
4.8
22.2
0.3

% of GDP
10.9

11.2

22.9
22.2
12.3
9.9
0.7

10.0
5.4
2.8
1.0
1.5
4.6

22.4
21.8
12.2
9.6
0.6

10.1
5.5
3.0
1.0
1.5
4.7

0.2

0.2

€ bn
289.7
135.7
37.9
35.8
80.4

225.7
141.7
56.2
27.8

307.6
208.7
76.3
22.6

305.6
n.a.
93.2
419.3
4.9

206.7

424.3
412.3
231.2
181.1
11.9

192.1
103.6
57.1
18.9
27.5
88.5

818.9

40.0
27.4

11.4
1.2

14
10
18
3

2
1
9
11

20
n.a.
8
1
22

21

5
2
2
11
17

7
17
20
11
13
1

4

21
23
18
12
14

21
6

TOTAL

44.1

43.8

43.1

42.9

43.2

43.6

43.9

43.3

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.4
1.8
-
0.5
0.1

20.9
42.1
38.1
20.6
29.6
13.2

3.9
2.0

2.3
1.7
-
0.5
0.1

20.3
41.7
38.7
21.4
32.9
12.8

1.9
1.6

2.5
1.8
-
0.7
0.1

20.3
41.2
37.4
19.8
29.0
12.6

1.0
0.6

2.5
1.7
1.5
0.7
0.1

20.0
41.5
36.5
18.7
24.4
13.0

1.1
-0.2

2.4
1.7
1.5
0.6
0.1

20.1
41.4
37.9
19.3
26.4
12.4

2.5
0.4

2.3
1.6
1.4
0.6
0.1

20.1
41.9
39.2
19.8
26.1
13.0

1.9
0.4

% of GDP
2.1
1.4
1.3
0.6
0.1

2.3
1.6
1.3
0.6
0.1

%
19.5
41.3
40.7
22.0
33.2
12.6

2.2
1.0

19.9
41.9
40.8
21.9
31.4
13.3

2.2
0.8

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

FRANCE

Overall trends in taxation

Structure and development of tax revenues

In  2007,  with  a  tax-to-GDP  ratio  of  43.3 %,  France  ranked  fourth  in  the  Union,  behind  Denmark,  Sweden  and
Belgium (EU-27 37.5 %).

The share of indirect taxes in percentage of GDP was 1.0 % above the EU-27 average, while the share of direct taxes1)
was 0.5 percentage points below average. Social contributions represented the second highest share relative to GDP
in the EU, after the Czech Republic. Employers’ contributions make up over two thirds of social contributions; in %
of GDP employers' contributions were 67 % higher than the EU-27 average.  

The central government raised 37.3 % of total taxes, the lowest share of any non-federal Member State. The local
governments' share of tax revenue (11.4 %) is slightly above the EU average (11.1 %) and well above the euro area
average (7.9 %). It consists mainly of the local business tax, patent levies, real estate and housing taxes.

Starting  from  44.1 %  in  2000,  the  overall  tax  burden  declined  continuously  between  2000  and  2003  (by  1.2
percentage  points),  notably  owing  to  a  drop  in  revenues  from  corporate  taxes,  probably  linked  to  the  cyclical
slowdown and to reductions in corporate income tax rates. After 2003, the ratio gradually increased to reach a level
of  43.9 %  in  2006,  mainly  due  to  an  increase  in  corporate  income  tax  revenue.  In  2007,  the  overall  tax  burden
declined by 0.6 percentage points mainly owing to a decrease in personal income tax revenues.

Taxation of consumption, labour and capital; environmental taxation

In 2007, the ITR on consumption was 2.7 percentage points below the EU average (22.2 %). While an important fall
in the ratio is visible from 2000 to 2001 due to reductions in the VAT rates, the ITR remained remarkably stable from
2001 to 2006. In 2007, the ITR dropped by almost half a percentage point.

The  ITR  on  labour  income,  41.3 %  in  2007,  is  very  high  compared  to  the  EU  average  (34.4 %).  In  2007,  France
ranked  highest  in  terms  of  employers'  social  security  contributions  in %  of  GDP.  Under  the  definition  of  labour
taxation used in this report, the increases in the CSG, the CRDS as well as the social levy of 2 %, booked in national
accounts as taxes on personal income, have offset the effects of reductions in social contributions at the aggregate
level.

The ITR on capital of 40.7 % is one of the highest in the EU. After a short period of decline in 2002 and 2003, the ITR
picked  up  again  rising  4.2  percentage  points  between  2003  and  2007.  The  recent  increases  in  the  ITR  on  capital
reflect mainly an increase in revenue from taxation on corporations. The French system relies on a number of other
taxes on capital, such as the real estate tax, the housing tax, the wealth tax and the local business tax. Most of them
are classified as taxes on stocks of capital/wealth, which altogether represented 4.7 % of GDP, the highest value in the
EU (EU-27 2.0 %).

France  has  a  relatively  low  share  of  environmental  taxes  on  GDP.  Their  level  declined  further  in  2007  to  2.1 %
compared to the EU-27 average of 2.7 %.

1)

  These  shares  are  based  on  the  Eurostat  definition,  which  is  based  on  the  ESA95  codes  (see  Annex  B  for  details).  The  French  national
definition differs in some important respects.

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Developments in the Member States

Current topics and prospects; policy orientation

The current tax policy aims at enhancing competitiveness, mainly by introducing changes in capital taxation. 

As of August 2008, the Economic Modernisation Act (Loi pour la Modernisation de l'Economie —LME) introduces a
new  tax  regime  for  micro  enterprises,  allowing  the  taxpayer  to  opt  for  a  monthly  or  a  quarterly  withholding  tax
applied at a rate of 13 % for income from the sale of goods and at a rate of 23 % for income from services. In addition,
small closely held capital companies can now opt for taxation under the personal income tax regime. The transfer of
shares  of  SAs  and  SARLs  is  subject  to  a  lower  registration  duty  of  3 %  (instead  of  5 %).  The  law  also  contains
important tax exemptions for inward expatriates and foreign-source dividends, interests and royalties. 

The  Finance  Amendment  Law  2008  contains  a  temporary  reduction  in  the  local  business  tax:  all  investments  on
equipments and property made from 23 0ctober 2008 to 31 December 2009 are exempted.

For corporate income tax, as of January 2009, the Finance Law 2009 provides for the progressive abolishment of the
annual minimum lump sum tax (IFA) and the extension of the exceptional windfall tax on oil companies as. As to
capital income taxes, the tax brackets for the net wealth tax are indexed and increased by 2.9 %. The same applies to
the brackets, thresholds and deductions in the gift and inheritance tax regime. Under certain conditions, capital gains
derived from the occasional sale of shares by a private individual are tax exempt. In response to the crisis, firms can
benefit from treasury measures; tax credit reimbursements (research tax credit and carry-back tax credits) and VAT
reimbursements are anticipated.

As  of  January  2009,  the  personal  income  tax  rates  remain  unchanged,  but  the  corresponding  income  brackets,
deductions and thresholds are indexed and increased by 2.9 %. The additional tax reduction (décote) is fixed at € 862.
In response to the crisis, a PIT reduction for low income households was introduced resulting in a cut of the PIT of
2/3 for these households in 2009.

As concerns environmental taxation, the Finance Amendment Law 2008 introduces a penalty of € 160, which applies
to  vehicles  emitting  more  than  250 g  CO2  per  kilometre  as  of  1  January  2009.  In  addition,  the  Finance  Law  2009
provides  the  extension  of  the  general  tax  on  polluting  activities  (TGAP)  to  the  installations  for  incineration  of
household waste.

In February 2009, the government announced a reform of the local business tax regime from 2010 onward. The plan
foresees that the tax will no longer be based on the annual value of commercial and industrial equipment, but will be
calculated  only  on  the  annual  rental  value  of  immovable  property.  The  aim  of  the  reform  is  to  enhance  the
competitiveness of French companies by reducing the tax burden on investment. Finally, as from 1 July 2009 the 5.5
% reduced VAT rate has been extended to restaurant services.

Main features of the tax system

Personal income tax

The  PIT  (IR)  is  levied  annually  on  worldwide  income  according  to  a  single  progressive  scale.  For  2008  the  top
marginal  rate  is  40 %  (applicable  above  € 69 505).  The  system  takes  into  account  the  specific  situation  of  each
household by applying a family quotient. A  noteworthy  feature  is  the  high  number of thresholds  and exemptions
applied. Investment income, such as bank and bond interest, and qualifying capital gains from the sale of monetary
investments are taxed at a flat rate of 16 %. There is no pay as you earn (PAYE) system in France; all individuals are
responsible for paying their tax due along with their annual income tax return.

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Developments in the Member States

Part III

Since 1999, one of the main objectives of fiscal policy has been to reduce taxes on labour income. As part of a multi-
annual tax reduction plan (2001–2003), the main tax-cutting measures for labour consisted of reducing statutory
PIT rates, social contributions, the creation of a reimbursable tax credit (prime pour l'emploi), and the reform of a
local business tax (taxe professionnelle) with a gradual phasing out of the wages component from the tax base. 

As of 2005, the avoir fiscal imputation system was replaced by a mitigated classical system for resident individuals
under  which  dividends  are  subject  to  income  tax  at  ordinary  rates,  but  only  for  60 %  of  their  amount.  The
equalisation tax (précompte mobilier) due on the distribution of dividends was also abolished.

In 2006, the income tax scale was overhauled through the reduction in the number of brackets, and a simplification
and  lowering  of  the  rates.  The  earned  income  tax  credit  (prime  pour  l'emploi)  was  increased  by  50 %.  The  total
amount of taxes paid by individuals, including income, wealth and local taxes, was capped at 50 % of their income.

Corporate taxation

The corporate tax (impôt sur les sociétés) affects all profits realised in France by companies and other legal entities. The
standard rate is 33.33 %. SMEs are taxed at a reduced rate of 15 % on the first € 38 120 of the profits. Large companies
(turnover over € 7 630 000 and taxable profit over € 2 289 000) are subject to an additional surcharge of 3.3 % (CSB)
levied on the part of aggregate corporate tax which exceeds € 763 000. Hence, the effective tax rate is 34.43 %. France
imposes a local business tax (taxe professionnelle) payable by the self-employed and companies. The actual tax, which
raises around 40 % of total corporation tax, varies with location and is calculated in reference to the value of the
business' fixed assets and value added.

In the late 1990s, earlier increases in the corporate tax rates were reversed with the gradual phasing out of the 15 %
surtax on corporate profits introduced in 1997. Furthermore, the 10 % surtax introduced in 1995 was lifted in several
stages  from  2001  onwards.  Part  of  these  cuts  were  funded  by  broadening  the  tax  base  by  reducing  depreciation
allowances and modifying the system for correcting double taxation of distributed intra-company dividends. The
full  and  partial  tax  exemptions  granted  to  new  companies  created  between  1995  and  2004  and  situated  in  some
specific places was extended until 2009. In 2005, the corporate tax rate was cut and from 2007 the local business tax
is  simplified  and  reduced  by  capping  the  tax  to  3.5 %  of  value  added  and  by  reinforcing  the  local  business  tax
reduction on new investments.

VAT and excise duties

The  standard  VAT  rate  is  19.6 %.  A  reduced  rate  of  5.5 %  applies  to  essential  goods,  certain  periodicals  and
restaurant services. A reduced rate of 2.1 % applies to newspapers, theatre performances and approved medicines. 

Wealth and transaction taxes

A net wealth tax (ISF) is levied on resident individuals on the value of assets owned, minus liabilities, if the net value
of these assets exceeds € 750 000. Business assets, qualified shareholdings, certain life insurance policies, and various
other assets are excluded from this tax. A 75 % exemption applies to certain nominative shares held by employees,
managers or shareholders and a 75 % deduction from income tax applies to capital investment in SMEs.

Social contributions

The French social security system is mainly financed by contributions and taxes deducted from earnings. Employers'
social security contributions are particularly high and range between 35 % and 45 %, while employee's social security
contributions are around 14 %. In general, personal income is also subject to the general social welfare contribution
(CSG) and the welfare debt repayment levy (CRDS). In both cases, the base is somewhat narrower than the gross
wage income. The standard CSG rate is 7.5 %, while the CRDS rate is 0.5 %. 

Taxation trends in the European Union                 161

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Part III

Developments in the Member States

<@>TAB_PRINT_DE.pdf

Germany

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

12.5
6.8
2.8
0.9
2.0

12.5
10.2
1.7
0.6

16.9
7.5
6.8
2.7

11.9
9.5
2.9
16.9
0.6

10.5

24.4
21.8
7.5
14.3
2.6

6.9
5.8
3.0
0.4
2.5
1.1

0.0

12.2
6.6
2.9
0.9
1.8

11.0
9.9
0.6
0.6

16.7
7.4
6.7
2.6

11.3
8.8
2.7
16.7
0.5

10.5

24.1
21.5
7.4
14.1
2.6

5.4
4.3
1.7
0.3
2.3
1.1

0.0

12.1
6.4
3.0
0.9
1.8

10.7
9.6
0.6
0.5

16.7
7.3
6.6
2.8

11.3
8.5
2.6
16.7
0.4

10.4

24.0
21.3
7.3
14.0
2.7

5.2
4.1
1.7
0.3
2.1
1.0

0.0

12.2
6.3
3.2
0.9
1.8

10.6
9.3
0.7
0.5

16.9
7.4
6.7
2.8

11.4
8.5
2.6
16.9
0.4

10.5

23.9
21.2
7.4
13.8
2.8

5.3
4.2
1.9
0.4
1.9
1.1

0.0

12.0
6.2
3.0
0.9
1.9

10.2
8.7
0.9
0.6

16.5
7.2
6.5
2.8

10.9
8.3
2.8
16.5
0.3

10.2

22.9
20.2
7.2
13.0
2.8

5.6
4.6
2.2
0.4
1.9
1.1

0.0

12.1
6.2
2.9
0.9
2.1

10.3
8.6
1.1
0.6

16.3
7.0
6.4
2.9

11.1
8.2
2.9
16.3
0.3

10.1

22.4
19.5
7.0
12.6
2.9

6.2
5.1
2.5
0.4
2.1
1.1

0.0

% of GDP
12.9
7.0
2.6
1.0
2.3

12.4
6.3
2.8
0.9
2.3

Ranking 1)
18
21
19
18
6

10.9
8.9
1.4
0.7

15.9
6.8
6.3
2.8

11.4
9.2
1.4
0.7

15.2
6.6
6.1
2.5

% of GDP
11.8
8.9
3.2
15.2
0.3

11.3
8.6
3.1
15.9
0.3

% of GDP
10.7

10.1

22.0
19.3
6.8
12.5
2.7

7.0
6.0
3.0
0.5
2.4
1.1

0.0

21.6
19.0
6.6
12.5
2.5

7.3
6.2
3.0
0.6
2.5
1.1

0.0

15
8
27
14

3
13
3
3

26
2
15
3
15

24

7
7
13
3
5

16
13
19
16
5
19

€ bn
313.3
170.1
63.8
24.0
55.4

275.0
223.9
33.1
18.1

368.5
159.0
148.7
60.8

287.0
216.5
77.0
368.5
7.8

258.3

522.6
461.5
159.0
302.5
61.1

175.9
149.3
73.2
15.3
60.8
26.6

TOTAL

41.9

40.0

39.5

39.6

38.7

38.8

39.2

39.5

10

956.8

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.4
2.0
-
0.3
0.0

18.9
40.7
28.9
24.3
-
-

3.2
1.2

2.5
2.1
-
0.4
0.0

18.5
40.5
22.5
17.9
-
-

1.2
1.0

2.5
2.2
-
0.4
0.0

18.5
40.4
20.9
16.7
-
-

0.0
-0.2

2.7
2.3
1.8
0.3
0.0

18.6
40.4
20.9
16.7
-
-

-0.2
-1.5

2.5
2.2
1.7
0.4
0.0

18.2
39.2
21.1
17.1
-
-

1.2
-1.4

2.5
2.1
1.6
0.4
0.0

18.1
38.8
22.1
18.2
-
-

0.8
-1.5

% of GDP
2.2
1.9
1.4
0.4
0.0

2.4
2.0
1.5
0.4
0.0

%
19.8
39.0
24.4
20.7
-
-

2.5
1.3

18.3
39.0
23.9
20.2
-
-

3.0
0.2

54.2
45.3

8.9
0.0

20
12
14
18
24

19
9

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

GERMANY

Overall trends in taxation

Structure and development of tax revenues

In 2007, Germany's total tax-to-GDP ratio (including social security contributions) was 39.5 %, above both the EU-
27 and the euro area averages (EU-27 37.5 %, EA-16 38.2 %). Compared to its neighbouring countries the overall tax
ratio is higher than in Poland, Luxembourg and the Czech Republic, but lower than in Denmark, Belgium, France
and Austria. The Netherlands has about the same level of taxation.

Germany stands out for a very high share of social contributions in total receipts (38.5 %, EU-27 29.5 %), while the
shares of direct taxes (28.7 %) and especially indirect taxes (32.7 %) are far below the EU averages. This feature is
unchanged, although in 2007 a shift away from SSC to direct and in particular indirect taxes could be observed. This
change is mainly due to that year's increase in the VAT rate and simultaneous cut in the unemployment insurance
rate. In Germany, SSC exceed the EU average by 4.2 % of GDP: this is mainly due to employees' contributions, which
are the third highest in the EU, whereas employers' contributions are in line with the average. 

Compared with the other federal countries, state governments in Germany receive a proportion of total tax revenue
(22.6 %) which is in line with Spain (21.6 %) and Belgium (24.4 %), but much higher than in Austria (7.3 %). The
German  Länder  receive  a  substantial  share  of  revenue  from  VAT,  the  wage  withholding  tax,  the  PIT  collected  by
assessment, the CIT and the withholding tax on interest. The Länder are also entitled to all revenue from other taxes
such as inheritance and gift taxes, taxes on property transfer and taxes on motor vehicles. Social security institutions
receive the fourth largest share of revenues in the EU (38.5 %) exceeded as a proportion only by France (51.2 %),
Slovakia  (39.3 %)  and  Belgium  (38.6 %).  The  end  result  is  that,  at  30.0 %,  the  federal  government  receives  the
smallest portion of tax receipts of any EU central government (EU-27 59.4 %).

Following  Germany's  reunification,  the  tax-to-GDP  ratio  rose  significantly  in  the  early  1990s,  with  most  of  the
increase coming in the form of higher social contributions. The increase continued in the 1995–2000 period as a
result of growing revenues from personal and corporate income taxes. In 2000, the tax-to-GDP ratio stood at 41.9 %.
The year 2001 marked a turning point: staggered reductions in PIT and CIT under the 'Tax Reform 2000' led to a
drop  in  revenue  by  more  than  three  percentage  points  up  to  2005.  The  ratio  increased  again  in  2006  and  2007,
however, mainly due to higher PIT and CIT revenue on the back of strong economic growth and as a consequence of
the increase in the standard VAT rate.

Taxation of consumption, labour and capital; environmental taxation

Consumption taxes as a percentage of GDP are among the lowest in the European Union (10.7 %, EU-27 12.4 %), as
reflected in the low ITR on consumption (19.8 %, EU-27 22.2 %). After having remained roughly stable since 1995,
revenue from consumption taxes increased by more than 1.5 percentage point in 2007 owing to the VAT hike.

The tax on labour as a percentage of GDP (21.6 %, EU-27 17.2 %) is relatively high, ranking seventh in the Union.
Social contributions account for around two thirds of the taxes on employed labour, driving the implicit tax rate on
labour to 39.0 %, well above the European average (EU-27 34.4 %). Starting from a peak at 40.7 % in 2000, the ITR
continuously decreased until 2005 as a consequence of income tax reform, and then stabilised in 2006 and 2007.

Despite a strong increase in recent years, Germany still derives lower than average revenues from taxation of capital
(7.3 %  of  GDP,  EU-27  8.0 %),  partly  due  to  a  low  level  of  taxes  on  stocks  of  capital/wealth  (1.1 %,  EU-27  2.0 %).
Moreover, as a result of the fact that in Germany a very low share of businesses is incorporated, a low overall level of

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Developments in the Member States

taxes on corporations is observed (3.0 %, EU-27 3.7 %). On the other hand relatively high revenues are raised by the
tax on the income of the self-employed (2.5 %, EU-27 1.5 %). These factors are likewise reflected in the rather low
implicit  tax  rate  on  capital  (24.4 %).  The  level  of  taxes  on  corporations  (including  the  trade  tax)  has  undergone
substantial changes due to the reforms in the last years (see last year's report for more information.

Environmental taxes were strongly increased in the 1999–2003 period as a consequence of the ecological tax reform
(from a pre reform level of 2.1 % of GDP to 2.7 % in 2003). In the following years, however, they declined again to
2.2 % of GDP (in 2007) and now again lie clearly below the EU-27 average (2.7 %).

Current topics and prospects; policy orientation

In December 2008, the German government decided on a reform of the inheritance tax, which came into force on 1
January 2009. Most notably, it includes a revaluation of the different kinds of property, an increase in the allowances
for  partners,  children  and  grandchildren,  changes  in  the  treatment  of  siblings,  nieces  and  nephews,  and  tax-
privileged  business  ownership  transfers,  insofar  as  employment  levels  are  safeguarded  in  the  following  years  (see
below for details).

In  2009  a  final  withholding  tax  of  25 %  (plus  solidarity  surcharge)  on  capital  income  of  private  households  was
introduced, with an option on the assessment of private investment income and capital gains. At the same time, the
'half-income  system'  (see  last  year's  report)  and  the  tax-exemption  of  private  capital  gains,  e.g.  from  shares  held
beyond the one-year holding period, were abolished. 

Other tax changes have been introduced via the economic stimulus packages I and II (Konjunkturpaket I und II). The
first package foresees the introduction of declining-balance depreciation at a rate of 25 % for movable fixed assets
acquired  or  produced  after  1  January  2009  and  before  31  December  2010  as  well  as  increased  thresholds  for
accelerated depreciation of movable fixed assets. Other incentives are a credit for services supplied by self-employed
persons for household repairs which was increased to 20 % of € 6 000 (i.e. maximum € 1 200). The second stimulus
package targets especially the PIT (see below). The entitlement to the revenue of taxes on motor vehicles will change
to the federal government as to 1 July 2009. The assessment of the taxes on motor vehicles will successively be linked
to the emission of carbon dioxide. Also, the rate for the contributions to the compulsory health insurance will be
decreased by 0.6 percentage points with effect from 1 July 2009; contribution rate for the unemployment insurance
has been reduced to 2.8 % from 1 January 2009.

Main features of the tax system

Personal income tax

The  economic  stimulus  package  reduced  the  bottom  PIT  rate  from  15 %  to  14 %  while  the  basic  allowance  was
increased from € 7 664 to € 7 834 retroactively as from 1 January 2009 and to € 8 004 as from 1 January 2010. PIT
rates increase in two-linear progressive zones from the new basic rate of 14 % to 42 % (applicable above € 52 552
respectively € 52 882 as from 1 January 2010). Since 2007, a top rate of 45 % applies to incomes above € 250 000. This
value  has  been  increased  to  € 250 400  as  from  1  January  2009  and  € 250 730  as  from  1  January  2010.  A  5.5 %
solidarity surcharge is levied on top of the PIT rates. Spouses living together are in general jointly assessed, their
combined personal allowance thus being € 15 668 in 2009. Husband and wife each pay income tax on half the total of
their  combined  incomes.  On  1  January  2009  a  final  25 %  withholding  tax  (plus  solidarity  surcharge)  on  private
households'  capital  income  came  into  force,  with  an  option  on  the  assessment  of  private  investment  income  and
capital gains. A € 801 allowance (€ 1 602 for married couples) per year applies to investment income. 

Another major recent reform was the introduction of a deferred taxation system exempting all retirement savings
and the accruing interest tax exempt, while the resulting old-age income is taxed as ordinary income. The new tax

164

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Developments in the Member States

Part III

treatment is being phased in over the years 2005 to 2040, with the share of retirement income subject to tax steadily
rising, as an increasing proportion of the savings becomes deductible for PIT purposes.

Corporate taxation

The corporation tax system has been reformed several times in recent years. In particular, the CIT rates have been
reduced  from  pre-1999  rates  of  45 %  (rate  on  non-distributed  profits)  and  30 %  (rate  on  distributed  profits)  to  a
common 15 % rate. In order to finance the tax cuts, base-broadening measures were introduced. Among others, the
depreciation on machinery and buildings was reduced. Moreover, the local tax on trade and industry (see below) is
not deductible from the CIT base and its own base any more. Finally, as of January 2008 two measures to secure the
CIT base are in place: a so-called interest barrier rule (Zinsschranke), which introduces a profit-based limit on the
deduction of interest expenses if net interest expenses exceed € 1 million, and a modified tax base rule, which adds
parts of the interest expenses and portions of rents, leasing and licence fees to the tax base.

A further important tax on business is the trade tax. The trade tax, like the real property tax, belongs to the category
of  non-personal  taxes.  To  the  extent  that  it  is  conducted  within  the  territory  of  the  Federal  Republic,  any  going
business enterprise (with exceptions such as the operation of agricultural or forestry establishments or the provision
of professional or other independent personal services) is liable to trade tax. The computation of trade tax proceeds
from the basic tax. This is obtained by multiplying the amount of business profits by a fixed percentage of 3.5 % (the
basic federal rate). Individuals and partnerships qualify for an allowance of € 24 500. The municipalities apply to the
uniform basic tax (or in the case of allocation, to their allocated share) a multiplier (minimum 200 %) which they are
entitled to determine.

As of January 2008 the CIT rate stands at 15 %, increased to 15.83 % by the 5.5 % solidarity surcharge. Together with
the local trade tax (calculated with an average multiplier of 400 %) the overall tax rate is about 30 %. Two further
aspects of the reform are the new preferential treatment of retained earnings in sole proprietorships and partnerships
(non-incorporated  businesses)  and  the  introduction  of  a  final  withholding  tax  of  25 %  that  will  apply  to  interest
payments, dividends and most forms of capital gains.

VAT and excise duties

The standard VAT rate was raised from 16 % to 19 % as of 1 January 2007. The use of the 7 % reduced VAT rate (e.g.
for  staple  food,  public  transport  and  books)  and  of  exemptions  (e.g.  for  rents,  doctors'  services)  is  rather  limited
compared to other Member States.

Wealth and transaction taxes

Property tax is levied annually by all municipalities on the assessed tax value of land and buildings located in their
region. The real estate transfer tax basically stands at 3.5 %, but as of 1 January 2007 the German Länder can set the
rate themselves. Inheritance and gift taxes have been reformed in 2008. They are levied at rates ranging from 7 % to
50 % depending on the amount involved if it exceeds certain allowances. Inheritance of self-occupied housing is tax
free  within certain limits.  The same holds for company successions where the  taxation depends on  how  long the
company is held by the heirs and how the payroll of the company changes.

Social contributions

Social security contributions to old-age insurance (19.9 % in 2009), unemployment insurance (2.8 %) nursing care
insurance (1.7 %) and health insurance (14.6 %; 14.0 % as of 1 July 2009) are in general paid half by employers and
half by employees up to a contribution assessment ceiling. However, employees pay a 0.9 % additional income linked
contribution to health insurance and employees without children an additional 0.25 % for nursing care insurance.

Taxation trends in the European Union                 165

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Developments in the Member States

<@>TAB_PRINT_EL.pdf

Greece

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
12.3
7.2
2.5
2.3
0.3

12.3
7.1
2.4
2.4
0.3

Ranking 1)
23
18
21
9
26

14.2
7.2
3.1
3.3
0.6

10.0
5.0
4.1
0.8

10.5
4.9
4.1
1.5

23.4
n.a.
0.3
10.4
0.6

12.4

12.4
11.5
4.9
6.6
0.9

9.8
7.4
4.1
0.8
2.5
2.4

0.0

13.8
7.5
3.1
2.7
0.5

8.8
4.5
3.4
1.0

10.6
4.9
4.2
1.5

21.9
n.a.
0.3
10.5
0.6

12.7

12.2
11.3
4.9
6.4
0.9

8.4
6.4
3.4
0.7
2.3
2.0

0.0

13.3
7.6
2.9
2.4
0.3

8.8
4.5
3.4
0.9

11.6
5.5
4.5
1.6

21.5
n.a.
0.3
11.5
0.4

12.4

13.1
12.2
5.5
6.7
0.9

8.2
6.6
3.4
0.7
2.5
1.6

0.0

12.5
7.0
2.8
2.3
0.3

8.0
4.4
2.9
0.7

11.8
5.4
4.7
1.7

20.0
n.a.
0.3
11.6
0.3

11.5

13.1
12.3
5.4
6.8
0.9

7.6
6.1
2.9
0.7
2.5
1.5

0.0

11.9
6.8
2.6
2.2
0.3

8.1
4.4
3.0
0.7

11.1
5.1
4.4
1.6

19.7
n.a.
0.3
10.9
0.3

11.2

12.6
11.7
5.1
6.6
0.9

7.4
6.0
3.0
0.6
2.4
1.3

0.0

11.8
6.8
2.6
2.2
0.3

8.6
4.6
3.2
0.8

11.1
5.0
4.4
1.7

20.1
n.a.
0.2
10.9
0.3

11.0

12.8
11.8
5.0
6.8
1.0

7.7
6.3
3.2
0.7
2.4
1.4

0.0

8.0
4.6
2.7
0.8

11.0
5.0
4.4
1.6

8.1
4.7
2.6
0.8

11.7
5.4
4.5
1.8

% of GDP
20.1
n.a.
0.2
11.5
0.3

19.9
n.a.
0.2
10.9
0.3

% of GDP
11.4

11.4

12.8
11.7
5.0
6.7
1.0

7.1
5.7
2.7
0.7
2.3
1.5

0.0

13.4
12.3
5.4
6.9
1.1

7.2
5.7
2.6
0.8
2.4
1.5

0.0

€ bn
28.1
16.5
5.7
5.2
0.7

18.5
10.7
5.9
1.9

26.6
12.3
10.3
4.0

45.8
n.a.
0.5
26.2
0.6

26.0

30.6
28.0
12.3
15.7
2.6

16.5
13.1
5.9
1.7
5.5
3.5

73.2

4.6
2.7

1.9
0.0

23
23
25
11

16
17
7
7

18
n.a.
26
13
21

17

21
21
20
19
11

17
16
26
14
7
14

22

25
26
25
8
24

27
12

TOTAL

34.6

33.2

33.7

32.3

31.2

31.5

31.3

32.1

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.3
1.6
-
0.8
0.0

16.5
34.5
19.9
15.1
29.0
8.9

4.5
-0.8

2.5
1.5
-
1.0
0.0

16.7
34.6
17.7
13.6
25.1
8.7

4.2
-0.3

2.3
1.4
-
0.9
0.0

16.1
34.4
17.7
14.1
26.0
9.4

3.4
-0.7

2.2
1.3
1.2
0.8
0.0

15.5
35.6
16.4
13.1
21.0
9.6

5.6
0.6

2.1
1.3
1.2
0.9
0.0

15.3
33.7
16.0
13.1
20.1
9.7

4.9
1.7

2.1
1.2
1.1
0.8
0.0

14.8
34.2
16.8
13.7
21.6
9.7

2.9
0.8

% of GDP
2.0
1.2
1.1
0.8
0.0

2.0
1.2
1.1
0.8
0.0

%
15.4
35.5
-
-
-
-

4.0
1.8

15.2
35.1
15.9
12.6
18.6
9.5

4.5
1.4

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

GREECE

Overall trends in taxation

Structure and development of tax revenues

As  of  2007,  the  tax-to-GDP  ratio  (including  social  security  contributions)  stood  at  32.1 %  in  Greece,  a  value
markedly below the EU-27 average (37.5 %). This is the lowest tax-to-GDP ratio among the countries of the euro
area (6.1 percentage points below the EA-16 average).

Indirect taxes are lower than the EU-27 average (12.3 % of GDP vs. 14.3 % of GDP) but play a more important role in
Greece than either direct taxes or social contributions. Revenue from direct taxes is only about two thirds of the EU-
27 average (8.1 % of GDP as compared with 12.4 % of GDP). Revenues from personal income taxes in particular
account for a mere 4.7 % of GDP, compared with an EU-27 average of 8.0 % of GDP. Looking at the tax mix, the
Greek tax system shows a structure similar to that of Cyprus, with a relatively low total tax ratio, low direct and, in
particular, personal income taxes, and a high share of indirect taxes in the total.

The vast majority of revenues, almost two thirds of the total, flow to the central government while social security
funds  receive  almost  all  of  the  remainder.  Local  government  levies  only  a  limited  share  of  overall  taxation  (note
however  that  the  value  of  0.2 %  of  GDP  does  not  include  all  local  taxes).  This  structure  has  not  shown  marked
changes since 1995, with the exception of a decline in the share of the taxes destined for the EU institutions.

The overall tax burden increased rapidly from 1995 to 2000, when it reached a peak of 34.6 % of GDP, reflecting the
effort to combat tax evasion and to reduce the government deficit in the run-up to the euro. The strongest relative
increases in that period were recorded for corporate income and personal income taxes. From 2002 to 2004, the tax
burden  dropped  by  2.5 %  of  GDP  with  declines  being  recorded  mostly  for  indirect  taxes,  corporate  tax  and
employer's  social  security  contributions.  The  ratio  remained  stable  in  the  period  of  2004  to  2006.  The  total  tax
burden  increased  by  0.8  percentage  points  in  2007,  mostly  due  to  the  rise  in  revenues  from  social  security
contributions.

Taxation of consumption, labour and capital; environmental taxation

As  of  2007,  the  implicit  tax  rate  on  consumption  in  Greece  was  significantly  below  the  EU-27  average  (15.4 %
compared with 22.2 %). This is due to a broad application of reduced VAT rates as compared to the standard VAT
rate and a moderate level of excise duties. The Greek ITR on consumption has declined steadily from its 16.7 % peak
in 2001 to 14.8 % in 2005, than rose again in the following years by a total of 0.6 percentage points.

The implicit tax rate on labour is, at 35.5 %, 1.1 percentage points above the EU-27 average. Given low direct taxes,
this high rate is due, in particular, to social security contributions. In the period under consideration, the ITR on
labour grew from a below average 34.5 % in 2000 to 35.6 % in 2003. It dropped markedly by 1.9 percentage points in
2004, inter alia due to the lagged effects of the tax measures already introduced in 2001, and has increased gradually
since then. 

Data  on  the  ITR  on  capital  are  only  available  until  2006.  Greece  displayed  a  low  rate  of  capital  taxation  in  the
previous  years;  with  the  ITR  on  capital  at  15.9 %  in  2006.  As  in  many  Member  States  the  ITR  had  decreased
substantially  in  the  years  2000–2004  but  then  it  picked  up  by 0.8 %  in  2005  and  dropped  again  by  0.9 %  in  2006
remaining well below the EU-25 average of 25.7 %. Note also that a low ITR on capital may be linked to the structure
of employment, characterised by a relatively high share of self-employed (whose income is treated as capital income
in our methodology).

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The role of environmental taxation has been decreasing over recent years in Greece: they have declined steadily by a
cumulative 0.5 % since 2001. This decline was driven by shrinking revenues from energy taxation. As of 2007, the
ratio of environmental taxation stood at 2.0 % of GDP, a value among the lowest in the EU (the EU-27 average is
2.7 %).

Current topics and prospects; policy orientation

In 2004, the government passed a tax reform law to foster entrepreneurship, encourage investment and innovation
and provide for a more equitable distribution of the tax burden. The first phase of the reform reduced the corporate
tax rate from 35 % to 25 %, increased tax-free personal income by € 1 000 and simplified the tax code.

The  second  stage  of  the  tax  reform  was  launched  in  2007  and  focused  on  lowering  personal  income  taxes.  In
particular, the tax rate applied to the central tax bracket will be reduced from 27 % for income earned in 2008 to 25 %
for income earned in 2009. The tax rate on income above € 75 000 will remain unchanged at 40 %.

Furthermore,  the  tax  reform  enacted  in  2008  foresees  a  gradual  reduction  by  1  percentage  point  per  year  of  the
corporate income tax rate for the years from 2010 to 2014 (from 25 % to 20 %).

In order to mitigate the negative impact of the global financial and economic crisis, several anti-crisis measures were
introduced in 2009. An extra tax on personal income for high income earners was introduced and special financial
benefit was granted to low income pensioners, farmers-pensioners and long term unemployed persons. In addition,
measures to strengthen the tourism were undertaken.

Main features of the tax system

Personal income tax

Greece has reduced the progressivity of the tax system over the last few years: the highest statutory personal income
tax rate was cut, from 45 % to 40 % in 2001–2002. At the other end of the tax scale, Greece has reduced the taxation
of  low-income  earners.  The  level  of  tax-exempt  income  was  raised,  while  the  2001  budget  also  introduced  an
exemption  from  National  Insurance  Contributions  for  low-income  earners.  The  tax  relief  for  the  elderly,  the
disabled, and for families with children was increased. The restructuring of the PIT over the 2006–2009 period is
going in the same direction. 

Individuals  are  subject  only  to  a  national  income  tax,  as  there  are  no  local  income  taxes.  Greek  law  defines  six
categories  of  taxable  income:  income  from  immovable  property,  i.e.  land  and  buildings;  income  from  movable
property,  i.e.  investment  income;  from  business;  from  agriculture;  from  employment;  and  from  professional
activities and other sources. Income from immovable property is subject to additional taxation beyond the normal
progressive income tax at the rate of 1.5 %. The rate rises to 3 % where the surface area of the residence is greater
than 300 m2. The amount of additional tax may not be greater than the amount payable on the taxpayer's total net
income. Pensions are subject to taxation as employment income. There is no net wealth tax. 

There are no personal allowances in the Greek tax system. In 2003 previous tax deductions were transformed into
tax credits. However, life insurance premiums, social security contributions and cash donations for specific purposes
remain  fully  deductible.  The  main  tax  credits  are  granted  for  medical  expenses,  home  rent,  annual  educational
expenses,  for  conversion  or  installation  of  environmentally  friendly  heating  systems,  for  the  annual  mortgage
interest  on  taxpayer's  principal  home  and  for  the  acquisition  of  long-term  balanced  or  equity  mutual  funds.
Domestic dividends are not subject to income tax or withholding tax, while interest is taxed at source according to
different schedules.

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Part III

Corporate taxation

Greece has been cutting the corporate tax rate over the last few years. The statutory tax rate for non-listed companies
was cut from 40 % to 37.5 % in 2001 and to 35 % in 2002, followed by a cut to 29 % in 2006. It was then further
reduced to 25 % in 2007. The tax rate for partnerships and civil law associations was reduced from 24 % to 22 % in
2006,  and  cut  to  20 %  from  2007  onwards.  An  additional  tax  of  3 %  is  levied  on  gross  income  derived  from
immovable property. This additional tax cannot exceed the tax calculated on the company's income.

Companies  are  subject  to  corporate  income  taxes  and  real  estate  taxes,  while  local  taxes  are  not  significant.  An
important feature of the Greek tax system is the tax exemption of dividends; these are paid from after tax profits and
are not taxed again at the recipients' level. There is no group taxation in Greece, i.e. all entities are taxed separately. In
general, tax losses may be carried forward for five years. No tax loss carry-backs are allowed. Expenses are deductible
only if they are incurred for the purpose of earning income.

Withholding  taxes  are  treated  as  prepayments  (i.e.  they  are  creditable  against  the  final  income  tax  liability.)
Government  bonds  and  treasury  bills,  bonds  issued  by  resident  companies  (including  banks  and  insurance
companies)  and  bank  deposits  are  subject  to  a  withholding  tax  at  the  rate  of  10 %.  Interest  on  loans  and  interest
received from abroad are taxed with a withholding tax at the rate of 20 % if the payment is made in Greece. A 15 %
withholding  tax  rate  applies  to  fees  paid  to  agents  for  supplies  agreed  with  foreign  entities;  a  3 %  rate  applies  to
construction contractors' fees and 8 % to service fees. There is no withholding tax on domestic royalties. 

VAT and excise duties

The standard VAT rate was increased by one point to 19 % on 1 April 2005. Greece also applies a 9 % reduced rate to
goods such as fresh food products, pharmaceuticals, transportation and electricity, as well as to certain professional
services  such  as  those  supplied  by  hotels,  restaurants,  coffee  shops  and  (non-exempt)  services  by  doctors  and
dentists; a super-reduced rate of 4.5 % applies to newspapers, periodicals, books and theatre tickets. For the region of
the  Dodecanese,  the  Cyclades  and  Eastern  Aegean  islands,  the  above  rates  are  reduced  to  13 %,  6 %  and  3 %,
respectively. 

In addition to VAT, an excise duty is levied on mineral oils, gasoline, tobacco, alcohol, beer and wine. 

Social contributions

Both employees and employers are obliged to pay contributions to social insurance. Employees' contributions are
withheld by the employer and paid at a rate of 16 % for white-collar employees and 19.45 % for blue-collar workers.
The monthly ceiling is € 2 384.96 (for 1 January through 30 September 2008) and € 2 432.25 (for the rest of 2008) per
employee if the employment has started prior to 1 January 1993 and € 5 437.96 (for 1 January through 30 September
2008) and € 5 543.55 (for the rest of 2008) if employment started thereafter.

Taxation trends in the European Union                 169

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Part III

Developments in the Member States

<@>TAB_PRINT_HU.pdf

Hungary

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
16.0
7.9
3.3
4.1
0.7

15.3
7.6
3.3
3.8
0.6

Ranking 1)
5
13
10
1
20

16.1
8.6
3.8
3.3
0.4

9.6
7.1
2.2
0.3

12.8
10.3
2.0
0.5

22.9
n.a.
3.8
11.8
n.a.

15.3

18.9
18.0
10.5
7.6
0.8

4.3
3.4
2.2
0.7
0.5
1.0

0.0

15.3
8.1
3.7
3.2
0.4

10.1
7.5
2.3
0.3

12.8
10.1
2.1
0.6

22.5
n.a.
4.0
11.8
n.a.

14.5

19.2
18.4
10.3
8.1
0.8

4.6
3.6
2.3
0.6
0.6
1.0

0.0

15.0
7.8
3.6
3.2
0.4

10.2
7.5
2.3
0.3

12.8
10.1
2.2
0.6

22.3
n.a.
4.0
11.7
n.a.

14.1

19.2
18.8
10.2
8.6
0.4

4.6
3.6
2.3
0.7
0.6
1.0

0.0

15.6
8.1
3.6
3.4
0.4

9.5
7.0
2.2
0.3

12.5
9.8
2.2
0.6

21.9
n.a.
4.3
11.5
n.a.

14.6

18.5
18.1
9.9
8.2
0.4

4.6
3.4
2.2
0.7
0.5
1.2

0.0

16.3
8.9
3.3
3.6
0.5

9.1
6.6
2.1
0.4

12.3
9.4
2.3
0.5

21.7
n.a.
4.5
11.3
0.2

15.0

18.0
17.7
9.6
8.1
0.4

4.6
3.2
2.2
0.6
0.5
1.3

0.0

15.8
8.4
3.2
3.6
0.5

9.1
6.6
2.1
0.4

12.5
9.7
2.3
0.5

21.4
n.a.
4.3
11.5
0.3

14.5

18.5
18.0
9.9
8.1
0.5

4.5
3.2
2.2
0.6
0.4
1.3

0.0

9.4
6.7
2.3
0.4

12.5
9.5
2.4
0.6

10.2
7.1
2.8
0.3

13.5
9.6
3.3
0.6

% of GDP
22.6
n.a.
4.4
12.5
0.3

21.2
n.a.
4.3
11.4
0.3

% of GDP
14.5

13.9

18.4
18.0
9.7
8.3
0.5

4.8
3.5
2.4
0.6
0.5
1.3

0.0

19.9
19.0
9.9
9.1
0.9

5.3
4.1
2.8
0.7
0.5
1.3

0.0

€ bn
16.2
8.0
3.4
4.1
0.7

10.4
7.2
2.8
0.3

13.7
9.7
3.3
0.7

22.8
n.a.
4.5
12.6
0.3

14.7

20.1
19.2
10.0
9.2
0.9

5.4
4.1
2.9
0.7
0.5
1.3

40.2

2.9
2.1

0.6
0.1

16
14
21
24

7
4
13
16

13
n.a.
12
7
11

4

9
8
6
12
14

23
24
21
15
23
17

9

8
8
5
10
8

3
7

TOTAL

38.5

38.3

38.0

37.7

37.6

37.5

37.2

39.8

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.9
2.4
-
0.4
0.2

27.5
41.4
15.9
12.3
23.9
6.2

5.2
-0.7

2.8
2.3
-
0.4
0.1

25.6
40.9
16.9
13.1
24.8
6.7

4.1
-1.0

2.8
2.2
-
0.4
0.2

25.4
41.2
16.4
12.8
19.8
7.3

4.1
-1.1

2.6
2.3
-
0.2
0.2

26.0
39.3
16.7
12.5
17.5
7.6

4.2
-0.7

2.7
2.1
1.8
0.5
0.2

27.6
38.3
16.8
11.8
17.1
6.8

4.8
0.5

2.7
2.1
1.8
0.5
0.1

26.4
38.4
16.6
11.6
17.0
6.6

4.0
1.1

% of GDP
2.9
2.1
1.9
0.6
0.1

2.8
2.1
1.9
0.6
0.1

%
27.1
41.2
-
-
-
-

1.1
1.6

25.8
38.8
16.3
11.9
14.7
8.0

4.1
2.6

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

170

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Developments in the Member States

Part III

HUNGARY

Overall trends in taxation

Structure and development of tax revenues

As of 2007, with a total tax-to-GDP ratio of 39.8 % (including social security contributions), Hungary's tax burden is
well above the EU average (37.5 %). Looking at neighbouring countries, Austria displays a higher tax ratio (42.1 %)
but Slovenia has a lower ratio (38.2 %) and both Slovakia’s and Romania's ratios lie well below the Hungarian value
(29.4 %).

Revenues from indirect taxes are substantial, their share accounting for 40.2 % of the total. VAT revenues yield 7.9 %
of  GDP  which  roughly  equals  to  the  EU  average  (8 %).  Other  taxes  on  products  are  the  highest  in  the  EU  mainly
because of local business tax revenues. In contrast, direct taxes are relatively low: at 10.2 % of GDP, they are lower than
the  EU  average  by  almost  one  quarter.  Social  contributions  in  relation  to  GDP  are  clearly  above  the  European
average; the majority of them fall on employers.

Tax  revenues  are  divided  between  central  government,  local  government  and  the  social  security  system.  While
central government remains by far the largest recipient of tax revenue, with over half of the total, local government
taxes are, at 4.4 % of GDP, not negligible. Local taxes grew rapidly until 2004 although in 2005 they dropped down
slightly to the 2003 level.

The overall tax burden declined gradually between 2000 and 2006 from 38.5 % to 37.2 % then jumped to 39.8 % in
2007, reaching the ninth highest in the EU. The shares of the main categories of taxes evolved differently over the
years going back finally to the 2000 shares in 2007 the main exceptions being the higher social contributions paid by
employees and the higher level of the other taxes on products. 

Taxation of consumption, labour and capital; environmental taxation

The high level of indirect taxation in Hungary leads to a correspondingly elevated ITR on consumption (27.1 % in
2007). This value is the third highest in the EU. The ITR on consumption shows a general decline up to 2002 in line
with the reduction in indirect tax revenue. However then it bounced back thereafter in line with the changes in VAT
system.

The ITR on labour amounted to 41.2 % in 2007. This value is 6.8 points above the EU average. Since 2000, the ITR
on  labour  showed  a  gradual  decline  over  time  until  2004,  but  increased  by  2.4  points  in  2007,  mainly  due  to  the
changes in social contribution system. The revenues from taxes on capital are, at 5.3 % of GDP, one of the lowest in
the EU, due notably to low business income taxation, but have been increased by 0.5 points in 2007 reflecting the
changes  in  tax  policy.  First  in  this  year  ITR  on  capital  is  available  for  all  years  except  2007.  The  ITR  on  capital
remained fairly stable since 2000 and well below the EU average.

Environmental  taxes  represented  2.9 %  of  GDP.  This  share  is  somewhat  above  the  EU  average  (2.7 %)  and  has
remained roughly stable between 2000 and 2007. As in most countries, taxes on energy account for the largest part of
environmental tax revenues.

Current topics and prospects; policy orientation

Labour and personal income taxes are planned to be decreased, while taxes on consumption and capital are expected
to increase further after the introduction of tax on interest and capital gains derived from stock exchange activities

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Part III

Developments in the Member States

(at a rate of 20 %) in 2006. As a first step, the Parliament approved  a set of changes that will enter into force on 1 July
2009.  Among  them,  an  increase  in  the  standard  VAT  rate  from  20 %  to  25 %,  a  new  18 %  reduced  VAT  rate,  an
increase  in  the  lowest  PIT  bracket  (taxed  at  an  18 %  rate)  from  HUF 1.7 million  (€ 5 900)  to  HUF 1.9 million
(€ 6 600) and a five percentage points decrease in the employers' contributions.

The solidarity tax for corporations and private persons with high income is planned to be abolished as of 2010. This
structural modification will maintain the overall tax burden but converge to EU structural trends. A company car tax
has  been  introduced  in  1  February  2009:  companies  have  to  pay  HUF 7 000  (€ 25)  per  month  per  car  below
1 600 cm3 and HUF 15 000 (€ 52) for cars over 1 600 cm3.

Main features of the tax system

Personal income tax

Personal income tax is applied at central government level. In recent years, Hungary has introduced a number of
reforms in personal income taxation. The three bracket system utilised since 1999 has been replaced, from 1 January
2005, with a two bracket system. As from January 2009 income up to HUF 1.9 million (€ 6 600) is taxed at an 18 %
rate, whereas above that threshold the rate is 36 %. This highest rate decreased two percentage points in 2006 from
the  previous  38 %.  However  from  2007  onwards  private  persons  with  a  combined  annual  income  of  more  than
HUF 7 446 000 (ca. € 25 800) must pay solidarity tax. The tax base is the portion of the income over HUF 7 446 000,
the tax rate is 4 %.

As a main rule the maximum amount of personal income tax allowance is HUF 100 000 (€ 350) up to HUF 3.4 million
annual income, between HUF 3.4 million (€ 11 800) and HUF 3.9 million (€ 13 500) annual income a reduced amount
of  tax  allowance  is  applicable;  and  no  allowances  are  available  for  those  who  have  annual  income  above  HUF 3.9
million (€ 13 500).

The employment tax credit is calculated as 18 % of wage income earned, with the monthly maximum of HUF 11 340
(€ 40). This tax credit is applicable to workers whose annual income does not exceed HUF 1 250 000 (€ 4340). In the
case of employees having annual income between HUF 1 250 000 and HUF 2 762 000 (€ 9 600), a reduced amount of
tax credit is applicable. No employment income tax credit is available over HUF 2 762 000 annual income.

A 25 % withholding tax is imposed on the dividends from resident companies paid to individuals. The 35 % rate has
been abolished as of 1 January 2009. Foreign source dividends are also taxed at a 25 % rate. In order to secure a more
equitable distribution of the tax burden between work and capital income, a tax on interest and a tax on capital gains
from  stock  exchange  transaction  were  introduced  on  1 September  2006.  The  rate  of  these  taxes  is  set  at  20 %.  No
portion of these incomes is exempted from tax. The tax on interest is withheld by the payer, and the tax on capital
gains in stock exchange deals is declared and paid by the private individuals in their tax return. Capital gains from
immovable property are subject to tax at a 25 % rate. 

Corporate taxation

In recent years there has been a strong tendency to reduce corporate tax rates, particularly in new Member States. In
this context Hungary has an established position as a low tax country, given that it introduced a corporate tax rate of
18 % already in 1995, further reduced to 16 % as of 2004. Under certain conditions a rate of 10% is applicable to the
part of the tax base which does not exceed HUF 50 million (€ 174 000). 

The  solidarity  tax  was  introduced  on  1  September  2006.  The  tax  rate  is  4 %  on  the  adjusted  pre-tax  profit.  R&D
expenditure is deducted from the tax base.

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Developments in the Member States

Part III

The rate of the simplified corporate tax (EVA) has increased from 15 % to 25 % effective from 1 October 2006.  Besides
the  corporate  income  tax,  municipalities  may  levy  a  local  business  tax.  From  2004  onwards  companies  are  also
required to pay an innovation tax, in 2007 at the rate of 0.3 %. Innovation tax is levied on the same base as that of the
local business tax, but an amount equal to R&D expenditure carried out directly by the firm is deducted from the tax. 

Since 2004, companies may carry the amount of trading losses forward indefinitely, but subject to limitations; carry
back of losses is not allowed. 

Capital  gains  are  generally  included  in  the  company's  total  ordinary  income.  However,  50 %  of  capital  gains  on
transactions  on  a  recognised  stock  exchange  by  a  company  other  than  an  insurance  or  financial  institution  are
exempt, subject to limitations. Capital gains of foreign companies without a permanent establishment in Hungary
are  exempt  from  Hungarian  tax.  Dividends  paid  to  Hungarian  companies  are  generally  deductible  from  the
corporate tax base.

VAT

In 2005 and 2006 the VAT system changed significantly. For almost all goods, the standard VAT rate was cut to 20 %
from 25 % from 1 January 2006, but the 15 % reduced rate has increased to 20 % from 1 September 2006. The 5 %
reduced rate applies only to a few products (such as specific medicines and medical materials, books, newspapers,
etc). The newly codified Act on VAT (No 127/2007) has come into force from 1 January 2007. The new act follows
much more closely the structure of Council Directive 2006/112/EC and has also introduced a relevant new measure,
the reverse charge scheme for waste commerce. In 2008, the sectoral reverse charge system was extended to various
services linked to immovable property as well. As from July 2009 the standard VAT rate was hiked to 25 % and a new
18 % reduced VAT rate was introduced for dairy products, baked goods and district heating.

Other taxes

From 1 January 2009 to 1 January 2011 a new tax is to be levied on energy suppliers — the Special Energy Tax. The
tax base is the pre-tax profit subject to certain tax base adjusting items. The rate of the Special Energy Tax is 8 %.

From 2007 banks have to pay a surtax on interest revenue from loans related to state subsidies at a 5 % rate. 

Municipalities may levy a real estate tax on building and land. The maximum tax is either a fixed amount (HUF 900
per year per square metre for buildings, HUF 200 per year per square metre for land) or 3 % of the market value.

Social contributions

Social security contributions consist of pension insurance contributions and health insurance contributions. In the
case of pension contributions paid by employees, a ceiling applies. Additionally, health care charges are payable.

Social security contributions include employers' social security contributions of 26 % (up to a certain threshold) and
employees' social security contributions of 15.5 % (health contribution 6 % plus pension contribution 9.5 %; in the
case of private pension fund members the health contribution is 6 %, the pension contribution is 1.5 % and they pay
8 % to private pension funds). The health care tax charge of 11 % is generally assessed on those items of income that
are not subject to the social security contributions, but are included in the aggregate taxable base.

Taxation trends in the European Union                 173

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Part III

Developments in the Member States

<@>TAB_PRINT_IE.pdf

Ireland

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
13.5
7.6
2.4
2.6
0.9

14.2
7.8
2.4
3.0
1.0

Ranking 1)
14
16
23
5
16

13.7
7.3
3.2
2.3
0.8

13.5
8.6
3.7
1.2

4.4
2.7
1.5
0.2

26.8
n.a.
0.6
3.6
0.6

12.1

11.5
11.4
2.7
8.7
0.1

8.0
6.0
3.8
1.1
1.1
2.0

0.0

12.5
6.8
2.9
2.0
0.8

12.8
8.1
3.5
1.2

4.5
2.8
1.5
0.2

24.9
n.a.
0.6
3.7
0.5

10.9

11.0
10.9
2.8
8.1
0.1

7.8
5.9
3.6
1.1
1.1
2.0

0.0

12.4
7.0
2.9
1.7
0.8

11.6
7.1
3.7
0.8

4.4
2.7
1.5
0.2

23.9
n.a.
0.6
3.7
0.3

11.0

10.0
10.0
2.7
7.3
0.1

7.4
5.7
3.7
0.8
1.1
1.8

0.0

12.6
7.0
2.8
1.9
0.9

12.0
6.8
3.7
1.5

4.5
2.7
1.6
0.2

24.4
n.a.
0.7
3.6
0.3

10.9

9.8
9.7
2.7
7.0
0.1

8.4
6.2
3.8
1.4
1.0
2.2

0.0

13.2
7.3
2.7
2.2
0.9

12.4
7.4
3.6
1.4

4.6
2.7
1.7
0.2

25.5
n.a.
0.7
3.8
0.2

11.2

10.4
10.4
2.7
7.7
0.1

8.6
6.2
3.7
1.5
1.1
2.4

0.0

13.7
7.6
2.6
2.5
0.9

12.3
7.3
3.4
1.7

4.7
2.7
1.7
0.2

25.9
n.a.
0.7
3.8
0.3

11.4

10.4
10.3
2.7
7.6
0.1

8.9
6.2
3.5
1.6
1.1
2.7

0.0

13.2
7.2
3.8
2.2

4.8
2.9
1.7
0.2

12.8
7.3
3.4
2.1

4.9
3.0
1.7
0.2

% of GDP
26.2
n.a.
0.7
4.1
0.3

27.2
n.a.
0.7
3.9
0.3

% of GDP
11.2

11.5

10.4
10.4
2.9
7.4
0.1

10.2
7.1
3.9
2.1
1.0
3.2

0.0

10.7
10.6
3.0
7.6
0.1

9.4
6.6
3.5
2.0
1.1
2.8

0.0

€ bn
25.7
14.4
4.5
5.0
1.8

24.4
14.0
6.4
4.0

9.4
5.8
3.2
0.4

49.9
n.a.
1.3
7.8
0.5

21.3

20.4
20.2
5.8
14.5
0.1

17.8
12.5
6.7
3.8
2.0
5.3

59.5

4.6
2.3

2.4
0.0

12
13
13
2

26
25
24
22

6
n.a.
24
24
20

19

26
25
25
16
25

9
9
13
2
15
7

23

17
27
24
5
22

7
25

TOTAL

31.6

29.8

28.5

29.0

30.3

30.7

32.1

31.2

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.9
1.4
-
1.4
0.0

25.9
28.5
-
-
-
-

9.2
4.1

2.3
1.2
-
1.1
0.0

23.9
27.4
-
-
-
-

5.8
2.6

2.3
1.3
-
1.1
0.0

24.9
26.0
14.8
11.2
-
-

6.4
2.5

2.3
1.3
1.1
1.1
0.0

24.7
25.0
16.8
12.4
-
-

4.5
1.3

2.5
1.3
1.2
1.1
0.0

25.9
26.3
17.8
12.9
-
-

4.7
0.5

2.5
1.3
1.2
1.2
0.0

26.4
25.4
19.4
13.5
-
-

6.4
1.3

% of GDP
2.4
1.2
1.1
1.2
0.0

2.5
1.2
1.2
1.2
0.0

%
25.6
25.7
18.5
13.0
-
-

6.0
2.9

26.5
25.4
21.1
14.6
-
-

5.7
1.7

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

174

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report2009.book  Page 175  Thursday, May 28, 2009  1:35 PM

Developments in the Member States

Part III

IRELAND

Overall trends in taxation

Structure and development of tax revenues

At 31.2 % in 2007, the total tax-to-GDP ratio in Ireland (including social security contributions) is the fifth lowest in
the Union and the second lowest in the euro area. While this ratio has shown an upward trend from 2002 to 2006, it
decreased by almost one percentage point in 2007.

The taxation structure is characterised by a heavy reliance on taxes rather than social security contributions. Indirect
and  direct  taxation  make  up  43.1 %  and  41.0 %  of  the  total  revenue  respectively,  whereas  there  social  security
contributions raise only 15.9 % of total tax revenue. In this respect, the structure of taxation differs considerably from
the  typical  structure  of  the  EU-27,  where  each  item  contributes  roughly  a  third  of  the  total.  As  in  the  majority  of
Member States, the largest share of indirect taxes is constituted by VAT receipts, which provide about 58 % of total
indirect taxes (55.9 % for the EU-27). The structure of direct taxation is similar to that found in the EU-27. Personal
income taxes and corporate income taxes represent 7.3 % and 3.4 % of GDP, respectively, compared with 8.0 % and
3.5 % for the EU-27. Social security contributions represent a meagre 4.9 % of GDP (second lowest in the Union after
Denmark), compared to an EU-27 average of 11.0 %. Employers' and employees' contributions are at 3.0 % and 1.7 %
of GDP, respectively.

Ireland is one of the most fiscally centralised countries in Europe; local government has only low revenues (2.2 % of
tax revenues). The social security fund receives just 13.0 % of tax revenues (EU-27 28.5 %), while the vast majority
(83.9 %) of tax revenue accrues to central government. This ratio is exceeded only by Malta and the United Kingdom.

From 2000 to 2002, Ireland reduced the total tax burden across the board from 31.6 % to just 28.5 % of GDP. Since
2002, however, the total tax ratio has increased every year, reaching 32.1 % in 2006, in large part due to a surge in VAT
receipts,  capital  gains  tax  and  stamp  duties.  This  upward  trend  was  interrupted  in  2007  when  the  total  tax  ratio
decreased by almost one percentage point. This decrease was mainly driven by lower ratios of VAT, other taxes on
products (incl. import duties), and corporate income taxes to GDP.

Taxation of consumption, labour and capital; environmental taxation

The tax structure by economic factor (consumption 35.8 %, labour 34.2 %, capital 30.0 %) differs notably from the
EU-27 average (33.6 %, 45.2 %, 21.3 %), with the tax system deriving the smallest proportion of tax receipts from
labour of any EU country, apart from Bulgaria, Cyprus and Malta. Conversely, it raises a large proportion from capital
taxes, exceeded in this only by the United Kingdom.

Taxes  on  consumption  absorb  11.2 %  of  GDP  (EU-27  12.4 %).  After  a  declining  period  from  13.0 %  in  1995  to
10.9 % in 2001, this ratio has increased slightly to 11.5 % in 2006. This principally reflects buoyant economic activity
in that period, which has driven VAT receipts up. However, the value slightly decreased in 2007 to 11.2 % for the first
time since 2003. In addition, Ireland applies a zero rate on several products. The weight of indirect taxes others than
VAT and excise duties are also high by EU standards.  

The very low social security contributions result in one of the lowest level of taxes on labour in the EU (10.7 % of
GDP compared with 17.2 % in EU-27). As in many EU countries the implicit tax rate on labour, increased steadily
from the early 1970s until the late 1980s. Having attained stability in the early 1990s, the rate fell from 29.3 % in 1996
to 25.7 % in 2007, as a result of successive cuts in personal income tax and social contributions. This constitutes the
fourth  largest  reduction  in  the  ITR  on  labour  in  any  European  country  in  the  period,  after  Slovakia,  Latvia  and
Estonia.

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The  Irish  case  is  notable  in  that  the  strong  economic  growth  in  recent  years  has  offset  the  effects  of  the
contemporaneous reductions in corporate income tax rates; the CIT rate was cut in half between 2000 and 2003.
Indeed, revenues from taxes on capital, at 9.4 % of GDP in 2007, are now higher than in 2000. Much of this was due
to soaring receipts from the capital gains tax and stamp duty, which collectively rose to reach respectively 500 % and
337 % of their 2002 level in the wake of the construction boom. The increase of tax revenue despite lower tax rates is
also pictured by the ITR on capital.1) It is at 18.5 % in 2007 and reached its peak at 21.1 % in 2006. From 2002 to 2006
the ITR on capital increased by more than five percentage points. 

As for environmental taxation, it has almost continuously declined over the period, moving from an above average
level in 1996 (3.1 % against 2.8 % for the EU-25) to 2.4 % (compared to 2.7 % for the EU-27). Transport taxation is
relatively high compared to the EU-27 average (0.5 % points above the EU-27 average) while taxation on energy was
the lowest in the Union in 2007.

Current topics and prospects; policy orientation

The current tax policy in Ireland focuses predominantly on mitigating the effects of the global economic downturn.
Ireland  launched  a  set  of  tax  measures  to  stimulate  the  recovery  while  meeting  revenue  needs.  Among  those
measures is a reduction of the stamp duty top rate for non-residential property from 9 % to 6 % to mitigate the slump
in  the  construction  sector.  Stamp  duties  on  life  insurance  and  non-life  insurance  policies  have  been  increased.
Furthermore, the standard tax band has been widened by € 1 000 for a single person, and by € 2 000 for a married
couple with two incomes. In addition, an income levy was introduced (see below for details). The standard VAT rate
was increased from 21 % to 21.5 % in December 2008 and some excise duties were increased. The capital gains tax
was increased from 20 % to 22 % and again increased on 7th April from 22 % to 25 %. Moreover, the payment dates
for corporation and capital gains tax were advanced. The research and development tax credit was increased from
20 %  to  25  %  of  incremental  expenditure.  A  pension  levy  was  introduced  on  public  sector  wages.  The  employee
social security contribution ceiling was raised from € 50 700 to € 52 000 in a first step and from € 52 000 to € 75 036
from May 1st 2009.

Main features of the tax system

Personal income tax

The two statutory personal income tax rates have been reduced substantially over the last decade. The standard rate
is currently at 20 % and the top rate at 41 %; tax allowances were also replaced by tax credits for equity reasons. The
threshold for the higher rate in 2008 is € 35 400 for a single person with no dependants. The supplementary 2009
Budget presented in April 2009 introduced an additional income levy of 2 % on gross income up to € 75 036 per
annum and a rate of 4 % for income above this amount. On income in excess of € 174 980 a 6 % levy is payable. Social
welfare payments are excluded from this levy. Taxation of individuals on capital gains is made at 25 % with an annual
exemption of € 1 270.

Corporate taxation

Companies resident in Ireland and non-resident companies which carry on a trade in Ireland through a branch or
agency, are, with a small number of specific exceptions, liable to corporation tax on their taxable profits. Corporation
tax is levied at 12.5 % on trading profits. A corporation tax rate of 12.5 % has applied to trading profits in all sectors

1)

The downward revision in the ITR on capital compared to the data presented in last year's edition of the report is due to the fact that a full
sectoral  accounts  dataset  has  now  been  made  available.  In  the  past,  the  ratio  for  Ireland  was  calculated  according  to  a  simplified
methodology (see 2008 edition, p. 414).

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Part III

since 1 January 2003. The 10 % rate, which was introduced in 1981, has been phased out; it now only applies to a
small  group  of  manufacturing  companies  until  2010.  A  25  %  rate  applies  to  other  passive  (non-trading)  income.
Capital gains are subject to tax at 25 %.. A profit resource rent tax of between 5 % and 15 %, based on the profit ratio
of a petroleum/gas field, was introduced in 2008 for exploration and production activities, which is in addition to the
existing corporation tax rate of 25 % for non-trading income.

While  withholding  taxes  on  interest,  dividends  and  patent  royalties  are  imposed  at  20 %,  a  number  of  specific
exemptions mean that some payments received by companies are not subject to withholding tax. A surcharge of 20 %
is  levied  on  undistributed  investment  or  estate  income  of  a  closely  held  company  or  a  company  providing
professional services. Losses may be carried forward indefinitely: back one year in the case of continuing business
and back three years in the case of a discontinued business. A substantial change in the ownership of a company,
combined with a change in the nature of the trade, may result in the restriction of these losses. There are no controlled
foreign company rules and no general schemes of transfer pricing or thin capitalisation rules.

VAT and excise duties

The standard VAT rate is now at 21.5 % compared with 21 % in 2007. A reduced rate of 13.5 % applies to various
services,  newspapers,  building  work  and  household  energy  and  fuels,  while  a  zero  rate  applies  to  basic  food,
children's clothing, children's footwear and books.

Wealth and transaction taxes

Capital acquisitions tax is charged at a rate of 25 % on gifts and inheritances over a certain value, depending on the
relationship of the beneficiary to the donor or deceased (just over € 542 544 for direct line). Stamp duty applies to
sales, gifts, conveyances and leases of property. Rates of stamp duty ranging up to 6 % apply depending on whether
property is for residential or non-residential purposes. There is a residential stamp duty rate of zero up to € 125 000
and a 7 % rate on the excess up to a limit of € 1 million. Properties in excess of € 1 million incur a rate of 9 %. First
time  buyers  are  exempt;  as  are,  for  the  most  part,  purchases  of  new  properties  by  owner-occupiers.  Shares  and
securities carry a fixed rate of 1 % while leases are subject to rates of 1 % to 12 % of the average annual rent. Capital
duty on the issue of share capital was abolished in 2005. There is no net worth tax.

Local taxes

There are no local taxes as such in Ireland, except for a levy imposed on businesses by local authorities called rates,
calculated as a percentage of the notional rental value of the business premises, and certain service charges.

Social contributions

Employer's  contributions  amount  to  10.75 %  of  the  salary,  without  any  ceiling.  A  reduced  rate  employer’s
contribution  of  8.5 %  applies  in  respect  of  employees  with  earnings  below  € 356  per  week.  Both  rates  include  a
national  training  fund  levy  of  0.7 %.  The  rate  for  employees'  pay-related-social-insurance  (PRSI)  contributions
stands at 4 %. In the budget 2008 the earnings threshold for paying employee PRSI was raised to € 352 per week. The
2009  ceiling  for  this  employee  contribution  is  now  € 75 036.  The  self-employed  pay  a  3 %  tax  rate  on  all  income
above € 3 174 per annum, with no annual ceiling, and a minimum payment of € 253 per year applies. On top of this,
a  health  contribution  levy  (HCL)  of  2 %  of  total  income  must  be  paid  by  all  wage  earners,  raising  the  total
contribution  to  6 %  and  5 %  for  employees  and  the  self-employed  respectively.  Since  2004,  employees  receiving
taxable benefits in kind have been taxed under the pay as you earn system and the benefits have been liable to PRSI
contributions and the HCL. 

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Developments in the Member States

<@>TAB_PRINT_IT.pdf

Italy

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
15.0
6.2
2.1
3.0
3.6

15.1
6.3
2.2
3.0
3.6

Ranking 1)
9
25
26
3
3

15.2
6.5
2.6
2.7
3.4

14.5
10.6
2.3
1.6

12.1
8.4
2.3
1.4

23.2
n.a.
6.0
12.1
0.5

10.9

19.9
17.9
10.0
7.9
2.0

11.0
8.3
2.9
2.1
3.4
2.6

14.7
6.3
2.5
2.5
3.5

14.8
10.8
2.9
1.1

12.0
8.3
2.3
1.3

22.8
n.a.
6.2
11.9
0.5

10.4

20.2
18.0
10.1
7.9
2.1

10.9
8.4
3.7
1.4
3.2
2.5

14.7
6.2
2.3
2.6
3.6

14.1
10.6
2.5
1.0

12.1
8.4
2.3
1.4

22.1
n.a.
6.3
12.1
0.4

10.2

20.2
18.1
10.2
7.9
2.1

10.5
7.6
3.1
1.3
3.2
2.8

14.3
5.9
2.4
2.5
3.5

14.7
10.5
2.2
2.1

12.3
8.7
2.3
1.4

22.1
n.a.
6.6
12.3
0.3

9.9

20.3
18.2
10.4
7.8
2.1

11.1
8.5
3.5
1.1
3.8
2.6

14.3
5.9
2.3
2.9
3.3

13.9
10.4
2.2
1.3

12.3
8.6
2.2
1.5

21.6
n.a.
6.4
12.3
0.3

10.0

20.1
18.0
10.3
7.7
2.1

10.5
7.7
3.1
1.1
3.5
2.8

14.5
6.0
2.2
2.8
3.5

13.4
10.4
2.3
0.7

12.6
8.8
2.2
1.6

21.2
n.a.
6.4
12.6
0.3

10.0

20.4
18.3
10.5
7.7
2.2

10.0
7.4
2.9
1.2
3.3
2.6

14.4
10.9
2.9
0.7

12.5
8.7
2.3
1.6

15.2
11.4
3.2
0.6

13.0
9.0
2.3
1.7

% of GDP
23.3
n.a.
6.7
13.0
0.3

22.8
n.a.
6.5
12.5
0.3

% of GDP
10.2

10.4

20.5
18.3
10.5
7.8
2.2

11.2
8.4
3.5
1.4
3.5
2.8

21.2
18.9
10.8
8.1
2.3

11.8
9.1
3.8
1.5
3.8
2.8

€ bn
230.2
95.7
32.1
46.5
55.9

234.0
174.6
49.7
9.7

200.3
138.0
35.4
26.8

357.1
n.a.
102.8
200.2
4.3

157.1

325.6
290.3
166.2
124.1
35.3

181.8
139.2
58.5
22.6
58.1
42.6

664.4

39.6
31.6

7.5
0.5

6
5
15
17

9
6
19
8

12
n.a.
5
6
18

25

8
9
3
14
7

2
3
8
5
1
8

5

13
9
13
15
17

25
1

Less: amounts assessed but unlikely to be collected

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

TOTAL

41.8

41.5

40.9

41.3

40.6

40.4

42.1

43.3

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

3.1
2.6
-
0.5
0.0

17.9
43.7
29.6
22.5
19.3
16.7

3.7
1.2

3.0
2.4
-
0.5
0.0

17.3
43.6
29.1
22.5
23.7
14.5

1.8
1.6

2.8
2.3
-
0.5
0.0

17.1
43.5
29.2
21.3
21.0
14.2

0.5
0.7

2.9
2.4
1.8
0.5
0.0

16.6
43.4
31.6
24.2
24.7
16.1

0.0
-0.3

2.8
2.2
1.7
0.5
0.0

16.8
43.1
29.8
21.9
21.4
15.1

1.5
0.1

2.7
2.2
1.6
0.5
0.0

16.7
42.9
29.6
21.8
20.8
15.1

0.6
-0.3

% of GDP
2.6
2.1
1.5
0.5
0.0

2.7
2.2
1.6
0.5
0.0

%
17.1
44.0
36.2
27.7
30.1
17.9

1.5
0.5

17.4
42.5
34.2
25.6
27.1
16.8

1.8
0.3

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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ITALY

Overall trends in taxation

Structure and development of tax revenues

In 2007, the total tax-to-GDP ratio (including social contributions) stood at 43.3 % in Italy. This level exceeds both
the average for the Union as a whole and that for the euro area, by respectively 5.8 and 5.1 percentage points. Italy's
overall tax burden ranks fifth highest in the EU.

The share of indirect taxes on the total (34.6 %) lies well below the EU-27 average (38.4 %), reflecting Italy's reliance
on direct taxes (35.2 % v. 32.3 % for the EU-27), while the share of revenue from social contributions is closer to the
EU average. As for indirect taxes, VAT and excise duties raise comparatively little revenue (6.2 and 2.1 % of GDP, the
third and second lowest value in the EU), but indirect taxes on products and on production are relatively high. The
high revenue from direct taxes is mainly due to the PIT, which, at 11.4 % of GDP, exceeds the EU-27 average by over
40 %. This structure has remained broadly constant since 2000.

Local government collects a relatively high level of revenue (6.7 % of GDP, fifth highest in the EU). Also the volume
of revenues collected by social security funds is comparatively high (13.0 % of GDP) and has been trending upwards
since 2001.

The total tax-to-GDP ratio has remained above 40 % throughout the 1995-2007 period. From 2000 to 2005, the ratio
tended  to  decline  somewhat,  but  during  2006–07  relatively  sharp  increases  were  recorded  (1.7  and  1.2  points
respectively), owing to growth in all categories of revenue, most particularly PIT and CIT. The 2007 total tax ratio
lies less than half a point below its 1997 all-time peak.

Taxation of consumption, labour and capital; environmental taxation

Despite the 1998 increase in the VAT rate from 18 % to 20 % and the abolition of the 16 % intermediate rate, the ITR
on consumption, currently 17.1 %, is the third lowest in the EU. This is, however, also due to the fact that Italy applies
a favourable VAT regime to housing. Owing to statistical limitations, the data presented here attribute VAT paid on
housing to consumption taxes instead of capital stock taxes (see methodology for details).  

At  44.0 %,  Italy's  ITR  on  labour  is  the  highest  in  the  EU;  in  2007,  the tax  burden  on  labour  exceeded  the  EU-27
average by over one quarter. In contrast to most Member States, in Italy the ITR on labour has increased markedly
since the mid-1990s, despite the mitigating effects of a 1998 reform; the ITR has remained roughly constant since the
turn of the century. More recent reforms aimed at decreasing labour taxes have primarily focussed on lower incomes.
It is also worth noting that IRAP partly falls on labour1).

Capital taxes currently yield the second highest revenue in the EU; note however that, under the methodology used
here, receipts from taxes and social contributions levied on the self-employed, a large group in Italy, are booked as
capital taxes. Taxes on the stocks of capital/wealth, too, are relatively high. The ITR on capital, which had remained
relatively constant since 2000, picked up in the 2006-07, reaching a high of 36.2 %2)3).

1) Accordingly,  our  methodology  allocates  part  of  the  tax revenue  from IRAP  to  labour  income.  The remainder  is  attributed  to the  capital
income  of  corporations  or  the  self-employed.  The  2007  Budget  introduced  tax  cuts  to  the  labour  component  of  IRAP,  but  the  splitting
percentage utilized here dates back to 2005, so that the 2007 ITR on labour could be somewhat overestimated.

2)

The analysis of the ITR for Italy is complicated by various factors..For a full discussion see the 2006 edition of this report, p. 152, footnote 2. 

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In the late 1990s, Italy displayed one of the highest levels of environmental taxation in the EU, mainly on account of
elevated energy taxes. Environmental tax revenues have, however, declined considerably since then, as a percentage
of GDP, and are now in line with the EU average.

Current topics and prospects; policy orientation

The  2009  Budget  Law  contained  few  key  measures  as  the  government  had  brought  forward  the  main  budgetary
adjustment effort to the summer. In particular, in June 2008, the government had issued a decree introducing a 5.5
point surcharge on the CIT, applicable to companies operating in the oil and gas and electricity sector ('Robin tax').
The decree also stipulated a compulsory inventory revaluation, with the resulting book profits taxed at 16 %.

A  number  of  measures  targeted  banks  and  insurance  companies.  These  may  now  deduct  only  96 %  of  interest
expenses (97 % for 2008) and face tighter rules on bad debt provisions. A new anti-avoidance rule stipulates that
foreign companies are deemed to be resident for tax purposes if directly or indirectly controlled by Italian resident
persons. 

The 2009 budget also prolonged until 2011 the measures supporting housing renovation, i.e. the 36 % PIT credit on
renovation  expenses,  and  the  reduction  to  10 %  of  the  applicable  VAT  rate;  a  further  provision  introduced  tax
incentives on the purchase of household appliances and furniture. The budget law also cut excise duties on gas for
industrial use and taxes and social contributions due by road haulage operators, in order to neutralise the effect of
higher oil prices on VAT revenue from oil products. In addition, a 2008 law substantially cut housing taxes, freeing
the first property owned from the ICI property tax. A cap on the interest rate for variable-rate mortgages was also
introduced; banks will be reimbursed through tax credits. Finally, an April 2009 law paves the way for introduction
of fiscal federalism in Italy.

Main features of the tax system

Personal income tax

In  2009,  PIT  rates  range  from  23 %  to  43 %;  the  top  rate  applies  to  incomes  above  € 75 000.  Regions  and
municipalities  levy  surcharges  on  the  PIT  (ranging  from  0.9 %  to  1.4 %  for  regions  and  up  to  0.5 %  for
municipalities). The tax is withheld at source for salaried workers. Individuals are taxed on their worldwide income,
subject  to  exemptions,  such  as  capital  gains  on  property  held  for  longer  than  five  years  or  used  as  a  principal
dwelling. Individuals earning professional and business income are also subject to IRAP. Professional fees paid by
companies, businesses and professionals are subject to an advance withholding tax at a 20 % rate.

All categories of capital income are taxed. Final withholding tax rates of 12.5 % and 27 % apply, depending on the
duration  and  type  of  the  investment.  As  from  2009,  49.72 %  (previously  40 %)  of  the  gains  realised  on  qualified
shareholdings are taxed at basic PIT rates; capital gains on non-qualified shareholdings and bonds are instead taxed
at 12.5 %. The 2008 'summer decree' abolished tax breaks on stock options, now taxed as ordinary labour income. 

Corporate taxation

Company taxation has been subject to several reforms. From 1997 to 2003 a dual income tax (DIT) model was in
force, with a special regime for new entrepreneurial activities and a tax credit for the hiring of new employees. Since
the end of 2003 the corporate tax (IRPEG) and the DIT have been replaced by a new corporate income tax, IRES,
with a statutory tax rate set at 27.5 % (progressively reduced from 37 % in the preceding years). A special regime

3)

The Italian authorities have suggested an alternative methodology for calculating the ITRs on labour and capital , in order to better reflect
the features of the Italian self-employed sector (see Annex B for an example of Tables C and D calculated following this approach). Despite
its merits this methodology has not been followed in order to safeguard maximum comparability with the other Member States.

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exists for investment funds and for non-operating companies, for which a minimum taxable income is presumed.
Pension funds are subject neither to IRES nor to IRAP (see below), but pay a final 11 % tax on the yearly net result.
In addition, a tonnage tax regime exists for shipping companies.

Resident companies are taxed on their worldwide income, non-resident entities on income arising in Italy. Losses
can be carried forward for five years (indefinitely if realised in the first three years of operation). The treatment of
capital gains depends on whether the assets are covered by the participation exemption regime. Under this rule, 95 %
of gains on the sale of shares or equivalent financial instruments are exempted from taxes after a one-year holding
period (under some conditions). Other types of capital gain are taxed as ordinary income, but the payment of the tax
due may be spread over four years. Group consolidation is allowed both at the domestic level and worldwide, if the
parent company controls at least 50 % of the subsidiary. Finally, companies located in particularly depressed areas of
the  Mezzogiorno  may  apply  for  a  tax  credit  on  investments  carried  out  in  the  2007–2013  period,  with  certain
exceptions;  an  additional  10 %–40 %  tax  credit  on  R&D  spending  can  be  granted  for  activities  carried  out  in
2007–2009. 

IRAP, introduced in 1998, taxes the net production value, i.e. the difference between the value of production and
production inputs excluding personnel and interest costs as well as losses on bad debts. The basic 3.9 % rate can be
augmented or reduced by up to one percentage point by the regions. The non-deductibility of labour and financial
costs  results  in  a  wide  base;  indeed,  typically  IRAP  raises  more  revenue  than  the  CIT.  Since  2007,  social
contributions, certain training costs incurred on new employees, the costs of R&D personnel , and a basic amount
for each employee have been made exempt, and since 2009, 10 % of  IRAP paid by employers is deductible from PIT
and CIT. Special rules apply to SMEs. 

VAT and excise duties

The  standard  VAT  rate  is  20 %.  A  reduced  (10 %)  and  a  super-reduced  (4 %)  rate  exist.  The  super-reduced  rate
applies mostly to staple foodstuffs, newspapers, some medical appliances, and residential housing; while the reduced
rate  generally  applies  to  non-luxury  housing,  other  foodstuffs,  electricity,  mineral  oil,  medicines  and  artistic
performances.

Wealth and transaction taxes

No  wealth  taxes  as  such  exist.  Until  recently,  the  ICI  property  tax  represented  an  important  revenue-raising
instrument, but its scope has been restricted by the 2008 reform. Transaction taxes exist, applying e.g. on property
transfers; stamp duties are often due on official documents.

Social contributions

Several compulsory contributions exist, depending on the type and size of the business and the characteristics of the
employee. The aggregate rates range from 40 % to 45 % approximately. 

Taxation trends in the European Union                 181

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Developments in the Member States

<@>TAB_PRINT_LV.pdf

Latvia

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
12.6
8.2
2.9
0.8
0.7

13.2
8.6
3.3
0.5
0.8

Ranking 1)
22
10
17
19
19

12.3
7.0
3.4
0.4
1.4

7.3
5.6
1.6
0.2

9.9
7.4
2.5
0.0

14.6
n.a.
5.0
9.9
n.a.

11.3

15.3
15.2
7.4
7.8
0.1

2.9
1.7
1.6
0.2
0.0
1.2

0.0

11.8
6.7
3.1
0.4
1.5

7.6
5.5
1.9
0.2

9.2
6.8
2.4
0.0

14.4
n.a.
4.9
9.2
n.a.

10.6

14.6
14.5
6.8
7.7
0.1

3.3
2.0
1.9
0.1
0.0
1.3

0.0

11.2
6.7
3.1
0.4
1.0

7.8
5.6
2.0
0.2

9.3
6.9
2.4
0.0

14.1
n.a.
4.9
9.3
n.a.

10.6

14.6
14.6
6.9
7.7
0.1

3.1
2.2
2.0
0.2
0.0
0.8

0.0

12.1
7.2
3.3
0.5
1.1

7.6
5.8
1.5
0.2

8.9
6.4
2.4
0.0

14.6
n.a.
5.1
8.9
n.a.

11.4

14.6
14.5
6.5
8.0
0.1

2.5
1.7
1.5
0.1
0.1
0.9

0.0

11.9
7.0
3.5
0.5
1.0

7.9
5.9
1.8
0.2

8.7
6.3
2.4
0.1

14.5
n.a.
5.1
8.7
0.2

11.3

14.6
14.5
6.3
8.1
0.1

2.6
1.9
1.8
0.0
0.1
0.8

0.0

12.7
7.8
3.6
0.5
0.9

7.9
5.7
2.0
0.2

8.4
6.1
2.3
0.1

15.4
n.a.
4.9
8.4
0.4

12.2

14.0
13.9
6.1
7.8
0.1

2.8
2.1
2.0
0.0
0.1
0.7

0.0

8.5
6.0
2.3
0.2

8.8
6.3
2.4
0.1

9.2
6.1
2.7
0.4

8.7
6.3
2.4
0.1

% of GDP
16.0
n.a.
5.4
8.7
0.4

16.1
n.a.
5.2
8.8
0.4

% of GDP
11.9

12.7

14.7
14.6
6.4
8.2
0.1

3.0
2.4
2.3
0.1
0.1
0.6

0.0

14.6
14.6
6.3
8.3
0.1

4.0
2.9
2.7
0.1
0.1
1.0

0.0

€ bn
2.7
1.7
0.6
0.2
0.2

1.9
1.3
0.6
0.1

1.8
1.3
0.5
0.0

3.4
n.a.
1.1
1.8
0.1

2.5

3.1
3.1
1.3
1.7
0.0

0.8
0.6
0.6
0.0
0.0
0.2

6.4

0.4
0.4

0.1
0.0

21
18
22
23

20
14
18
26

21
n.a.
6
18
9

14

18
16
15
13
26

25
26
23
23
27
20

24

24
19
11
21
11

20
19

TOTAL

29.5

28.5

28.3

28.5

28.5

29.0

30.4

30.5

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.4
1.8
-
0.3
0.2

18.7
36.7
11.2
6.7
8.6
1.1

6.9
-2.4

2.2
1.6
-
0.3
0.2

17.5
36.5
11.5
7.0
8.8
0.7

8.0
-1.0

2.3
1.8
-
0.3
0.2

17.4
37.8
9.6
7.0
8.3
1.1

6.5
-1.3

2.5
2.0
-
0.4
0.2

18.6
36.6
8.2
5.4
6.6
0.7

7.2
-1.2

2.6
2.1
-
0.4
0.1

18.5
36.7
8.4
5.9
8.0
0.5

8.7
-0.2

2.7
2.2
2.2
0.3
0.1

20.2
33.2
9.6
7.2
9.6
0.5

10.6
2.2

% of GDP
2.1
1.7
1.7
0.3
0.1

2.4
2.0
2.0
0.3
0.1

%
19.6
31.0
14.6
10.8
13.0
1.7

10.2
9.9

20.1
33.1
11.0
8.8
11.1
1.0

11.9
6.5

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

182

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Developments in the Member States

Part III

LATVIA

Overall trends in taxation

Structure and development of tax revenues

The ratio of total taxes to GDP in Latvia was 30.5 % in 2007, which is the fourth lowest in the EU after Romania,
Slovakia and Lithuania. The tax ratio in neighbouring Estonia is higher by 1.5 percentage points of GDP.

The  structure  of  taxation  has  undergone  significant  changes  since  2000.  As  a  share  of  GDP,  social  security
contributions,  particularly  those  paid  by  employers,  have  been  cut  notably  while  indirect  taxes  have  tended  to
increase  and  direct  taxes  revenue has gone up significantly. In 2007 indirect taxes constituted the most important
source  of  tax  revenues  with  a  41.2 %  share  of  total  revenue,  which  is  2.8 %  higher  than  the  EU-27  average.  The
predominance  of  indirect  taxation  is  a  common  feature  of  the  tax  systems  of  the  new  Member  States:  out  of  ten
countries with the highest share of indirect taxation, only two joined the Union before 2004. Direct taxes contribute
30.2 % of total revenue compared with the 32.3 % EU-27 average. However, in recent years the share of direct taxes as
a percentage of GDP has increased gradually, from 7.3 % in 2000 to 9.2 % in 2007. Most notably, CIT yielded 2.7 % of
GDP in 2007, a 50 % increase in three years despite an unchanged tax rate. This value is in line with neighbouring
Lithuania but well above the one recorded in Estonia. As mentioned above, revenues from social contributions have
been declining quite markedly; as a share of total tax revenues they decreased from 33.5 % of the total in 2000 to
28.6 % in 2007. This is due to an overall reduction of the rate of social insurance contributions, from 36 % to 33.09 %,
implemented over several years (2000, 2001 and 2003).

There  are  only  central  government  taxes  in  Latvia  as  local  governments  do  not  have  any  fiscal  autonomy.
Nevertheless, they ultimately receive 17.8 % of the total tax revenues, a much higher value than the EU-27 average
(11.1 %). Since 2006, the bulk of local government receipts are obtained through a majority share of PIT revenue
(increasing progressively from 73 % in 2005 to 83 % in 2009).

As in several other Member States the tax ratio tended to increase from 1996 onwards and decline around the turn of
the century. In Latvia, the decline started in 1999 and was sizeable and rapid (over 5 % of GDP, equivalent to around
one  sixth  of  the  total,  in  just  three  years).  However,  since  2002  a  steady  upward  trend  has  been  recorded  with  a
cumulative effect of 2.3 percentage points until 2007, due essentially to higher VAT and CIT revenue. The growth in
the  revenue  ratio  between  2003  and  2007  is  also  linked  with  a  marked  acceleration  in  GDP  growth,  which  has
notably contributed to the pickup in CIT revenues since 2003.

Taxation of consumption, labour and capital; environmental taxation

The  level  of  Latvian  taxes  on  consumption  as  a  share  of  GDP  is  slightly  below  the  EU-27  average.  The  ITR  on
consumption  is  2.6 %  below  the  EU-27  average,  also  owing  to  a  somewhat  larger  share  of  consumption  in  GDP.
Consumption tax revenue peaked at 12.7 % of GDP in 2006 after two years of growth, but declined markedly in the
following year reaching 11.9 % of GDP.

The  ITR  on  labour  is,  at  31.0 %,  more  than  three  percentage  points  below  the  EU-27  average.  It  has  declined
markedly, by almost seven percentage points, from its 2002 peak. Over the past decade, employers' social security
contributions have been brought down, while employees' contributions have remained constant, as a percentage of
GDP.

After  a  five-year  decreasing  phase  and  an  8.2 %  trough  in  2003,  the  ITR  on  capital  has  trended  clearly  upwards,
reaching 14.6 % in 2007. This still represents one of the lowest rates of the ITR on capital in the EU, as the EU-25

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Part III

Developments in the Member States

average is 28.7 %. The ITR on capital income of households and the self-employed is significantly below the EU-25
average,  but  also  considerably  lower  than  in  the  other  Baltic  States,  probably  due  to  a  number  of  exemptions  for
personal capital income.

Revenue from environmental taxes has tended to decrease from 2005 and remains one of the lowest in the EU with
2.1 % of GDP.

Current topics and prospects; policy orientations

During 2008, in order to counteract the effects of the global financial crisis and to shift the tax burden from taxes on
production factors to consumption taxes, the government introduced several new tax measures with an effect from
January  2009.  These  include  a  reduction  of  the  PIT  rate  by  two  percentage  points  and  an  increase  in  basic
allowances. 

The  standard  VAT  rate  was  increased  by  three  percentage  points  from  18 %  to  21 %.  The  reduced  VAT  rate  was
increased from 5 % to 10 %. Moreover, various types of goods have been made ineligible for the reduced rate. Finally,
excise duties on fuel, coffee, smoking tobacco, alcohol and non-alcoholic beverages were increased in February 2009. 

Main features of the tax system

Personal income tax

Latvia  reduced  the  PIT  tax  rate  from  25 %  to  23 %  from  1  January  2009.  PIT  allowances  such  as  the  basic  tax
allowance, the allowance for dependent persons and the disability allowances were increased by 12.5 %.

The PIT rate on individuals' business income was reduced from 25 % to 15 %. If the income derived by a resident
taxpayer consists of both income subject to PIT at the 15 % rate and other income (which remains subject to a 23 %
rate), allowances and deductions are to be allocated proportionally to each part of the income.  

Latvian residents are taxed on their worldwide income. Dividends from companies resident in the EU or the EEA
paid to a resident personal shareholder are tax free; otherwise the dividends are taxed at 10 % rate. Interest payments
and insurance premiums received by resident individuals are exempt in case they are paid out by credit institutions
or  insurance  companies  that  are  established  in  Latvia,  the  EU  or  the  EEA.  Outbound  interest  payments  to  non-
resident individuals are generally taxed at source at a 23 % rate. Individuals resident in the EU or EEA that receive
more than 75 % of their income in Latvia, are granted nearly all tax exemptions. Furthermore, the income obtained
as a result of inheritance is exempt, except for author's copyrights. 

Gains from the disposal of immovable property are only taxable if the property has been in the resident’s ownership
for less than 12 months.

Corporate income tax

Latvia has reduced its corporate income tax rate from 25 % in 2001 to 22 % in 2002, then to 19 % in 2003 and finally
to  15 %  since  2004.  The  tax  is  levied  on  the  income  of  resident  companies  (with  some  exemptions)  and  of  non-
resident companies operating through a permanent establishment in Latvia. 

Dividends paid by a resident company to a non-resident corporate shareholder are subject to a 10 % withholding tax,
except  for  those  who  are  residents  of  EU  Member  States  or  EEA  countries  (the  participation  threshold  has  been
removed retroactively from 1 January 2006). However, if the distributing company is exempt from CIT or entitled to
the tax benefits linked to one of the economic zones or free ports, the dividends are taxable for the recipient. Interest
income paid out to a corporate non-resident related party is subject to a final 10 % withholding tax (5 % if paid by a

184

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Developments in the Member States

Part III

bank). Otherwise, interest income paid to non-residents is not subject to the withholding tax. Finally, Latvia applies
group taxation; losses can be offset between related companies.

As from 1 January 2009, in the case where a company is not distributing dividends partially or fully, taxable income
is reduced by the amount of interest, which the company would have to pay for an equal loan. The reference rate
used to calculate this notional interest amount is the Central Bank's average lending rate for national currency in
respective year.

VAT and excise duties

The standard VAT rate is 21 % from 1 January 2009 (it had been 18 % since 1995). The reduced VAT rate is 10 %
(5 % prior to 2009) and applies to goods such as medicines, medical equipment, certain products for infants, inland
public transport services, and the supply of thermal energy, electricity and natural gas to individuals. Periodicals are
subject to the 10 % reduced rates until the end of 2009. Excise rates on tobacco were increased gradually and have
reached the EU minima.  The excise rate on petrol, too, now exceeds the EU minimum.

Social contributions and other taxes

Since  1995,  a  pension  system  based  on  the  concept  of  notional  defined-contribution  (NDC)  accounts  is  in  force.
Unlike in the previous PAYG system, the benefits are calculated on the basis of a person’s contributions to a notional
individual  account,  utilising  a  rate  of  return  determined  by  the  government  taking  into  account  economic  and
demographic  indicators.  No  real  funds  are  accumulated  into  the  accounts,  and  financing  the  current  cohort  of
retirees is based on payroll contributions. The contribution rate is currently 33.09 %. This rate includes the 24.09 %
rate that falls to employers and the 9.0 % rate payable by employees. The rate for the self-employed is marginally
lower (30.48 %). Social security contributions paid by the self-employed are payable from annual income equal to 12
times the minimum monthly wage (LVL 2 160 in 2009). 

A property tax is applicable to land, buildings and constructions. Its rate was reduced over the years from 4 % to
1.0 %  currently.  The  rate  is  applied  to  the  cadastral  value  of  property.  It  is  not  imposed  on  houses  owned  by
individuals for residential purposes.

Taxation trends in the European Union                 185

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Developments in the Member States

<@>TAB_PRINT_LT.pdf

Lithuania

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
12.0
8.2
2.9
0.4
0.5

11.4
7.6
2.9
0.4
0.5

Ranking 1)
24
11
15
27
22

12.6
7.6
3.2
1.2
0.6

8.4
7.7
0.7
0.1

9.4
8.4
0.8
0.1

12.7
n.a.
6.1
11.6
n.a.

11.8

16.3
16.3
8.4
7.8
0.0

2.3
1.5
0.7
0.1
0.6
0.9

0.3

12.2
7.3
3.3
1.0
0.6

7.8
7.2
0.5
0.0

8.9
8.0
0.8
0.2

12.2
n.a.
5.7
11.0
n.a.

11.5

15.4
15.3
8.0
7.3
0.1

2.0
1.3
0.5
0.2
0.5
0.7

0.3

12.4
7.4
3.2
1.2
0.6

7.5
6.9
0.6
0.0

8.6
7.8
0.7
0.1

15.2
n.a.
2.8
10.6
n.a.

11.7

14.9
14.7
7.8
6.9
0.2

2.0
1.2
0.6
0.3
0.4
0.7

0.2

11.7
6.7
3.3
1.1
0.6

8.0
6.5
1.4
0.0

8.5
7.7
0.7
0.1

15.2
n.a.
2.6
10.4
n.a.

11.1

14.6
14.4
7.7
6.7
0.2

2.5
1.9
1.4
0.2
0.3
0.6

0.1

11.2
6.5
3.0
1.1
0.6

8.7
6.8
1.9
0.0

8.4
7.5
0.8
0.1

15.0
n.a.
2.8
10.3
0.2

10.6

14.7
14.5
7.6
7.0
0.2

3.1
2.4
1.9
0.3
0.2
0.7

0.1

11.4
7.1
2.9
0.8
0.5

9.0
6.9
2.1
0.0

8.1
7.3
0.7
0.1

15.3
n.a.
2.8
10.1
0.4

10.8

14.4
14.3
7.3
6.9
0.2

3.3
2.7
2.1
0.4
0.2
0.6

0.0

9.6
6.8
2.8
0.0

8.4
7.5
0.8
0.1

9.3
6.7
2.6
0.0

8.6
7.7
0.8
0.1

% of GDP
15.9
n.a.
3.0
10.6
0.4

16.0
n.a.
2.9
10.3
0.3

% of GDP
11.4

10.9

14.6
14.4
7.6
6.9
0.2

4.0
3.4
2.8
0.3
0.3
0.6

0.1

14.6
14.4
7.7
6.7
0.2

3.9
3.3
2.6
0.3
0.3
0.6

0.0

€ bn
3.4
2.3
0.8
0.1
0.2

2.6
1.9
0.7
0.0

2.4
2.2
0.2
0.0

4.5
n.a.
0.9
3.0
0.1

3.3

4.2
4.1
2.2
1.9
0.1

1.1
0.9
0.7
0.1
0.1
0.2

8.5

0.5
0.5

0.0
0.0

20
15
24
26

22
10
26
25

22
n.a.
17
15
4

16

17
17
11
20
21

26
25
25
19
24
26

25

26
22
12
26
13

24
16

TOTAL

30.1

28.6

28.4

28.1

28.3

28.5

29.4

29.9

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.4
1.8
-
0.7
0.0

18.0
41.2
7.2
4.5
3.9
2.5

4.2
-4.5

2.5
1.8
-
0.7
0.0

17.5
40.2
5.9
3.7
2.5
2.5

6.7
-2.4

2.8
2.0
-
0.7
0.0

17.9
38.1
5.7
3.6
2.6
2.2

6.9
-1.4

2.8
2.0
-
0.7
0.0

17.0
36.9
7.1
5.3
5.7
1.8

10.2
2.1

2.7
1.8
1.7
0.8
0.1

16.1
36.0
8.5
6.6
7.2
2.0

7.4
2.5

2.3
1.7
1.7
0.5
0.1

16.5
34.9
9.1
7.4
8.0
2.5

7.8
3.2

% of GDP
1.8
1.6
1.6
0.1
0.1

1.8
1.6
1.6
0.1
0.1

%
17.9
32.3
12.1
10.2
10.7
3.3

8.9
6.1

16.7
33.6
11.6
9.9
10.8
2.6

7.8
4.1

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

186

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Developments in the Member States

Part III

LITHUANIA

Overall trends in taxation

Structure and development of tax revenues

Lithuania  exhibits  the  third  lowest  total  tax  burden  (including  social  contributions)  in  the  EU  (29.9 %  of  GDP
against an EU-27 average of 37.5 %). This level is below those in the other Baltic States.

Lithuania's reliance on indirect taxes is roughly in line with the EU-27 average. However, compared to the late 1990s,
the share of indirect taxes in the total has decreased, while the EU-27 average has increased slightly. Given the light
overall taxation, at 12.0 % of GDP, the level of indirect taxes falls well below the EU-27 average (14.3 %). Direct taxes
represent  9.3 %  of  GDP  (EU-27  12.4 %)  while  social  security  contributions  also  yield  much  less  than  the  average
(8.6 %,  EU-27  11.0 %).  The  tax  mix  has  somewhat  shifted  towards  direct  taxes  and  away  from  social  security
contributions  since  2000;  however,  reforms  introduced  recently  will  most  probably  show  a  drop  in  the  weight  of
direct taxation, when the data for 2009 become available.

The proportions of total tax revenue received by central government (53.1 %) and local authorities (10.1 %) lie below
the EU-27 averages of 59.4 % and 11.1 %, respectively. In Lithuania, the proceeds from the personal income tax are
shared  between  central  government,  local  government  and  the  social  security  fund.  The  national  budget  receives
70 %  of  collected  personal  income  tax,  while  the  remaining  30 %  goes  to  the  compulsory  health  insurance  fund.
About two thirds of the funds accruing to the national budget are directed to the local budgets and the remainder to
the central government. These proportions are established by law and revised annually. The corporate income tax
conversely accrues entirely to the central government. 

Despite  accelerating  growth,  from  2000  to  2003  the  already  low  overall  tax  burden  declined  further,  by  two
percentage points of GDP, but has been picking up moderately since then, so that the overall tax ratio is currently
roughly on a par with the 2000 level. Revenues from CIT in particular grew robustly, from a very low 2001 trough
(0.5 % of GDP) to a 2.6 % level in 2007, which nevertheless represented one of the lowest in the EU. This dynamism
is  linked  to  the  growth  upswing  after  the  1999  recession  and  to  base-broadening  measures,  which  more  than
compensated  for  the  2002  cut  in  the  CIT  rate  from  24 %  to  15 %.  In  contrast,  revenue  from  the  PIT  and  from
employers' social contributions has declined fairly markedly since 2000.

Taxation of consumption, labour and capital; environmental taxation

The ITR on consumption, at 17.9 %, is the fourth lowest in the EU (EU-27 22.2 %). The ITR declined until 2004, but
the trend has reversed since then owing to strong VAT receipts. 

Overall, labour taxes bring in almost half of all revenues, over the EU average (48.9 %, EU-27 45.2 %). At 32.3 %, the
ITR on labour is lower than the EU average (34.4 %). It has been decreasing steadily and forcefully from its 41.2 %
peak in 2000, due notably to the increase in basic tax allowances and the successive cuts in the PIT rate. 

Taxes on capital are the second lowest in the EU in revenue terms, yielding only slightly less than half of the EU-27
average in GDP terms (3.9 % v 8.0 % for the EU-27) and providing just 12.9 % of all tax receipts (compared with
21.3 % for the EU-27). Despite the recent strong revenue increase, taxes on corporations remain moderate, while the
revenue from capital income taxes on the self-employed and households is among the lowest in the EU. The self-
employed, notably, have benefited from favourable tax law provisions (their gross incomes was taxed, until 2009, at
15 %) and from 'business certificates', which allow small businesses to pay a small lump sum tax instead of standard
income tax. The capital income of households is also subject to the lower 15 % rate. Wealth taxes stand at less than

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Part III

Developments in the Member States

one third of the EU-27 average. All of this is reflected in a low ITR on capital of 12.1 %, a ratio which has however
more  than  doubled  since  2002  on  the  back  of  both  strong  economic  growth  and  the  base-broadening  measures
mentioned.

At 1.8 % of GDP, revenue from environmental taxation is the second lowest in the EU, due in particular to the very
low revenue from transport taxes (0.1 % of GDP, EU-27 0.7 %). Since 2003, environmental tax revenues, as a share of
GDP, have fallen by more than one third.

Current topics and prospects; policy orientation

The end of 2008 brought significant changes in the tax code as, in the wake of the global financial crisis; Lithuania
decided to shift the tax burden from labour to consumption and the corporate sector. In the domain of personal
taxation,  Lithuania  is  continuing  its  policy  of  aggressive  tax  cuts.  After  cuts  in  2006  and  2008,  the  PIT  rate  was
slashed  to  a  flat  15%  as  from  1  January  2009.  However,  a  compulsory  health  insurance  contribution  of  6 %  was
introduced, bringing the combined rate on employment income to 21 % — still below the previous 24 % rate, which
included  both  the  PIT  and  the  health  insurance  component.  Significant  adjustments  have  also  been  made  in  the
social security system, mainly with the aim of better integrating in the system various categories of self-employed
persons (athletes, entertainers, owners of independent business activities or royalties, lawyers, notaries and bailiffs,
farmers). 

In  contrast,  the  corporate  income  tax  rate  has  been  increased  from  15%  to  20%  from  1.1.2009.  Moreover,  some
businesses that were until now exempted from the CIT, like credit unions and certain agricultural partnerships, have
become liable to the tax. However, significant investment incentives have been simultaneously introduced for the
period up to 2013. 

Finally,  the  standard  VAT  rate  has  been  increased  and  the  reduced  rates  have  been  abolished  (additional  details
below). The tax on beneficial use of public property and an array of excise duties were also hiked. 

Main features of the tax system

Personal income tax

Apart from the changes in the rates mentioned above, the latest reform has restructured tax allowances. The basic
personal allowance applies to employment income only and is determined on a sliding scale, declining as income
increases.  No  basic  personal  allowance  is  granted  to employees  earning  more  than  LTL 3 150  (€ 910)  monthly.  A
number of allowances were abolished (interest on new mortgages on residential property acquired after 1.1.2009,
expenses  for  personal  computers  and  Internet  access)  or  reduced  in  scope  (expenses  for  professional  training  or
higher education). The tax exemption of benefits from life insurance companies has now been reduced and subjected
to a number of conditions.

The 15 % tax rate also applies to self-employed income (previously, individual entrepreneurs were taxed either at
15 %  on  a  gross  basis  or  at  24 %  on  a  net  basis).  The  self-employed  are,  however,  also  subject  to  a  9 %  health
insurance  contribution  (calculated  on  their  gross  income).  In  addition,  dividend  income  is  now  taxed  at  a  20 %
(instead of a 15 %) rate and is subject to the general 6 % health contribution. Royalties continue to be taxed at 15 %,
but the health contribution rate, again, applies. 

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Developments in the Member States

Part III

Corporate taxation

The corporate income tax rate was progressively reduced from 29 % in 1995 to 15 % in 2002, but since the beginning
of 2009 has been increased to 20 %. Small companies with up to 10 employees and taxable income not exceeding
LTL 500 000 — approximately €145 000 —  benefit, however, from a lower 13 % rate.

From 2009 to 2013, an up to 50 % reduction in taxable profit, subject to conditions, is granted to firms acquiring
assets  such  as  plant  and  machinery,  structures,  ICT  equipment,  and  rights  on  intangible  assets.  Companies
employing 20 % or more disabled persons also benefit from generous tax credits. As from 2005 the profits of 'social
enterprises' are taxable at a 0 % tax rate.

Lithuania adopts a modified classical system whereby dividends are taxed both at the level of the company and in the
hands of the shareholder, in the case of a physical person. Dividends distributed to another company are subject to
the  20 %  corporate  income  tax  which  is  withheld  by  the  distributing  company,  unless  participation  exemption
applies. A 10 % withholding tax will continue to be applied to interest (with some exceptions) and royalties. Trading
losses can be carried forward for five years, but not back. Both straight-line and declining-balance depreciation are
permissible,  at  quite  generous  rates.  Since  2007,  capital  gains  on  shares  of  EEA-registered  entities,  or  countries
having a tax treaty with Lithuania, are exempt if they are subject to corporate income taxation and the transferring
entity has held more than one quarter of the capital for two years. 

A 'Social tax' was levied in 2006-07 to ensure the financing of social programs and of measures against poverty and
social separation. The tax was de facto equivalent to a surcharge on the CIT. The rate was 4 % in 2006 and 3 % in
2007.

VAT and excise duties

As from 1 January 2009, the standard VAT rate has been increased by one point to 19 %. Furthermore, the 9 % rate
applying to construction services and the 5 % super-reduced rate have been abolished, so that these goods are now
taxed at 19 %, although short transitional regimes apply to some of these goods. Excise duties on alcohol, cigarettes,
and fuels have also been increased. 

Wealth and transaction taxes

Taxation of capital gains is included in computation of the personal income tax and corporate income tax. Land tax
is levied at 1.5 % of land value, while an immovable property tax ranges between 0.3 % and 1 % but applies only to
legal persons or premises used for economic activities. Inheritance tax is levied at 5 % and 10 %, while gifts are taxed
under the PIT. There is no net wealth tax.

Other taxes

The pollution tax is applied on emissions from stationary and mobile sources (automobiles equipped with an exhaust
emission neutralisation system are not subject to this tax), certain goods (e.g. batteries, mercury lamps), as well as
packaging.  The  amount  of  tax  depends  on  the  specific  pollution-related  indices  determined  by  state  institutions.
There is also a tax on State natural resources. 

Social contributions

The  general  rate  for  mandatory  state  social  insurance  contribution  stands  at  close  to  34 %,  of  which  employers
contribute  30.7 %  of  employees'  gross  wages  to  the  State  Social  Insurance  Fund  (SSIF),  while  employees  typically
contribute 3 % for compulsory health insurance. The general rate for the insurance covering professional diseases
and accidents at work stands at 0.3 %, but three special groups exist which are subject to different rates. 

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Part III

Developments in the Member States

<@>TAB_PRINT_LU.pdf

Luxembourg

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
12.9
5.8
3.7
1.3
2.1

12.7
5.7
3.8
1.1
2.0

Ranking 1)
19
27
6
15
8

14.0
5.6
4.5
1.5
2.3

15.0
7.2
7.0
0.9

10.1
4.4
4.5
1.2

26.5
n.a.
2.2
9.8
0.5

10.8

15.3
13.8
4.4
9.4
1.5

13.1
8.9
7.0
0.8
1.2
4.2

13.6
5.8
4.2
1.3
2.2

15.3
7.0
7.3
0.9

10.9
4.8
4.9
1.3

26.4
n.a.
2.2
10.7
0.4

10.6

16.0
14.6
4.8
9.8
1.4

13.1
9.2
7.3
0.9
1.1
3.9

13.0
5.8
4.4
1.1
1.7

15.4
6.4
8.0
1.0

10.9
4.8
4.8
1.3

26.0
n.a.
2.4
10.6
0.3

10.8

15.4
14.0
4.8
9.2
1.3

13.1
9.9
8.0
0.8
1.1
3.2

12.6
5.7
4.3
1.1
1.5

14.8
6.5
7.3
0.9

10.8
4.7
4.7
1.3

25.1
n.a.
2.3
10.5
0.3

10.6

15.3
13.9
4.7
9.2
1.4

12.2
9.3
7.3
0.9
1.1
2.9

13.4
6.0
4.6
1.1
1.7

13.1
6.6
5.7
0.8

10.7
4.7
4.7
1.3

24.8
n.a.
1.8
10.4
0.2

11.2

15.4
13.9
4.7
9.2
1.4

10.6
7.7
5.7
0.8
1.2
2.9

13.3
6.1
4.2
1.2
1.9

13.8
7.1
5.8
0.8

10.5
4.6
4.6
1.3

25.5
n.a.
1.7
10.2
0.2

10.9

15.4
14.0
4.6
9.4
1.4

11.2
8.0
5.8
1.1
1.1
3.2

13.2
7.5
5.0
0.7

9.9
4.3
4.4
1.2

13.6
7.4
5.4
0.8

10.2
4.4
4.6
1.2

% of GDP
24.9
n.a.
1.6
10.0
0.2

24.3
n.a.
1.6
9.7
0.2

% of GDP
10.1

10.1

14.8
13.4
4.3
9.2
1.3

10.9
7.6
5.0
1.5
1.1
3.4

15.3
14.0
4.4
9.6
1.4

11.3
7.7
5.4
1.1
1.2
3.6

€ bn
4.7
2.1
1.3
0.5
0.8

4.9
2.7
2.0
0.3

3.7
1.6
1.7
0.4

9.0
n.a.
0.6
3.6
0.1

3.7

5.6
5.1
1.6
3.5
0.5

4.1
2.8
2.0
0.4
0.4
1.3

13.3

1.0
0.9

0.1
0.0

9
12
3
13

18
23
6
10

8
n.a.
21
16
26

26

16
18
23
10
10

5
5
3
9
14
4

16

12
2
1
24
24

4
18

Less: amounts assessed but unlikely to be collected

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

TOTAL

39.1

39.8

39.3

38.1

37.2

37.5

35.8

36.7

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.8
2.7
-
0.1
0.0

23.1
29.9
-
-
-
-

8.4
4.2

2.8
2.7
-
0.1
0.0

22.8
29.6
-
-
-
-

2.5
1.9

2.8
2.6
-
0.1
0.0

22.8
28.3
-
-
-
-

4.1
1.4

2.8
2.7
2.6
0.1
0.0

23.9
29.3
-
-
-
-

1.5
-1.5

3.0
2.9
2.9
0.1
0.0

25.3
29.5
-
-
-
-

4.5
-0.8

3.0
2.8
2.8
0.1
0.0

26.2
30.4
-
-
-
-

5.2
-0.7

% of GDP
2.6
2.4
2.4
0.2
0.0

2.6
2.5
2.5
0.1
0.0

%
26.9
31.2
-
-
-
-

5.2
1.9

26.3
30.7
-
-
-
-

6.4
0.8

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

LUXEMBOURG

Overall trends in taxation

Structure and development of tax revenues

At 36.7 %, the tax-to-GDP ratio in Luxembourg was below the EU-27 average (37.5 %). The ratio was lower than in
the three neighbouring countries — Belgium, France and Germany.

Direct tax revenues, which were 1.2 percentage points above the EU-27 average in 2007, have been on a downward
trend in recent years. Moderate personal income tax (PIT) nominal rates result in a share of PIT revenues in GDP of
7.4 % in 2007, below the EU-27 average (8.0 %). Despite relatively low rates the revenues from corporate income tax
(CIT) and excise duties are among the highest in the EU, which is partly due to the importance of the financial sector
in the economy and the high degree of openness of the economy leading to substantial earnings from cross-border
trade.  Revenue from  indirect  taxes  overall  lay  1.4  percentage  points below  the EU-27 average  owing  to  moderate
VAT nominal rates. 

Over two thirds of levies accrue to the central administration and over a quarter to the Social Security funds. At
1.5 % of GDP, tax revenues accruing directly to the local government are very low in comparison to the 4.3 % EU-27
average and decreased by around one quarter since 2000.

The overall tax burden started to decrease nearly continuously as of 2002. The lagged impacts of below potential
growth in 2001–2003 and the 2001 and 2002 cuts in PIT and CIT placed tax revenues on a downward trajectory, so
that by 2006 revenues from CIT as a percentage of GDP were down by more than one third from their 2002 peak. A
revenue rise on the back of economic growth above potential in the 2005–2007 period lead to an increase in the tax-
to-GDP ratio by nearly one percentage point in 2007.

Taxation of consumption, labour and capital; environmental taxation

Consumption taxes (10.1 % of GDP) were 2.3 percentage points below the EU-27 average in 2007. The interpretation
of  the  ITR  on  consumption  for  Luxembourg  is  affected  by  the  small  size  of  the  territory  and  the  high  degree  of
openness of the  economy.  In  particular,  purchases  of  excisable  goods  by  non-residents  (minus  purchases  of  these
goods by Luxembourg residents abroad) are likely to push upward the ITR on consumption. Overall, the ITR on
consumption stood at 26.9 % and is 4.7 percentage points above the EU-27 average (22.2 %).

Although it increased in recent years, the ITR on labour (31.2 %) was significantly lower than the EU-27 average
(34.4 %). The low level of labour taxation is a result of moderate levels of taxation of personal income and a relatively
low level of social contributions. 

Between 2000 and 2003, taxes on capital represented roughly one third of total revenue, the highest value in the EU.
Although the share of capital taxes in total revenue has slightly decreased to 30.7 % since 2002, it is still considerably
above the EU-27 average (21.3 %). This is nearly entirely related to the high proceeds of the CIT, which, despite a
decline compared to the beginning of the decade, remains among the highest in the EU as a share of GDP. The high
revenue from taxes on capital in general and the CIT in particular, is linked to Luxembourg's large financial sector
with a highly internationalised customer base.

Environmental taxation accounted for 2.6 % of GDP in 2007, down from 3.0 % in 2005. This drop, driven by lower
energy tax revenues, caused Luxembourg's environmental tax revenues to fall marginally below the EU-27 average
(2.7 %). 

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Developments in the Member States

Current topics and prospects; policy orientation

The Budget Bill 2009 introduces a certain number of changes in the area of taxation and notably reductions in the tax
burden on personal and corporate income.

As of 1 January 2009, PIT brackets are linearly indexed by 9 % without modifying the underlying tax rates in order to
avoid or reverse ‘bracket creep’ occurring because of non-indexation of tax brackets to inflation. In 2008, tax brackets
had already been adjusted by 6 % but prior to this they had not been adjusted for inflation since 2001. In addition
both the general tax allowance and the tax allowance for the retired of € 600 each are replaced by a tax credit of € 300.
The deduction of € 1 920 applied to unmarried taxpayers with dependent children is replaced by a tax credit of € 750. 

Also with effect of 1 January 2009, the CIT rate is reduced from 22 % to 21 %. The capital duty is abolished from the
same date. The motor vehicle tax on company cars, other than buses and taxis, used for the transport of employees is
no longer deductible from CIT. These cars also benefit from a subsidy of € 750 if they emit less than 120g CO2/km. 

The Budget Bill 2009 also contains measures to support the financing of owner-occupied dwellings, by increasing the
deduction ceiling for the one-off premium paid as part of a temporary life insurance policy and an extension of the
preferential tax treatment for the construction or renovation of owner-occupied dwellings (reduced 3 % VAT rate). 

The 80 % tax exemption for income and gains from intellectual property rights, introduced in 2008, is extended to
Internet  domain  names  from  1  January  2009.  In  addition,  qualifying  intellectual  property  is  exempted  from  net
wealth tax.

Main features of the tax system

Personal income tax

The  main  categories  of  income  are  employment  income,  business  income,  income  from  movable  capital  and
miscellaneous income. Taxable income is computed on a cash basis, except for business income (accrual basis) and
capital  gains  from  a  substantial  participation  (time  of  transaction).  The  top  marginal  rate  is  38 %,  applying  to
incomes  of  more  than  €  39 885.  In  general,  expenses  incurred  to  obtain  or  preserve  income  are  deductible  from
taxable  income.  In  addition,  a  resident  taxpayer  may  claim  deductions  for  special  expenses  and  an  allowance  for
extraordinary  expenses  from  his  aggregate  income.  Some  former  tax  allowances  have  taken  on  the  form  of  tax
credits. They notably refer to child benefits and the compensatory amounts attributed to monoparental taxpayers,
the employed and the retired. 

Married couples are jointly taxed, but a splitting system applies in the calculation of the tax due. Salaries, wages and
pensions derived from former employment are subject to a wage withholding tax. The PIT is increased by a 2.5 %
surcharge for the Employment Fund.

Dividends  and  interests  are  taxed  as  income  from  movable  capital.  Interest  payments  are  subject  to  a  10 %  final
withholding  tax.  Dividends  are  subject  to  a  15 %  withholding  tax  which  is  not  final.  Capital  gains  derived  from
speculative holdings and significant participation activities are subject to PIT.

Corporate taxation

Corporate income is subject to CIT, increased by a surcharge for the employment fund and a municipal business tax.
The corporate tax system is, in principle, classical. The tax on profit is calculated by adding up the general CIT rate of
21 % (previously 22 %), a 4 % solidarity tax surcharge for the employment fund (the effective rate is 21.84 %) and a
municipal business tax (which for Luxembourg City amounts to 6.75 %), taking the all-in effective rate to 28.59 %
(for Luxembourg City). For SMEs whose taxable income is not more than € 15 000, the basic rate is 20 %. 

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Part III

Luxembourg also applies a system of investment credits and provides for specific tax incentives for new industrial
investment (tax credit up to 12 %), venture capital investment and audiovisual investment (investment credit).

VAT and excise duties

Six  VAT  rates  exist.  The  standard  rate  is  15 %;  a  super-reduced  rate  of  3 %  applies  to  food  and  beverages,
pharmaceutical products, books and newspapers and passenger transport. A reduced rate of 6 % applies to gas, electric
power, flowers and labour-intensive services such as hairdressing and window cleaning. An intermediary rate of 12 %
applies to wine and coal. Finally, flat rates of 4 % or 9 % apply to farmers and foresters subject to a specific regime.

Regarding  excise  duties  on  car  fuels,  the  applicable  rate  for  diesel-driven  cars  amounts  to  €  305  per  1 000  litres
subsequent  to  an  increase  of  the  Kyoto  element  (environment  protection)  of  the  tax  rate  from  1  January  2008.
Tobacco  taxation  has  changed  from  1  February  2009.  The  new  excise  rates  applying  to  cigarettes  are  46.24 %
(proportional  element)  and  €  16.89  per  1 000  cigarettes  (specific  element).  The  excise  rates  applying  to  fine-cut
tobacco and other smoking tobaccos have been raised from 36 % to 37 %.

Wealth and transaction taxes

Resident corporations are subject to wealth tax on their worldwide net worth. The tax rate is 0.5 %. The taxable base
is determined as assets less liabilities. Since 2002, wealth tax may be reduced under certain conditions. From January
2006,  wealth  tax  applying  to  resident  individuals  was  abolished.  In  parallel  a  withholding  tax  on  interest  income
from savings of 10 % was introduced. 

Local taxes

The  most  important  local  tax  accruing  directly  to  municipalities  is  the  municipal  business  tax.  It  is  levied  on  all
business  establishments  located  in  Luxembourg.  As  explained  in  the  chapter  on  corporation  tax,  the  municipal
business tax adds on to the general corporate tax rate of 21 % and the solidarity tax surcharge of 4 %. 

Generally speaking, the volume of local taxes in terms of GDP is low compared to the EU average. Municipalities
derive the most important part of their funding from the Fonds Communal de Dotation financière. This is a special
fund redistributing part of income gathered by the central government from PIT, VAT, motor vehicle tax and excise
tax on alcohol to municipalities in addition to a direct allocation from the budget.

Social contributions

Social security contributions for pension, health insurance and family allowances are levied on the gross wage. The
pension scheme is financed by central government, employers and employees contributions. A contribution of 16 %
of  gross  wages  is  paid  by  both  employers  and  employees.  The  central  government  participates  with  8 %  of  total
contributions paid on salaries. The health care scheme is financed by central government, employers and employees
contributions. A health care contribution of about 5 % of gross wages is paid by both employers and employees. The
central government participates with 37 % of total contributions paid on salaries. For family allowances, the rate of
1.7 % is borne by the employee on his salary. 

The  1.4 %  contribution  rate  to long-term  care insurance is borne  by  the employees (levied  on total  gross income
including income derived from personal wealth). Unemployment benefits are paid from the Employment Fund. This
special fund centralises income from the solidarity tax paid by employers and employees, excise income from certain
mineral oil products and direct budgetary endowments from central government. 

Taxation trends in the European Union                 193

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Developments in the Member States

<@>TAB_PRINT_MT.pdf

Malta

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
15.2
7.7
3.4
3.6
0.5

15.3
8.0
3.1
3.7
0.5

Ranking 1)
8
15
8
2
23

12.6
6.0
2.5
3.7
0.3

9.2
5.6
2.9
0.7

6.4
2.8
2.8
0.8

28.2
n.a.
n.a.
n.a.
n.a.

12.1

9.7
9.0
2.8
6.2
0.7

6.3
5.2
2.9
1.1
1.2
1.1

0.0

13.3
6.4
2.8
3.7
0.4

10.2
6.2
3.2
0.8

6.9
3.1
3.1
0.7

30.4
n.a.
n.a.
n.a.
n.a.

12.7

10.7
10.0
3.1
6.8
0.8

6.9
5.7
3.2
1.3
1.1
1.3

0.0

13.6
7.0
2.7
3.6
0.4

11.4
6.1
3.9
1.4

6.5
2.9
2.9
0.7

31.5
n.a.
n.a.
n.a.
n.a.

13.4

10.2
9.5
2.9
6.6
0.7

7.9
6.4
3.9
1.4
1.1
1.5

0.0

12.9
6.2
2.7
3.6
0.4

12.0
6.3
4.5
1.2

6.5
2.9
2.9
0.7

31.4
n.a.
n.a.
n.a.
n.a.

12.4

10.3
9.5
2.9
6.6
0.8

8.7
7.1
4.5
1.5
1.1
1.6

0.0

14.9
7.4
2.8
3.9
0.8

11.4
6.4
4.1
0.9

6.5
2.9
2.9
0.7

32.5
n.a.
n.a.
n.a.
0.3

13.2

10.4
9.6
2.9
6.7
0.8

9.1
6.7
4.1
1.4
1.1
2.5

0.0

15.4
8.3
3.1
3.5
0.6

12.0
6.3
4.5
1.3

6.4
2.9
2.9
0.7

33.3
n.a.
n.a.
n.a.
0.5

14.4

10.3
9.4
2.9
6.6
0.8

9.1
6.9
4.5
1.4
1.1
2.2

0.0

12.2
6.4
5.0
0.8

6.2
2.8
2.8
0.6

13.6
5.9
6.7
1.0

5.9
2.6
2.6
0.6

% of GDP
34.2
n.a.
n.a.
n.a.
0.5

33.3
n.a.
n.a.
n.a.
0.4

% of GDP
13.9

14.0

10.2
9.3
2.8
6.5
0.9

9.5
7.4
5.0
1.4
1.1
2.1

0.0

9.4
8.6
2.6
5.9
0.8

11.4
9.3
6.7
1.5
1.0
2.1

0.0

€ bn
0.8
0.4
0.2
0.2
0.0

0.7
0.3
0.4
0.1

0.3
0.1
0.1
0.0

1.9
n.a.
n.a.
n.a.
0.0

0.8

0.5
0.5
0.1
0.3
0.0

0.6
0.5
0.4
0.1
0.1
0.1

1.9

0.2
0.1

0.1
0.0

8
19
2
8

25
26
17
17

3
n.a.
n.a.
n.a.
3

5

27
27
26
22
16

4
2
2
4
17
11

19

3
16
10
2
4

18
27

TOTAL

28.2

30.4

31.5

31.4

32.8

33.8

33.7

34.7

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

3.7
1.4
-
2.3
0.0

15.9
20.6
-
-
-
-

-
4.8

3.7
1.5
-
2.1
0.0

16.5
21.4
-
-
-
-

-1.6
-0.3

3.4
1.4
-
2.0
0.1

18.1
20.8
-
-
-
-

2.6
0.4

3.4
1.3
-
2.1
0.0

16.5
20.4
-
-
-
-

-0.3
-2.2

3.1
1.2
1.2
1.8
0.0

17.6
21.0
-
-
-
-

1.2
-3.2

3.3
1.3
1.3
1.8
0.2

19.7
21.3
-
-
-
-

3.5
-2.1

% of GDP
3.7
1.8
1.7
1.7
0.3

3.4
1.3
1.3
1.8
0.2

%
20.3
20.1
-
-
-
-

3.9
0.7

19.9
21.3
-
-
-
-

3.2
-1.3

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

MALTA

Overall trends in taxation

Structure and development of tax revenues

The  tax-to-GDP  ratio  (including  social  security  contributions)  of  Malta  was  at  34.7 %  in  2007,  2.8 %  percentage
points lower than the EU average (37.5 %). With respect to other countries bordering the Mediterranean, this level of
taxation is well below that of Italy, France, Spain and Cyprus, but somewhat higher than that of Greece.

Malta relies heavily on indirect taxes; their share of the total tax lies well above the EU average (Malta 43.7 %, EU-27
38.4 %), so that the overall taxation structure is similar to that in the United Kingdom (indirect taxes, direct taxes,
social contributions in a ratio of around 2:2:1), perhaps reflecting the fact that the Maltese tax system has its origin in
the former British system. Although the Maltese are, on the whole, relatively lightly taxed, indirect taxes therefore
absorb a proportion of GDP (15.2 %) which is higher than the EU average (14.3 %). The level of direct taxation is
also  slightly  higher  than  the  EU  average  (Malta  13.6 %,  EU-27  12.4 %)  while  social  security  contributions  yield
comparatively  little  revenue,  roughly  two  thirds  of  the  EU  average  in  GDP  terms  (5.9 %  of  GDP,  EU-27  11 %).
Within social security contributions, employees contribute somewhat below the European average (Malta 2.6 %, EU-
27 3.3 %), while employers contribute less than half the EU average (Malta 2.6 %, EU-27 6.6 %).

As  Malta  has  no  sub-central  level  of  government  collecting  taxes,  and  does  not  maintain  a  social  security  fund
separate from the central exchequer, 98.7 % of receipts are collected by central government (EU-27 average 59.4 %).

The country has experienced a more than 23 % increase in tax revenue when expressed in terms of its share of GDP
between 2000 and 2007. All categories of revenue have witnessed an increase, but this was most notable in direct
taxation; direct taxes revenue grew by over 48 %. This stems partly from increase in CIT arising from the broadening
of the base, and efforts to improve efficiency in collection. The increase in indirect taxes was 20.6 % while social
security revenue decreased by 7.8 %, being now one of the lowest values in the EU. 

Taxation of consumption, labour and capital

Taxes  on  consumption  generate  revenues  of  13.9 %  of  GDP  (EU-27  12.4 %),  having  increased  by  1.8 percentage
points since 2000. This is mainly due to the widening of the VAT base and the raising of excise duties to bring them
in  line  with  EU  minimum  rates.  The  ITR  on  consumption  (20.3 %)  also  reflects  this  rise,  having  increased  from
15.9 % in 2000. However, the rate remains among the lowest in the Union (EU-27 22.2 %), due partly to the high
ratio of consumption to GDP.

The  amount  of  revenue  raised  from  taxation  of  labour  is  the  lowest  in  the  Union  (Malta  9.4 %  of  GDP,  EU-27
17.2 %). This figure results from the fact that employer's social security contributions are low. The ITR on labour is,
at 20.1 %, some 14 percentage points below the EU average (34.4 %), the lowest in the EU by a wide margin.

The taxation of capital yields substantial revenue (11.4 % of GDP, EU-27 8 %), putting Malta in fourth place in the
EU. This is primarily due to the tax on corporations (at 6.7 % of GDP, the second highest revenue after Cyprus). By
contrast the revenue from taxation of the self-employed is below the Union average. Unfortunately, owing to data
limitations, no ITR on capital is available for Malta.

Environmental taxes are relatively high (Malta 3.7 % of GDP, EU-27 2.7 % of GDP) and have been increasing further
recently. The high level of environmental tax revenue is attributable to taxation on transport, which is the second

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Developments in the Member States

highest in the Union (1.7 % of GDP, EU-27 0.7 %), while revenue from taxation on energy is roughly equal to the EU
average (1.8 %, EU-27 1.9 %).

Current topics and prospects; policy orientation

In  2007  a  new  PIT  system  with  fewer  brackets  was  introduced.  The  2009  budget  has  further  increased  personal
income tax thresholds after once already increased in 2008. The new regulations also relieve family businesses as the
spouse's  salary  can  be  deducted  and  family  allowances  have  increased.  VAT  exemptions  have  been  extended  to
cultural services and to registration tax on trucks. In 2009 a primarily CO2 emission-based registration tax has been
introduced for vehicles in Malta. The travellers’ departure tax was abolished in November 2008.

Main features of the tax system

Personal income tax

As mentioned above, in 2009 the thresholds of the four bracket PIT system have been increased by around 4 % on
average,  while  the  rates  have  not  changed  (0 %,  15 %,  25 %  and  35 %).  The  0 %  rate  is  up  to  €  8 500  for  single
individuals  and  €  11 900  for  married  couples;  while  the  35 %  rate  applies  for  income  over  €  19 500  for  single
individuals and € 28 700 for married couples. Individuals who are ordinarily resident and domiciled in Malta are
taxable on their worldwide income e.g. from trades, professions, employments, interest, pensions, annuities, rents,
dividends and capital gains. Any income arising in Malta is always taxable in Malta. Apart from the basic personal
relief of € 8 500 for single individuals and of € 11 900 for married couples, the Maltese personal income tax system
does  not  offer  any  other  deductions  or  allowances  of  note.  However,  income  tax  paid  by  a  company  can  be  fully
attributed to shareholders following the distribution of dividends by a company. Under this system, dividends paid
by a company resident in Malta carry a tax credit equivalent to the tax paid by the company on its profits out of
which the dividends are distributed. Shareholders are taxed on the gross dividend at the applicable tax rates, but are
entitled to deduct the tax credit attaching to the dividend against their total income tax liability.

Corporate taxation

With  a  rate  of  35 %  (which  is  also  the  maximum  personal  tax  rate),  Malta  exhibits  one  of  the  highest  tax  rates
applicable to companies in the EU. However, Malta applies the full imputation system of taxation described above
and  there  would  be  no  further  tax  to  pay  when  dividends  are  distributed  to  shareholders.  Under  this  system,
dividends paid by a company resident in Malta carry a tax credit equivalent to the tax paid by the company on its
profits out of which  the dividends are distributed. Shareholders are  taxed on  the gross dividend at their personal
applicable tax rates, but are entitled to deduct the tax credit attaching to the dividend against their total income tax
liability.

Therefore the maximum rate of tax payable on company profits — taking into account the tax paid by the company
on its profits and the tax paid by the shareholders on dividends received — can never exceed 35 %. Trade losses may
be  carried  forward  indefinitely  while  carry-backs  are  not  permissible.  The  tax  code  is  restrictive  on  the  use  of
provisioning  for  tax  purposes  (for  doubtful  debts  or  investment  value  losses)  but  depreciation  allowances  are
available.  Capital  gains  realised  by  companies  are  aggregated  with  other  income  and  taxed  at  a  35 %  rate.  The
imputation system described above also applies with respect to profits distributed by companies arising out of such
gains. Certain tax incentives are available for enterprises involved in shipping, targeted industrial sectors and free
port activities.

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Part III

VAT and excise duties

The  standard  VAT  rate  is  18 %  with  a  5 %  reduced  rate  applicable  to  holiday  accommodation,  letting  of  sites  for
artistic  or  cultural  activities,  electricity,  printed  material,  medical  accessories  and  goods  intended  for  the  use  of
disabled persons. Zero-rated supplies include food, pharmaceutical goods, local transport and cultural services. VAT
was introduced in 1995, replaced with a sales tax following a change of government, following which the revenues
dropped by more than 1 % of GDP. A further change of government led to its reintroduction in 1999. 

Excise  duties  are  moderate  on  light  alcoholic  beverages,  close  to  EU  average  on  fuels  and  relatively  high,  in
comparison with other new Member States, on both strong liquors and tobacco. Both VAT and excise duties generate
revenues as a proportion of GDP comparable with the EU average, but other indirect taxes are well in excess of the
EU average (3.6 % of GDP, EU-27 1.6 %). This is due to high levels of import duties, stamp duty and car registration
duties. The latter also have the effect of raising the aggregate tax on transport above the EU average.

Environmental taxes

In September 2004 the so-called eco-contribution was introduced in Malta. It is chargeable on a number of white
goods, containers, batteries, tyres and other specified products that are deemed to result in waste. Currently taxes on
pollution yield 0.3 % of GDP, which is the fourth highest level in the EU.

Wealth and transaction taxes

There is no wealth tax but the transfer of immovable property by individuals and companies is normally subject to a
rate of 5 % of the transfer value (3.5 % on the first € 117 000 in the case of acquisitions for the purpose of establishing
the  purchaser's  own  residence).  While  there  is  no  withholding  tax  on  dividends  or  royalties,  the  distribution  of
untaxed corporate income, the interest paid by Maltese banks and government and the capital gains arising from the
disposal of shares in investment schemes are subject to withholding tax at 15 %.

Social contributions

Maltese  workers  are  covered  by  a  social  security  system  under  which  the  employee,  the  employer,  and  the
government each contribute 10 % of an employee's basic salary; the self-employed contribute at a rate of 15 %, which
is  matched  by  the  government,  with  contributions  capped  at  an  annual  maximum  of  € 1 681  for  employees  and
€ 2 522 for self-employed persons.

Taxation trends in the European Union                 197

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Developments in the Member States

<@>TAB_PRINT_NL.pdf

Netherlands

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

12.5
6.9
2.6
2.0
1.0

12.0
6.0
4.3
1.6

15.4
4.5
7.9
3.1

22.3
n.a.
1.4
15.4
0.8

11.7

20.4
17.5
4.5
13.0
2.9

7.8
5.6
4.3
-1.1
2.3
2.2

0.0

12.9
7.3
2.5
2.1
1.1

11.7
6.2
4.2
1.3

13.7
4.3
6.7
2.6

22.6
n.a.
1.4
13.7
0.7

11.9

18.0
15.6
4.5
11.1
2.4

8.4
6.2
4.2
0.1
1.9
2.2

0.0

12.7
7.2
2.5
1.9
1.1

11.8
6.8
3.6
1.4

13.3
4.3
6.4
2.5

22.5
n.a.
1.4
13.3
0.5

11.7

18.4
15.9
4.5
11.4
2.5

7.7
5.4
3.6
-0.1
2.0
2.3

0.0

12.7
7.3
2.4
1.9
1.1

11.0
6.5
3.0
1.4

13.8
4.3
6.7
2.8

21.6
n.a.
1.5
13.8
0.5

11.8

18.8
16.2
4.4
11.8
2.6

6.8
4.6
3.0
-0.4
2.0
2.1

0.0

12.9
7.3
2.6
2.0
1.1

10.7
6.0
3.3
1.4

13.9
4.3
6.9
2.7

21.6
n.a.
1.5
13.9
0.5

12.0

18.6
16.1
4.4
11.7
2.6

6.9
4.7
3.3
-0.5
1.9
2.2

0.0

12.9
7.2
2.5
2.1
1.1

11.7
6.6
3.6
1.5

12.9
4.0
6.4
2.5

22.6
n.a.
1.5
12.9
0.5

11.9

18.2
15.7
4.1
11.6
2.6

7.4
5.1
3.6
-0.5
1.9
2.3

0.0

% of GDP
13.1
7.6
2.4
2.1
1.0

13.1
7.4
2.5
2.2
1.0

Ranking 1)
17
17
22
10
14

11.9
7.0
3.6
1.3

14.1
4.6
6.5
3.0

12.3
7.4
3.5
1.3

13.5
4.5
6.2
2.8

% of GDP
23.6
n.a.
1.3
13.5
0.5

23.2
n.a.
1.3
14.1
0.5

% of GDP
12.2

12.2

19.7
17.0
4.7
12.3
2.7

7.1
5.1
3.6
-0.6
2.0
2.0

0.0

19.6
16.9
4.6
12.3
2.7

7.1
5.0
3.5
-0.6
2.0
2.1

0.0

13
11
11
4

8
22
2
1

10
n.a.
22
5
2

12

11
12
22
6
3

19
20
12
27
9
13

€ bn
74.2
42.9
13.8
11.7
5.8

69.9
42.2
20.1
7.6

76.8
25.8
35.3
15.6

133.6
n.a.
7.4
76.8
3.0

69.3

111.4
96.0
26.3
69.7
15.4

40.2
28.4
20.1
-3.3
11.6
11.8

TOTAL

39.9

38.3

37.7

37.4

37.5

37.6

39.1

38.9

11

220.8

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

3.9
1.9
1.3
1.4
0.7

23.7
34.5
20.8
15.0
18.5
8.0

3.9
2.8

3.8
1.8
1.2
1.3
0.7

24.4
30.6
22.6
16.7
17.3
13.0

1.9
1.8

3.7
1.8
1.3
1.2
0.6

23.9
30.9
24.3
17.2
18.1
12.9

0.1
-0.6

3.7
1.8
1.3
1.2
0.6

24.2
31.5
21.0
14.3
14.4
11.9

0.3
-2.2

3.9
1.9
1.3
1.3
0.6

24.8
31.4
20.4
13.9
14.4
10.5

2.2
-1.8

3.9
2.0
1.3
1.3
0.6

25.0
31.6
18.2
12.5
12.5
10.4

2.0
-1.5

% of GDP
3.9
1.8
1.2
1.4
0.7

4.1
2.0
1.3
1.4
0.7

%
26.8
34.3
16.4
11.6
11.0
10.5

3.5
1.3

26.5
34.6
17.2
12.3
11.9
10.8

3.4
-0.2

21.9
10.4

7.7
3.8

2
15
19
4
2

5
14

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

NETHERLANDS

Overall trends in taxation

Structure and development of tax revenues

In 2007, the tax-to-GDP ratio was 38.9 % in the Netherlands. This value lies 1.4 percentage points above the EU-27
average (37.5 %) and somewhat above the euro area average (38.2 %).

Indirect taxes, direct taxes and social contributions each account for about one third of total tax revenues. Since 2000
reliance  on  VAT  has  increased,  making  tax  revenue  less  sensitive  to  the  business  cycle.  The  weight  of  corporate
income  tax  (CIT)  decreased  because  of  a  reduction  in  the  statutory  income  tax  rates.  In  the  2001  tax  reform  the
burden from taxes and social security premium was lowered. Most allowances were replaced by tax credits; these
apply not only to the PIT but to social security contributions as well. Therefore, the relief of the 2001 tax reform is
found mainly in social security contributions. 

From a fiscal viewpoint, the Netherlands display a fairly centralised tax structure as local government taxes account
for merely 3.4 % of total tax revenues, a share which is below a third of the EU-27 average (11.1 %). In contrast, the
share of social security funds (34.8 %) is well above the European average (28.5 %). Revenues received by the central
government are slightly above the EU-27 average.

Between 2000 and 2003 tax revenues as a share of GDP decreased continuously. The decline in the overall tax ratio
was driven by decreases in revenues from direct taxes and social contributions, while indirect taxation has grown.
The increases of the shares of personal income taxes and employers' social security contributions explain to a large
extent the rise in the total tax burden since 2005.

Taxation of consumption, labour and capital; environmental taxation

The implicit tax rate on consumption shows an increasing trend since 2002, partly as a result of increases in revenues
from  VAT  and  environmental  taxes.  In  2007,  the  implicit  tax  rate  was  4.6  percentage  points  higher  than  the  EU
average (22.2 %).

The ITR on labour dropped significantly in 2001 as a result of the PIT reform reducing substantially employees' social
contributions. Since then the ITR has increased by 3.7 percentage points. The large share of this increase is due to the
replacement of private health care insurance contributions by a new public health care insurance system in 21)006. In
2007, the ITR (34.3 %) was in line with the EU average (34.4 %).

The ITR on capital increased significantly from 2000 to 2002. This increase stems largely from higher revenues from
taxes  paid  by  households.  From  2003  onwards  the  ITR  on  corporations  has  been  declining  probably  due  to  the
lagged  effects  of cyclical factors and, as of  2005,  due to the impact of  strong CIT rate cuts.  This drives down the
general ITR on capital. In 2007, the ITR on capital in the Netherlands was 16.4 %, more than 12 percentage points
below the EU-25 average. Revenue from taxes on the capital income of households are negative and, at – 0.6 % of
GDP,  the  lowest  in  the  EU  (EU-27  0.8 %).  The  negative  value  is  mainly  due  to  the  mortgage  interest  deduction
(balanced with the deemed rental value of owner-occupied houses) and the deduction of contributions to pillar 2
pensions in the wage tax/income tax.

1) Under the accounting conventions followed in this report, this replacement leads to an increase in the ITR on labour although disposable

income of households is unaffected.

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Part III

Developments in the Member States

At 3.9 % of GDP, the Netherlands has the second highest level of environmental taxes as a percentage of GDP in the
Union  after  Denmark.  The  Netherlands  raises  significant  revenue  from  transport  taxes  and  is  one  of  the  few
countries in the Union with a non-negligible contribution of pollution taxes, originating from a tax on pollution of
surface waters and sewerage charges (0.7 % of GDP, EU-27 0.2 %).

Current topics and prospects; policy orientation

The current focus of the tax policy is on simplification and greening of the tax system, and encouraging innovative
entrepreneurship.  

As of 1 January 2009, the ceiling for the deduction of annuity premiums related to private pensions is substantially
raised. The tax credit for working parents is increased. In addition, the parental leave tax credit for working parents is
increased and the eligibility for the tax credit no longer depends on participation in the lifelong savings scheme. The
tax  plan  also  introduces  a  number  of  administrative  simplifications  in  the  tax  and  social  security  systems.  The
employee's contribution to the unemployment social security scheme is abolished. Employees working after reaching
the age of 62 are entitled to a bonus of up to € 3 000. As for company taxation, small and medium-sized businesses
are  granted  a  tax  exemption  on  a  larger  share  of  their  profits.  Furthermore,  the  relief  for  new  enterprises
(startersaftrek) is increased.

The tax plan contains a number of environmental measures in the field of car taxation. The basis for car taxation is
changed from list prices to CO2 emissions. For highly fuel-efficient cars the motor vehicle tax is abolished and for
cars running on natural gas the motor vehicle tax is reduced. A tax exemption is introduced for hydrogen.  

The  government  plans  to  propose  a  bill  by  mid-2009  to  simplify  and  modernise  the  inheritance  tax  regime  with
expected entry into force on 1 January 2010. The aim is to reduce the number of tax brackets from 28 to 4 and to cut
the maximum rate from 68 % to below 50 %. The rate reduction would be financed through a broadening of the tax
base, and through combating structures to avoid inheritance tax.

In response to the current financial and economic crisis the government has announced several measures including
several  tax  measures.  The  first  set  of  measures  were  introduced  at  November  2008  and  included  the  easing  of
existing  depreciating  rules  for  investments  in  2009  in  order  to  encourage  companies  to  invest  in  new  assets.  The
arbitrary or accelerated depreciation 2009 is applicable to both corporate- and income tax liable entrepreneurs and
applies to all business assets with some exception (e.g. housing, industrial buildings and immaterial fixed assets).
Further, it was decided to lower the SME tariff of the second tax bracket of corporate income tax from 23% to 20 %
for both 2009 and 2010. This tariff applies to amounts up to 200.000 euro. 

The additional set of measures introduced in March 2009 contains more extensive tax measures. Tax facilities for
environmental  investments  are  expanded  as  well  as  tax  credit  for  R&D  investments.  The  ticket  tax  on  air  plane
tickets – introduced in 2008 – is abolished and a demolition subsidy for old cars is introduced. Furthermore, it was
decided  to  ease  the  rules  for  loss  compensation  and  to  allow  companies  to  pay  the  due  VAT  quarterly  instead  of
monthly. Another set of measures for SMEs will be included in the tax plan 2010.

Main features of the tax system

Personal income tax

The Dutch PIT system consists of three so-called boxes:

Box  1  consists  of  labour  income  items  as  well  as  some  capital  income  items,  such  as  the  proceeds  of  capital  that
proprietors  employ  in  their  own  businesses,  the  presumptive  income  from  owner-occupied  housing,  interest  and

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Developments in the Member States

Part III

rental income. The sum of income in Box 1 is taxed at progressive rates ranging from 33.6 % to 52 % (income tax and
social security contributions). The highest rates applies to income above of € 53 860.

Box 2 contains profit distributions and capital gains in connection with closely held companies, in which particular
shareholders have a substantial interest. The nominal PIT rate on these income items is 25 %, but the effective overall
tax rate is higher, because these items are also subject to the corporation tax at the level of the company. 

Box 3 includes the returns on individually held assets such as saving deposits, stocks, bonds, and real estate (except
owner-occupied housing). The items in this box are subject to the presumptive capital income tax. The statutory rate
is 30 % on a presumptive return of 4 % on the average value of the net assets during the taxable year.

Corporate taxation

In  the  Netherlands,  profit  for  fiscal  purposes  is  not  necessarily  calculated  on  the  basis  of  the  annual  financial
statements.  Profits  should  be  determined  according  to  ‘sound  business  practice’,  a  concept  that  has  mainly  been
developed  in  case  law.  One  of  its  requirements  is  the  use  of  consistent  accounting  methods.  This  means  that  the
method of determining profits may be changed only if this is compatible with sound business practice.

Under certain conditions a parent company may be taxed as a group together with one or more of its subsidiaries.
For corporate income tax (CIT) purposes this means that the parent company and subsidiary are deemed to be one
fiscal entity. The main advantages of group taxation are that the losses of one company can be offset against profits
from  another  company  within  the  group,  and  that  fixed  assets  can  in  principle  be  transferred  tax  free  from  one
company  to  another.  The  current  profits  of  corporations  (publicly  and  closely  held  companies)  are  subject  to  the
corporation tax at a rate of 25.5 % (20 % for profits up to € 275 000 in 2008 and € 200 000 in 2009).  

VAT and excise duties

There  are  two  rates.  The  standard  rate,  which  was  increased  from  17.5 %  following  the  2001  reform,  is  19 %.  A
reduced rate of 6 % applies to inter alia food, water, pharmaceuticals, art, cultural events and publications. 

The Netherlands applies a wide range of green taxes: environmental taxes (taxes on groundwater, tap water, waste
materials, fuels and the regulatory energy tax), excise duties on petroleum oils and taxes on vehicles (goods vehicle
tax, tax on private cars and motorcycles and tax on heavy goods vehicles).

Wealth and transaction taxes

The net wealth tax was abolished in 2001. Inheritance and gift taxes are levied at rates ranging from 5 % to 68 %
depending  on  the  relationship  between  the  donor  and  the  beneficiary  and  the  amount  involved  if  the  amounts
exceed certain allowances.

Social contributions

The  social  security  system  (sociale  verzekeringen)  is  composed  of  national  insurance  (volksverzekeringen)  and
employee insurance (werknemersverzekeringen). The national insurance applies to all inhabitants and its financing is
integrated in the income tax and wage (withholding) tax levy. The employee insurance applies to employees and is
financed by a levy calculated on gross salaries (with a maximum amount) and depends on the economic sector. For
basic  health  insurance  each  adult  pays  a  fixed  amount  of,  on  average,  € 1 012  a  year.  In  addition,  6.5 %  of  gross
earnings are paid up to a maximum income of € 30 623. For the latter contribution an employee receives mandatory
full compensation from his employer. This compensation is subject to the personal income tax. Furthermore low-
income taxpayers can receive a compensation for the fixed health care insurance payments (zorgtoeslag). 

Taxation trends in the European Union                 201

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Part III

Developments in the Member States

<@>TAB_PRINT_PL.pdf

Poland

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

12.6
6.9
3.7
0.8
1.3

7.2
4.4
2.4
0.3

12.9
5.7
5.5
1.8

16.9
n.a.
3.0
12.9
n.a.

11.3

14.2
13.5
5.7
7.8
0.7

7.2
5.5
2.4
0.2
2.9
1.6

0.2

12.5
6.8
3.7
0.6
1.4

6.7
4.5
1.9
0.3

13.4
5.7
5.5
2.1

16.1
n.a.
3.1
13.4
n.a.

11.1

14.4
13.6
5.7
7.9
0.8

7.0
5.3
1.9
0.1
3.3
1.7

0.4

13.2
7.2
4.0
0.6
1.4

6.9
4.3
2.0
0.6

12.9
5.4
5.1
2.5

16.9
n.a.
3.3
12.9
n.a.

11.8

13.4
12.7
5.4
7.3
0.7

7.8
5.8
2.0
0.2
3.6
1.9

0.4

13.2
7.1
4.1
0.6
1.3

6.6
4.2
1.8
0.6

12.8
5.2
5.2
2.4

16.7
n.a.
3.1
12.8
n.a.

11.9

13.2
12.5
5.2
7.3
0.7

7.4
5.6
1.8
0.3
3.5
1.8

0.3

13.1
7.2
4.2
0.4
1.4

6.4
3.6
2.2
0.5

12.3
4.9
5.0
2.4

15.2
n.a.
4.0
12.3
0.2

11.8

12.5
11.8
4.9
6.9
0.7

7.5
5.7
2.2
0.2
3.3
1.8

0.3

13.9
7.7
4.2
0.3
1.7

7.0
3.9
2.5
0.6

12.3
4.9
4.8
2.5

16.4
n.a.
4.1
12.3
0.3

12.2

12.6
11.9
4.9
6.9
0.7

8.4
6.2
2.5
0.2
3.5
2.2

0.4

% of GDP
14.5
8.4
4.2
0.4
1.5

14.5
8.1
4.0
0.3
2.0

Ranking 1)
11
8
2
26
12

7.5
4.6
2.4
0.5

12.2
4.8
4.9
2.5

8.7
5.3
2.8
0.6

12.0
4.8
4.8
2.4

% of GDP
18.2
n.a.
4.7
12.0
0.3

17.4
n.a.
4.3
12.2
0.3

% of GDP
13.0

12.4

13.0
12.2
4.8
7.3
0.8

8.7
6.2
2.4
0.2
3.6
2.5

0.4

13.4
12.5
4.8
7.6
1.0

8.8
6.7
2.8
0.2
3.7
2.1

0.4

22
22
20
18

12
21
5
4

19
n.a.
9
9
19

9

20
20
21
15
13

10
8
22
22
2
12

€ bn
44.8
25.9
13.0
1.2
4.7

26.8
16.5
8.5
1.8

37.2
14.9
14.9
7.4

56.2
n.a.
14.5
37.2
0.9

40.1

41.5
38.5
14.9
23.6
3.0

27.2
20.7
8.5
0.7
11.4
6.5

TOTAL

32.6

32.2

32.7

32.2

31.5

32.8

33.8

34.8

18

107.5

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.1
1.8
-
0.2
0.2

17.8
33.6
20.5
15.9
37.1
10.0

4.3
1.2

2.1
1.8
-
0.2
0.1

17.2
33.2
20.7
15.7
37.2
10.8

1.2
-0.3

2.4
2.0
-
0.2
0.2

17.9
32.4
22.5
16.9
37.0
11.9

1.4
-1.8

2.5
2.1
-
0.2
0.1

18.3
32.7
20.7
15.6
21.9
12.6

3.9
-1.3

2.6
2.1
1.7
0.3
0.1

18.4
32.7
19.1
14.5
18.7
11.7

5.3
0.1

2.7
2.3
1.8
0.3
0.1

19.5
33.1
21.6
15.9
20.8
12.6

3.6
-0.7

% of GDP
2.7
2.4
1.9
0.2
0.1

2.8
2.3
1.9
0.2
0.3

%
21.4
35.0
-
-
-
-

6.6
1.7

20.2
34.2
22.8
16.2
19.5
13.4

6.2
0.4

8.4
7.4

0.7
0.2

10
3
4
22
12

15
13

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

POLAND

Overall trends in taxation

Structure and development of tax revenues

As at 2007, the ratio of total taxes on GDP in Poland lay at 34.8 %, well below the EU-27 average (37.5 %). This level
is lower than in other neighbouring countries such as the Czech Republic (36.9 %) and Germany (39.5 %), but is
higher than in Slovakia (29.4 %).

Indirect taxes play a much more important role in Poland than direct taxes (14.5 % of GDP compared to 8.7 % in
2007). Indeed, the proceeds from indirect taxes lie close to the EU mean value (14.3 %), whereas direct tax revenue is
well below the EU-27 average (12.4 %). Revenue from personal income taxes in particular account for 5.3 % of GDP,
only slightly more than half the EU-27 average (8.0 % of GDP). The main reason for the low level of direct taxes is
the  substantial  shift  from  personal  income  tax  to  social  security  contributions  that  took  place  in  1999,  with  the
introduction of a global reform of the social security system. Social security contributions play as important a role as
indirect taxes, accounting for 12.0 % of GDP, a level exceeding the EU-27 average (11.0 %).

The  distribution  of  revenue  between  levels  of  government  has  changed  significantly  over  the  period  under
consideration, as  central  government revenue, has  shrunk since 1995, while  the  share collected  by  social  security
funds has increased. Local government revenue oscillated around the 3 % of GDP mark after the introduction of the
first major reform of the local governments in 1999, before increasing to 4 % from 2004 onwards as a result of the
new law on local government finance.

The overall tax burden decreased progressively from 37.1 % of GDP in 1995 to 31.5 % in 2004, reflecting mostly the
reforms of tax and social security contributions carried out in those years. In contrast, the 2004–2007 period was
characterised by an increase in the tax-to-GDP ratio, which reached a level of 34.8 % of GDP in 2007. This trend has
been driven mostly by an increase in VAT revenues, as a result of a strong domestic consumption, and by robust
growth in PIT revenue due to a rise in employment.

Taxation of consumption, labour and capital; environmental taxation

Revenue  from  consumption  taxes  is  close  to  the  EU-27  average  (13.0 %  of  GDP,  EU-27  12.4 %).  The  ITR  on
consumption declined markedly from 1995 to 2001 but has been picking up since, reflecting strong VAT and excise
duties revenue growth. 

At  35.0 %,  the  ITR  on  labour  for  2007  is  slightly  above  the  EU-27  average  (34.4 %  in  2007).  The  ratio  has  been
picking up steadily since 2002, but remains below the level recorded in 1995.

The ITR on capital for 2007 is not available. As of 2006, the ITR on capital stood at 22.8 % — a value well below the
EU-25 average (25.7 %). It increased by 3.7 percentage points from 2004 to 2006 mainly due to the more effective
collection of corporate taxes. 

The ratio of environmental taxation to GDP has increased by half over the last decade to reach 2.7 % of GDP, a value
perfectly  in  line  with  the  EU-27  average  (2.7 %).  The  increase  was  driven  by  energy  taxation,  as  other  types  of
environmental taxes yielded stable or even declining revenue. 

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Developments in the Member States

Current topics and prospects; policy orientation

From 1 January 2009, the new personal income tax rates of 18 % and 32 % have been introduced, replacing the 2008
rates of 19 %, 30 % and 40 %.

The investment incentive (i.e. an immediate accelerated depreciation of certain fixed assets), which is available to
small taxpayers and newly established entities under both personal and corporate income taxes, has been increased
from € 50 000 to € 100 000. 

The period for VAT refund has been shortened from 180 to 60 days. VAT on bad debts lasting more than 180 days
will be refunded to the seller by the tax authorities.

VAT payers are allowed to report to the authorities on a quarterly basis, yet the payments are due on a monthly basis.

Main features of the tax system 

Personal income tax

The main emphasis of the tax measures undertaken since 1995 in the field of the personal income tax was on closing
tax loopholes, reducing exemptions, and simplifying the tax code. Furthermore, PIT rates have been reduced four
times since 1995. To counterbalance the decline in PIT progressivity in recent years, the tax base has been broadened
by abolishing a number of tax deductions, perceived as distorting consumption, savings and investment decisions,
and by including fringe benefits and benefits in kind within taxable income.

Since 2009 Poland applies two tax rates, i.e. 18 % and 32 %. The lowest statutory rate applies to the vast majority of
taxpayers;  for  2009  the  threshold  is  set  at  PLN 85 528  (around  €  19 000).  Income  above  PLN 85 528  (around  €
19 000) is charged at 32 %. Dividends and interest payments are subject to a final withholding tax at a rate of 19 %. 

There is a personal allowance of PLN 3 089 (around € 690), which is granted to all taxpayers. There are a limited
number  of  allowed  deductions  that  may  reduce  aggregate  taxable  income,  e.g.  social  security  contributions,
donations to religious and public utility organisations and the costs of an Internet access in the taxpayer's premises.
A tax credit is granted for contributions to the obligatory health insurance scheme (up to 7.75 % of the tax base).
Individuals are required to pay individual income tax and spouses are taxed separately. However, spouses may elect
to file a joint tax return, provided that they were married during the entire tax year

Corporate taxation

Since 1995 a number of tax measures have been taken in the field of corporate taxation. Over the last few years, the
corporate income tax has been cut alongside the personal income tax; in particular, tax rates have been significantly
reduced through stepwise  reductions to the current 19 % level from 40 % in 1996 (see also Part II.4). The tax base
has been broadened by limiting or abolishing various incentive schemes, investment credits and property-related tax
shelters. Depreciation for tax purposes has been brought more closely in line with economic depreciation and the
number of depreciation schedules has been drastically reduced. A number of amendments have been made to the tax
law in order to adapt it to the EU regulations on direct taxation, such as the EC Parent-Subsidiary Directive, the EC
Merger Directive and the Interest and Royalties Directive, and to the rulings of the European Court of Justice on
withholding taxes and thin capitalisation.

The Polish corporate  income tax system  is a  classical tax system; corporate  income is  fully taxed at  the  company
level, with the distributed profits being taxed again by way of a final withholding tax in the hands of the shareholders.
The corporate income tax rate is 19 % and is applicable to income and capital gains. Capital gains are added to total
ordinary  income.  Tax  law  provides  for  a  list  of  non-deductible  expenses  (e.g.  representation  expenses).

204

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Part III

From 1 January  2007  donations  made  to  public  organisations  registered  in  Poland  or  another  EEA  country  (EU
Member States, Iceland, Liechtenstein and Norway), as well as donations for religious purposes, are deductible from
taxable income up to a maximum of 10 % of income. 

Tax losses may be carried forward for five years. The set-off may not exceed 50 % of the loss in each year. Tax loss
carry-back is not allowed. Poland applies the notion of a tax group.

In 2007 a new regulation applicable to small taxpayers and business start-ups was introduced. It allows for a one-off
depreciation  of  certain  fixed  assets.  The  deduction  takes  place  in  the  year  when  the  fixed  asset  is  recorded.  The
maximum amount of deduction has been raised from € 50 000 to € 100 000 from 2009 onwards.

VAT and excise duties

VAT law provides for the following tax rates: the basic 22 % rate, the reduced 7 % rate, the 3 % super-reduced rate
and the 0 % rate. The standard rate is applicable to most goods and services. As a result of the accession negotiations,
Poland was granted transitional arrangements in the area of indirect taxation (VAT and excise duties) until the end
of 2007, and therefore, it maintained the reduced VAT rate on restaurant services and construction and the zero rate
on books. The application of the transitional arrangements has been prolonged until 2010. A special reduced rate of
5 % applies to lump sum refunds to flat scheme farmers. 

Wealth and transaction taxes

There is no wealth tax. The stamp duty applies to official acts performed on the basis of notification or upon request
of the person concerned. 

Social contributions

Both employers and employees have to pay social security fund contributions for old-age pensions, at equal rates of
9.76 %  of  gross  remuneration.  Employees'  contributions  are  withheld  by  the  employer.  There  is  a  ceiling  on
contributions to the old-age pension fund equal to the annual equivalent of 30 projected average monthly salaries in
the calendar year. In addition to the compulsory scheme there is a possibility to opt for employees' voluntary private
pension  plans  and  life  insurance.  The  social  security  system  includes  also  contributions  for  disability  insurance
(1.5 % paid by employee and 4.5 % by the employer); health and maternity insurance (paid at 2.45 % by employee),
as well as injury insurance (paid solely by employer at 0.97 % to 3.86 %). Additionally, there is an obligatory health
insurance contribution to cover medical expenses (paid at 9 %), which is creditable against the income tax liability,
up to 7.75 %.

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Developments in the Member States

<@>TAB_PRINT_PT.pdf

Portugal

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
15.3
8.8
2.9
2.8
0.8

15.7
8.8
3.2
2.9
0.8

Ranking 1)
6
6
16
4
18

14.1
8.0
2.7
2.8
0.6

9.9
5.6
3.9
0.5

10.3
6.7
3.2
0.5

21.0
n.a.
2.1
10.7
0.6

12.4

14.1
13.5
6.7
6.8
0.6

7.8
5.8
3.9
1.0
0.9
2.0

0.0

14.0
7.8
2.9
2.7
0.7

9.5
5.6
3.4
0.5

10.5
6.7
3.4
0.4

20.6
n.a.
2.0
10.8
0.5

12.4

14.3
13.6
6.7
6.9
0.7

7.2
5.3
3.4
1.0
0.9
2.0

0.0

14.5
7.9
3.1
2.6
0.9

9.4
5.4
3.4
0.5

10.8
6.9
3.4
0.4

21.1
n.a.
2.1
11.1
0.4

12.7

14.5
13.8
6.9
6.9
0.7

7.4
5.2
3.4
0.9
0.8
2.3

0.0

15.1
8.0
3.3
2.4
1.4

8.7
5.4
2.9
0.4

11.1
6.9
3.6
0.6

21.0
n.a.
2.0
11.5
0.3

12.7

14.8
13.9
6.9
7.0
0.9

7.4
4.6
2.9
0.9
0.8
2.7

0.0

14.4
8.0
3.2
2.5
0.7

8.6
5.2
3.0
0.4

11.1
7.1
3.5
0.5

20.2
n.a.
2.1
11.5
0.3

12.7

14.8
13.9
7.1
6.8
0.9

6.5
4.6
3.0
0.8
0.8
2.0

0.0

15.3
8.7
3.1
2.7
0.7

8.5
5.3
2.8
0.4

11.4
7.3
3.5
0.5

20.8
n.a.
2.2
11.8
0.3

13.5

15.2
14.2
7.3
6.9
1.0

6.4
4.3
2.8
0.8
0.8
2.1

0.0

8.8
5.5
3.0
0.4

11.4
7.4
3.4
0.5

9.8
5.7
3.7
0.4

11.7
7.6
3.5
0.6

% of GDP
22.2
n.a.
2.2
12.1
0.3

21.6
n.a.
2.2
11.8
0.3

% of GDP
13.3

13.8

15.3
14.3
7.4
6.9
1.0

6.8
4.6
3.0
0.7
0.8
2.2

0.0

15.8
14.7
7.6
7.1
1.0

7.6
5.3
3.7
0.8
0.9
2.3

0.0

€ bn
25.0
14.3
4.7
4.6
1.3

15.9
9.3
6.0
0.6

19.1
12.4
5.7
0.9

36.2
n.a.
3.6
19.7
0.5

21.7

25.7
24.1
12.4
11.6
1.7

12.5
8.7
6.0
1.3
1.4
3.8

60.0

4.8
3.3

1.5
0.0

17
21
8
22

15
11
11
18

16
n.a.
19
8
17

7

15
15
12
18
12

14
18
9
13
19
10

15

7
10
6
7
23

17
22

TOTAL

34.3

33.9

34.7

34.8

34.1

35.1

35.9

36.8

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.7
1.6
-
1.1
0.0

19.2
27.0
32.7
24.3
25.5
16.3

3.9
2.9

3.0
1.9
-
1.1
0.0

19.3
27.4
30.6
22.3
22.7
14.9

2.0
2.5

3.2
2.1
-
1.0
0.0

19.9
27.6
32.2
22.3
22.4
15.1

0.8
1.2

3.1
2.2
1.9
0.9
0.0

19.8
27.8
31.4
19.7
19.0
15.0

-0.8
-1.1

3.1
2.2
2.0
0.9
0.0

19.7
27.9
27.3
19.1
18.8
11.8

1.5
-1.0

3.1
2.1
1.9
1.0
0.0

20.6
28.1
28.5
19.2
19.4
10.3

0.9
-1.2

% of GDP
2.9
2.0
1.9
0.9
0.0

3.0
2.0
1.9
0.9
0.0

%
20.3
30.0
34.0
23.7
-
-

1.9
0.0

21.0
28.6
30.8
20.9
22.6
8.6

1.4
-0.9

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Part III

PORTUGAL

Overall trends in taxation

Structure and development of tax revenues

In 2007, the Portuguese overall tax burden (including social contributions) stood at 36.8 % of GDP, somewhat below
the EU-27 and euro area averages (37.5 % and 38.2 %, respectively). Portugal's tax-to-GDP ratio is slightly below that
in neighbouring Spain.

Portugal relies relatively heavily on indirect taxation for collecting budget revenue. In 2007 the share of indirect taxes
amounted to 41.7 % (EU-27 38.4 %). The share on VAT over GDP was nearly one percentage point higher than the
EU-27 average. The share of social contributions, too, is above the EU average (31.8 %, EU-27 29.5 %), mainly due to
a high share of employer's social security contributions. On the other hand, the share of direct taxes amounted to
only 26.5 % of total tax revenue (EU-27 32.3 %), mainly due to modest PIT levels.

As for the structure by level of government, the share of taxes collected by local government is quite low at 6.0 % (EU-
27 11.1 %), whereas the percentage received by social security institutions is rather high (32.8 %, EU-27 28.5 %). The
share of the central government is close to the EU-27 average.

The tax-to-GDP ratio oscillated around the 34 % mark in the 2000–2004 period. In the following three years the
ratio went up by more than 2 ½ percentage points. Whereas the augmentation in the ratio in 2005 was mainly due to
higher VAT revenue following rate increase, rising growth rates led to higher revenue in particular from taxes on
capital in 2006 and 2007. 

Taxation of consumption, labour and capital; environmental taxation

In line with high revenue from indirect taxes, taxes on consumption play an important role in Portugal, representing
more than 36 % of total tax revenue. Mainly due to the increase in the VAT standard rate in 2002 and 2005 the implicit
tax  rate  on  consumption  increased  in  recent  years,  reaching  20.3 %  in  2007.  Nevertheless,  it  remained  below  the
EU-27 average (22.2 %).

Taxes on labour as a percentage of GDP are below the EU average (15.8 %, EU-27 17.2 %). The implicit tax rate on
labour  has  increased  quite  significantly  in  recent  years,  however,  from  27.0 %  (2000)  to  30.0 %  (2007),  despite
marginal reductions in personal income tax rates and targeted reductions of social contributions. Nevertheless, the
implicit tax rate on labour still remains well below the EU-27 average (34.4 %).

The ITR on capital, at 34.0 % in 2007,  was  well above  the  EU-25 average (EU-25 28.7 %). In line with the EU-25
average, it had increased constantly since the 2004 low. The capital tax-to-GDP ratio has shown a similar trend in
recent years as the ITR on capital. In 2007 the capital tax-to-GDP ratio has gone up, as in the EU-27 in general, mainly
do to a strong increase in revenues from corporate taxation. 

After several years with increases in corporate tax revenues (as % of GDP), the ratio declined from 3.9 % of GDP in
2000 to 2.8 % in 2005, in line with the strong reduction in the top statutory CIT rate and as a consequence of lower
growth rates. By 2007, as growth accelerated, the ratio, however, nearly reached the 2000 peak again (3.7 %). 

At 2.9 % of GDP, Portugal's level of environmental taxes is above the EU average (EU-27 2.7 %), notably with respect
to energy taxes (70 % of total environmental taxes). The 2007 level is, however, well below the 2002 peak (3.2 % of
GDP).

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Developments in the Member States

Current topics and prospects; policy orientation

The State Budget for 2009 contains adjustments in several areas of taxation. Although the individual income tax rates
remained  unchanged,  several  new  measures  entered  into  force  as  of  1  January  2009.  Namely,  there  has  been  an
increase  in  deductions  from  taxable  income  related  to  education,  health,  dwelling  and  nursing  home  expenses.
Moreover, commuting expenses are excluded from taxable income and personal deduction allowance for disabled
taxpayers has been increased. 

As far as the corporate income tax is concerned, the Portuguese authorities introduced a new general 12.5 % rate for
taxable profits up to € 12 500 in order to improve the business environment for SMEs. Moreover, advance payments
for SMEs were reduced. 

As concerns the real estate tax, the top rate was reduced and the period of payment exemption extended.

Main features of the tax system

Personal income tax

In  Portugal  the  personal  income  tax  (IRS)  is  levied  on  the  aggregated  base  of  six  income  categories.  There  is  no
personal allowance, but a single personal tax credit which is linked to the minimum wage and to the family situation
of the taxpayer. Portugal applies a progressive tax rate with seven brackets (from 10.5 % to 42.0 % in 2009), the top
marginal rate being reached at an income of € 64 110. In the Azores the rates are reduced by 20 %, while in Madeira
the rates range from 8.5 % to 41 %. As of 2007 municipalities choose their share in the revenue from IRS, up to a
maximum of 5 % of their resident taxpayers’ tax liability. If the stake is below 5 %, a tax credit corresponding to the
difference will be granted to the resident taxpayer.

Spouses living in a single household have to file a joint return including the aggregated family income. However, they
benefit  from  an  income-splitting  relief.  Interest  and  dividends  are  subject  to  a  withholding  tax  of  20 %.  Resident
individuals may opt to include 50 % of the gross domestic dividends (or dividends received from EU entities covered
by the Parent-Subsidiary Directive) in their taxable income according to the partial exemption system and in the
latter case the tax withheld at source constitutes an advance payment.

In the years up to 2006, Portugal reduced the statutory PIT rates in several steps, adjusted thresholds upwards and
made tax credits for savings, housing, health and education expenses more favourable. In 2006, however, a higher top
rate was introduced.

Corporate taxation

As  of  1  January  2009,  two  corporate  income  tax  rates  (IRC)  apply.  Taxable  profits  up  to  €  12 500  (included)  are
subject to a new rate of 12.5 %. The former general rate of 25 % is applied to taxable profits surpassing € 12 500. The
new  rate  is  inapplicable  to  companies  that  have  undergone  a  major  reorganisation  or  restructuring  after
31 December 2008  and  achieve  a  taxable  income  below  € 12 500.  In  addition,  the  rate  of  12.5 %  will  not  apply  to
contributions  of  assets  and  liabilities  by  individual  taxpayers  to  a  company's  share  capital,  whenever  the  activity
undertaken by the company is the activity previously undertaken by the individual. Given the introduction of the
new  12.5 %  rate,  the  simplified  scheme  for  small  companies  with  a  reduced  rate  of  20 %  will  be  progressively
abolished.  Subject  to  certain  conditions,  companies  operating  in  less  developed  inland  areas  may  qualify  for  a
reduced rate of 15 % (10 % for the first five years if they are start-ups) and other tax incentives. For the Azores and
Madeira special rules apply. 

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Part III

On top of the corporate income tax, municipalities may levy a non-deductible surcharge of up to 1.5 % of the taxable
profit (before the deduction of tax losses). Capital gains are not taxed separately but are usually included in ordinary
income.  Under  special  conditions,  a  50 %  tax  relief  is  granted  if  the  proceeds  are  reinvested.  Ordinary  losses  are
deductible in the calculation of the tax base, whereas special rules apply for capital losses derived from the sale of
shares.

In 2002, the partial imputation system was replaced by a partial exemption system. 

VAT and excise duties

After increases of two percentage points in 2002 (to 19 %) and 2005 (to 21 %), the standard VAT rate was cut by one
percentage point to 20 %, effective as of 1 July 2008. 

Portugal applies three VAT rates: besides the standard 20 % rate, an intermediate 12 % rate (on restaurants, some
wines,  some  foodstuffs,  fuel  oil  and  coloured  diesel)  and  a  reduced  5 %  rate  (mainly  on  basic  foodstuffs,  books,
periodicals and newspapers, water and electricity). In the Azores and Madeira the standard rate is 15 %, whereas the
intermediate rate is 8 % and the reduced rate is 4 %. Excise duties revenues are in line with the EU-27 average. 

Wealth and transaction taxes

In December 2003 and January 2004 respectively, the local tax on real estate and the transfer tax were replaced by new
municipal taxes. Currently, two taxes on wealth are in force: the municipal real estate tax (IMI) and the municipal
real estate transfer tax (IMT). There is no net wealth tax. The gift and inheritance tax was abolished in 2004. A stamp
tax is levied on transfers of property on death or gift only if the donor and the beneficiary are not next of kin.

Local taxes

In addition to the taxes already mentioned, taxation at the local level also comprises a municipal tax on vehicles.

Social contributions

Employees  pay  contributions  equal  to  11 %  of  their  gross  salary  without  any  ceiling  (10 %  for  members  of  the
corporate  board,  but  up  to  a  ceiling).  The  employers'  contribution  rate  is  23.75 %  (21.25 %).  Social  security
contributions are deductible from the PIT and the CIT.

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Developments in the Member States

<@>TAB_PRINT_RO.pdf

Romania

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

12.2
6.5
3.0
2.2
0.5

7.0
3.3
3.0
0.7

11.2
8.1
3.0
0.0

15.9
n.a.
3.4
11.1
n.a.

11.6

13.2
13.2
8.1
5.1
0.0

5.6
4.4
3.0
1.3
0.1
1.2

0.0

11.4
6.3
2.8
1.6
0.6

6.4
3.3
2.5
0.6

11.1
7.2
3.8
0.0

12.9
n.a.
5.5
10.5
n.a.

10.7

13.0
12.9
7.2
5.8
0.0

5.2
4.0
2.7
1.1
0.2
1.2

0.0

11.6
7.1
2.6
1.3
0.6

5.8
2.7
2.6
0.5

10.7
6.5
4.2
0.1

12.2
n.a.
5.5
10.4
n.a.

10.9

12.3
12.3
6.5
5.8
0.0

4.8
3.8
2.6
1.0
0.1
1.1

0.0

12.3
7.2
3.5
1.0
0.6

6.0
2.8
2.8
0.4

9.5
6.2
3.1
0.2

12.5
n.a.
5.9
9.4
n.a.

11.5

11.2
11.1
6.2
4.9
0.1

5.0
4.0
2.8
0.9
0.3
1.0

0.0

11.7
6.7
3.6
1.0
0.5

6.4
2.8
3.2
0.3

9.2
5.9
3.0
0.3

12.4
n.a.
5.8
9.1
n.a.

11.1

10.8
10.7
5.9
4.8
0.1

5.3
4.5
3.2
1.0
0.3
0.9

0.0

12.9
8.1
3.3
1.0
0.5

5.3
2.3
2.7
0.3

9.7
6.4
3.0
0.3

12.3
n.a.
6.0
9.5
n.a.

12.3

11.1
11.0
6.4
4.6
0.1

4.5
3.6
2.7
0.7
0.3
0.9

0.0

% of GDP
12.8
8.1
3.1
0.7
0.8

12.7
7.9
3.2
1.1
0.6

Ranking 1)
21
12
14
21
17

6.1
2.8
2.8
0.4

9.8
6.3
3.4
0.1

6.8
3.3
3.1
0.4

9.9
6.3
3.4
0.3

% of GDP
11.7
n.a.
7.6
9.8
0.3

11.5
n.a.
7.5
9.6
n.a.

% of GDP
11.9

12.0

11.7
11.7
6.3
5.4
0.1

4.8
3.8
2.8
0.8
0.2
1.0

0.0

12.1
11.9
6.3
5.6
0.2

5.4
4.2
3.1
0.8
0.3
1.2

0.0

26
25
17
21

19
16
12
20

27
n.a.
4
17
n.a.

13

22
22
17
24
22

22
23
18
12
25
18

€ bn
15.8
10.1
3.8
0.9
1.0

8.4
4.1
3.8
0.5

12.3
7.7
4.1
0.4

14.5
n.a.
9.4
12.1
n.a.

14.7

15.0
14.7
7.7
7.0
0.3

6.7
5.2
3.8
1.0
0.4
1.5

TOTAL

30.4

28.9

28.1

27.7

27.3

27.9

28.6

29.4

27

36.4

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

3.5
3.2
-
0.1
0.1

16.8
32.2
-
-
-
-

2.1
-7.9

2.4
1.9
-
0.1
0.4

15.5
31.8
-
-
-
-

5.7
-5.4

2.1
1.7
-
0.1
0.3

16.2
31.1
-
-
-
-

5.1
-3.9

2.4
2.0
-
0.1
0.3

17.7
29.5
-
-
-
-

5.2
-2.7

2.4
2.3
1.9
0.1
0.0

16.4
28.9
-
-
-
-

8.5
1.0

2.0
1.8
1.8
0.1
0.1

17.9
28.0
-
-
-
-

4.2
0.4

% of GDP
2.1
1.7
-
0.3
0.0

1.9
1.7
1.7
0.1
0.1

%
18.1
30.1
-
-
-
-

6.0
2.9

17.7
30.4
-
-
-
-

8.2
3.0

2.6
2.1

0.4
0.0

23
18
n.a.
19
21

23
21

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

210

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Developments in the Member States

Part III

ROMANIA

Overall trends in taxation

Structure and development of tax revenues

The overall tax-to-GDP ratio of Romania is, at 29.4 % in 2007, more than eight percentage points lower than the
EU-27 average. The level of taxation in Romania is the lowest in the EU and markedly lower than in neighbouring
Bulgaria (34.2 %) and Hungary (39.8 %).

The tax  structure  of Romania  stands  out  in  several respects.  Romania  has  the fourth highest reliance on  indirect
taxes in the EU after Bulgaria, Cyprus and Malta. Indirect taxes supply 43.4 % of total tax revenue compared to a
38.4 % EU-27 average, while the share of social contributions account for 33.6 % (EU-27 29.5 %) and direct taxes
only for 23.0 %  (EU-27 32.3 %). Because  of  this structure,  the  share  of  VAT  on total  tax  and  social  contributions
revenue  in  2007  (27.7 %)  was  the  third  highest  in  the  Union.  The  low  level  of  direct  taxes  is  mainly  due  to  low
personal income taxes (merely 3.3 % of GDP), amounting to around 40 % of the EU-27 average. 

The share of taxes collected by local government is two thirds of the share of the central government (25.8 % and
39.9 %  of  total  tax  revenue,  respectively),  representing  a  relatively  high  value  in  comparison  with  the  other  EU
Member States. The share of funds accruing to local government has increased by nearly two and a half times since
2000.  The  revenue  shares  received  by  the  social  security  funds  account  for  33.2 %,  almost  five  percentage  points
above  the  EU-27  average.  In  per  cent  of  GDP,  however,  the  revenues  of  the  social  security  funds  are  nearly  one
percentage point below the EU average.

The tax-to-GDP ratio declined continuously in the 2000–2004 period by overall more than three percentage points,
mainly due to a reduction in revenues from direct taxes and social security contributions paid by employers. The
latter went down by more than one quarter. This development was partly reversed up to 2007. Higher revenues in all
three major tax categories lead to an increase in the tax-to-GDP ratio from 27.3 % (in 2004) to 29.4 % in 2007.

Taxation of consumption, labour and capital; environmental taxation

The ITR on consumption is, at 18.1 % in 2007, 4.1 percentage points lower than the EU-27 average. Due to the very
high share of final consumption of households in GDP, consumption taxes as per cent of GDP are nevertheless in
line with the EU average (11.9 %, EU-27 12.4 %). 

The  ITR  on  labour  steadily  declined  from  2000  to  2005,  altogether  by  more  than  four  percentage  points.  The
strongest reduction of nearly one percentage point can be observed in 2005, the year of the introduction of the flat
PIT. In 2006, however, the ITR on labour picked up by more than two percentage points and remained rather stable
in  2007.  The  ITR  was  markedly  below  the  EU-27  average  (30.1 %,  EU-27  34.4 %),  which  is  mainly  due  to  low
revenues from personal income taxes on employed labour income.

Taxation of capital is one of the lowest in the EU, yielding merely 5.4 % of GDP as compared with 8.0 % in the EU
average. This is due to low revenues from all categories of capital taxes but those on the capital income of households,
which  is  equal  to  the  EU  average.  In  line  with  the  EU  averages,  the  capital  income  taxation  of  corporations  has
increased  in  2006  and  2007  and  currently  lies  0.6  percentage  points  below  the  EU-27  average.  Due  to  data
limitations, no ITRs on capital are available for Romania.

Based  on  available  data,  environmental  tax  revenue,  at  2.1 %  of  GDP  in  2007,  lies  well  below  the  EU-27  average
(2.7 %);  in  fact,  this  value  is  the  fifth  lowest  in  the  EU.  Most  of  this  revenue  is  realised  on  energy:  the  other  two

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Part III

Developments in the Member States

categories  of  environmental  taxes,  transport  and  pollution/resources,  each  raise  less  than  half  the  EU  average.
Revenues from environmental taxes have overall decreased in recent years.

Current topics and prospects; policy orientation

In autumn 2008, the Romanian authorities implemented several tax changes in order to react to the global financial
crisis. These changes include temporary tax exemptions on capital gains from trading securities on the Romanian
stock  market.  This  exemption  is  in  force  from  1  January  2009  and  will  be  applicable  for  a  period  of  one  year.
Moreover, specific types of capital gains realised by non-residents are now subject to permanent tax exemption; a
reduction in dividend taxes for non-residents is also foreseen. The cap for the deductibility for voluntary pension
and health contributions from corporate and personal income was increased as of January 2009.

Social security contribution rates undergo regular changes. After several reductions in recent years, the latest with
effect  as  of  1  January  2009,  the  social  security  budget  law  2009  led  to  an  increase  by  3.3 percentage  points  in
contribution rates with effect of 1 February 2009. An increase of 2.3 percentage points falls on the employers.

In December 2008, the government introduced a 5 % reduced VAT rate for the construction of social dwellings and,
subject  to  conditions,  private  dwellings  not  exceeding  120  m2  and  a  value  of  RON  380 000  (about  € 90 000).  In
February 2009, the government decided to reduce the car pollution tax, which had been tripled for some types of
vehicles  at  the  end  of  2008,  by  one  third.  Furthermore,  the  government  increased  the  excise  duties  on  alcohol
beverages, cigarettes and fuel as from April 2009.

Main features of the tax system

Personal income tax

As from 2005, a flat rate tax system has replaced the previous four-bracket system, with tax rates ranging from 18 %
to 40 %. The flat tax rate has been set at 16 %, the same applied on taxable corporate profits. This rate in general
applies to income from independent work activity, royalties, income from movable and immovable property (such as
rents), but also to short-term capital gains on listed shares. Interest income, too, is subject to a final withholding tax
of 16 %.

Taxpayers do not need to fill in a tax return if they only receive labour income in Romania or from investments and
other activities subject to a final withholding tax. Commuting expenses and expenses incurred on secondment are
generally  exempt,  under  conditions.  Moreover,  employment  income  earned  by  employees  whose  main  activity  is
software development is also exempted from income tax. Benefits in kind are normally taxed, but meal vouchers are
exempted from tax. Income from stock options is not taxed when the option is granted nor upon its exercise, but
only when the acquired shares are sold. Pension income is taxed only for the portion exceeding a threshold, which is
adjusted regularly (currently RON 1 000 per month, around € 235).

Corporate taxation

Romanian corporate income tax follows the classical system: corporate profits are taxed at the company level and
distributed profits are taxed again at the level of both corporate and individual shareholders. The standard flat-tax
rate is 16 % (before 2005 it was 25 %). Dividends received from other Romanian resident companies are exempt from
taxation. Capital gains are generally treated as ordinary business income and subject to the same rate. 

Expenses  incurred  for  business  purposes  are  generally  deductible,  except  when  used  to  supply  benefits  to
shareholders or employees or when related to damaged or lost goods. Depreciation over periods fixed by the law
applies  to  assets  with  a  value  above  RON 1 800  (€  425);  depreciation  may  follow  the  straight-line,  degressive  or

212

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report2009.book  Page 213  Thursday, May 28, 2009  1:35 PM

Developments in the Member States

Part III

accelerated method. Companies have to allocate up to 5 % of the annual accounting profits to a legal reserve, which
is  not  taxed  until  its  amount  reaches  20 %  of  the  share  capital.  Banks,  insurance  companies,  credit  unions  and
guarantee funds may create specific tax-deductible reserves. 

The EC Parent-Subsidiary Directive applies from 1 January 2007. The transitional period relating to implementation
of the Interest and Royalties Directive, foresees that a 10 % withholding tax will apply to interest and royalties if the
non-resident  is  registered  as  a  legal  entity  (or  has  a  permanent  establishment)  in  an  EU  Member  State.  In  other
circumstances, the standard withholding tax rate of 16 % applies to interest and royalties.

For businesses such as gambling, nightclubs and casinos, there is a minimum tax equal to 5 % of the turnover. Micro-
enterprises (having between one and nine employees, a turnover of less than € 100 000 and not deriving more than
50 %  of  their  income  from  consultancy  and  management)  may  opt  for  taxation  at  a  rate  of  2 %  of  the  turnover
instead of the general corporate income tax (the rate will be 2.5 % in 2008 and 3 % as of 2009).

VAT and excise duties

The standard VAT rate is 19 %; a reduced rate of 9 % applies to several goods like pharmaceutical products, medical
equipment for disabled persons, books, newspapers, admission to cultural services and hotel accommodation. As
mentioned above, as of 2009, a 5 % reduced rate applies to the supply of social and some private dwellings.

VAT exemptions without right of deduction apply to, among others, medical treatments; educational and cultural
activities (with some exceptions), public postal services, certain banking and financial transactions, insurance and
reinsurance, and buildings and land (this exemption does not apply to a delivery made by a taxable person who is
entitled to deduct the respective tax).

Wealth and transaction taxes 

There are neither net wealth taxes nor gift or inheritance taxes in Romania.

Immovable property located in Romania is subject to a local building tax. The tax is levied at rates varying between
0.1 %  for  buildings  owned  by  individuals  and  0.25 %  to  1.5 %  for  company-owned  buildings,  depending  on  the
building's taxable value and book value, respectively. If the building has not been revalued during the last three years,
the rates for company owned buildings vary from 5 % to 10 %. Land both inside and outside city limits is in general
subject to local land tax. 

Social contributions

Social security contributions are payable at a combined rate for the employer and the employee. As of 1 February
2009,  employees  with  normal  working  conditions  must  contribute  for  social  security  at  10.5 %  calculated  on  the
gross  income  earned  without  any  ceiling.  Employers  contribute  at  a  rate  of  20.8 %.  In  the  case  of  particular  and
special working conditions, higher rates for the employers apply.

In  addition,  employees  must  contribute  at  5.5 %  to  the  health  insurance  fund  and  at  0.5 %  to  the  national
unemployment fund. Employers in particular have to contribute to the health insurance fund at a rate of 5.2 %, the
unemployment fund (rate 0.5 %) and the work accidents insurance fund (rate from 0.15 % to 0.85 %).

All social contributions are deductible for income tax purposes. 

Taxation trends in the European Union                 213

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Part III

Developments in the Member States

<@>TAB_PRINT_SK.pdf

Slovakia

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
11.6
6.7
3.5
0.4
0.9

11.6
7.5
2.9
0.3
1.0

Ranking 1)
26
22
7
25
15

12.5
7.0
3.1
1.7
0.7

7.5
3.4
2.6
1.5

14.1
9.1
2.9
2.1

18.9
n.a.
1.4
13.8
n.a.

12.2

15.0
14.8
9.1
5.7
0.2

6.9
6.1
3.5
0.3
2.3
0.8

0.0

11.4
7.3
2.7
0.7
0.7

7.5
3.5
2.6
1.4

14.3
8.9
3.0
2.5

17.7
n.a.
1.5
14.0
n.a.

11.0

15.1
14.8
8.9
5.9
0.3

7.0
6.3
3.4
0.3
2.6
0.8

0.0

11.6
7.0
2.9
0.7
0.9

7.1
3.3
2.5
1.3

14.6
8.9
3.0
2.8

17.3
n.a.
1.6
14.3
n.a.

11.2

15.0
14.6
8.9
5.7
0.4

7.0
6.3
3.2
0.2
2.8
0.8

0.0

12.1
7.5
3.1
0.6
0.9

7.1
3.2
2.8
1.2

13.8
8.4
2.8
2.6

18.0
n.a.
1.5
13.5
n.a.

11.8

14.4
14.0
8.4
5.6
0.4

6.9
6.1
3.4
0.2
2.5
0.8

0.0

12.5
7.8
3.3
0.5
0.9

6.1
2.7
2.6
0.8

13.1
7.6
2.9
2.6

17.1
n.a.
1.5
12.9
0.2

12.1

13.2
12.7
7.6
5.1
0.5

6.3
5.5
3.0
0.1
2.4
0.8

0.0

12.8
7.9
3.7
0.3
1.0

6.0
2.6
2.7
0.6

12.6
7.0
3.0
2.6

15.4
n.a.
3.5
12.2
0.3

12.5

12.5
12.2
7.0
5.2
0.3

6.5
5.7
3.0
0.1
2.7
0.7

0.0

6.1
2.5
2.9
0.7

11.7
6.3
2.8
2.7

6.1
2.6
2.9
0.6

11.7
6.3
2.8
2.7

% of GDP
14.4
n.a.
3.2
11.5
0.4

14.2
n.a.
3.3
11.6
0.3

% of GDP
11.3

11.3

11.5
11.2
6.3
4.9
0.4

6.5
5.9
3.2
0.1
2.6
0.7

0.0

11.6
11.3
6.3
5.0
0.4

6.5
5.9
3.2
0.1
2.6
0.6

0.0

€ bn
6.4
3.7
1.9
0.2
0.5

3.4
1.4
1.6
0.3

6.4
3.5
1.5
1.5

7.9
n.a.
1.8
6.3
0.2

6.2

6.4
6.2
3.5
2.7
0.2

3.6
3.2
1.8
0.0
1.4
0.3

16.1

1.2
1.0

0.1
0.1

27
27
19
16

14
15
15
2

23
n.a.
14
12
7

18

23
23
16
25
20

20
14
17
26
4
25

26

19
13
8
23
5

16
20

TOTAL

34.1

33.2

33.2

33.1

31.6

31.5

29.4

29.4

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.2
2.0
-
0.2
0.0

21.7
36.3
22.9
20.3
40.0
11.8

1.4
-4.0

1.9
1.7
-
0.2
0.0

18.8
37.1
21.7
19.3
32.7
12.6

3.4
-4.0

2.4
1.9
-
0.2
0.3

19.4
36.7
22.5
20.0
34.7
13.3

4.8
-3.3

2.6
2.2
-
0.2
0.3

21.1
36.1
22.5
20.0
35.3
12.5

4.7
-3.0

2.7
2.2
-
0.2
0.3

21.5
34.5
18.5
16.3
22.6
12.0

5.2
-3.1

2.6
2.1
2.1
0.2
0.3

22.2
32.9
19.5
17.4
23.5
13.4

6.5
-2.7

% of GDP
2.3
1.8
1.8
0.2
0.3

2.4
2.0
1.9
0.2
0.3

%
20.6
30.9
17.5
15.8
19.5
12.5

10.4
2.5

20.2
30.5
18.2
16.4
20.3
13.1

8.5
-1.1

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

SLOVAKIA

Overall trends in taxation

Structure and development of tax revenues

As  at  2007,  the  tax-to-GDP  ratio  (including  social  security  contributions)  stood  at  29.4 %  in  Slovakia,  a  value
markedly below the EU-27 average (37.5 %). The level of taxation in Slovakia (being the same as in Romania) is the
lowest in the European Union. 

Indirect taxes raised 11.6 % of GDP, as compared to 14.3 % of GDP for the EU-27 average. They play a much more
important role in Slovakia than direct taxes, as the latter yield only around half as much revenue. Not surprisingly
therefore, direct tax revenue lies well below the EU-27 average (6.1 % of GDP compared to 12.4 % of GDP). The ratio
of  tax  revenues  from  social  security  contributions  to  GDP  has  decreased  over  the  recent  years  by  2.4  percentage
points from 14.1 % of GDP in 2000 to 11.7 % of GDP in 2007. This reflects a significant reduction of employers'
social security contributions. Since 2005–2006, the introduction of a ‘second pillar’ fully funded pension scheme led
to  a  further  reduction  in  social  security  receipts,  as  contributions  to  privately  managed  funds  are  not  booked  as
government revenue.

The central government receives less than half of overall revenue, a comparatively low share, while social security
funds receive most of the remainder; their share of revenue is the second highest in the Union after France. The share
of  the  local  governments  in  taxes  increased  recently  (from  1.5 %  of  GDP  in  2004  to  3.2 %  in  2007)  due  to  the
implementation of a new financing system for regional self-government from 1 January 2005.

Slovakia's  tax  ratio  has  decreased  very  significantly  over  the  last  decade,  from  40.3 %  of  GDP  in  1995,  when  it
exceeded the EU-27 average by almost three points, to 29.4 % of GDP in 2007, when the ratio was more than eight
points below the average. This cut in taxation by one quarter is by far the strongest in the EU-27. 

Taxation of consumption, labour and capital; environmental taxation

As of 2007, the implicit tax rate (ITR) on consumption in Slovakia is below the EU-27 average (20.6 % compared
with 22.2 %). After a recent decrease phase, the Slovak ITR on consumption has rebounded by some two percentage
points  from  its  2001  fall  on  account  of  stronger  VAT  and  excise  duties  revenue.  The  decline  in  consumption  tax
revenue in 2007 was influenced by a shift in final demand towards exports, which are not subject to consumption
taxation, and by the fact that, a VAT rate for medicines and certain other medical and pharmaceutical products has
been reduced to 10 % since 1 January 2007. 

The implicit tax rate on labour in Slovakia is, at 30.9 % in 2007, well below the EU-27 average (34.4 %). The ratio has
tended to decline over time in line with the decline in tax levels, but this process has accelerated over the last two
years owing to the introduction of a 19 % flat PIT rate. One should note, however, that the introduction of a second
pillar  pension  scheme  in  2005–2006  also  results,  under  our  methodology,  in  a  reduction  of  the  ITR  on  labour,
although payments to these funds have an impact on workers' disposable income which is analogous to traditional
social security contributions. 

The relatively low contribution of taxes on capital to total tax revenue is also reflected in the low ITR on capital, at
17.5 % in 2007. Capital taxation revenue has slightly declined since 2002 (remaining at 6.5 % level in 2005–2007. The
fall of the ITR is mainly driven by the progressive decrease in the corporate income tax rate since 1999.

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Developments in the Member States

As  of  2007,  the  ratio  of  environmental  taxation  stood  at  2.3 %  of  GDP,  a  value  slightly  below  the  EU-27  average
(2.7 %). The environmental taxation revenue has been on the decline from 2004 mainly due to shrinking revenues
from energy taxation.

Current topics and prospects; policy orientation

Since 2004 Slovakia has switched over to a comprehensive flat tax system featuring a low 19 % basic rate for PIT, CIT
and VAT and a wide base with a limited number of allowances. More recent tax changes following this major tax
reform have generally aimed at aligning the taxable base with the accounting base. Significant amendments to the
CIT  rules  on  reserves  and  provisions  for  losses  were  introduced  in  January  2008;  previously,  losses  on  loans  and
receivables were fully deductible with almost no restrictions, especially in the case of bank loans. These rules have
now  been  tightened,  through  introduction  of  time  limits  and  prerequisites,  in  order  to  encourage  a  more  active
stance by creditors.

A reduced 10 % VAT rate was introduced in 2007. In addition, higher excise duties on electricity, coal and natural gas
will be collected as from July 2008 in application of the EU energy taxation directive. Finally, in the domain of social
security, besides the above mentioned introduction of a second pillar, the contribution ceilings for social insurance
have been increased.

In order to mitigate the negative impact of the global financial and economic crisis, several anti-crisis measures were
introduced  in  2009.  An  employee  tax  credit  as  a  form  of  negative  income  tax  has  been  introduced  and  the  basic
allowance has been increased. While the first is a permanent measure, the latter is temporary (only for two years). In
addition, the rate of contribution to the social insurance agency was decreased to 2 % for mandatory insured self-
employed. Among other measures, changes in the rules on property depreciation were adopted (increase in input
price for investment property depreciation, accelerated depreciation and depreciation of components).

Main features of the tax system

Personal income tax

The introduction of the flat tax rate in 2004 has superseded the previous system of progressive rates. The new tax law
has scrapped the majority of exceptions, exemptions and deductions. The restriction in the number of allowances
and credits to the minimum obviously contributes strongly to the transparency and simplicity of the tax system. The
basic  allowance  increased  from  19.2  to  22.5  times  the  minimum  monthly  subsistence  level.  As  the  goal  of  this
measure was to target the tax cut on the low and middle-income class, the threshold from which the basic allowance
is gradually withdrawn has been lowered, so that the high-income class will not be affected by this measure. This
measure will be in force until 2010. Employee tax credit was introduced on 1 January 2009. It is a form of negative
income tax which is paid to low income employees. 

The PIT tax rate is 19 % of aggregate income. Income is defined broadly as any benefit in cash or in kind. Aggregate
income  includes  income  from  employment,  occupational  pensions,  business,  rent,  capital  and  other  occasional
activities. Capital gains are generally included in aggregate income with the exception of income from the sale of a
dwelling used as a permanent residence of the taxpayer over the previous two years, and the income from the sale of
other immovable property owned for at least five years; gains from the sale of movable property owned for at least
five years; and gains from the sale of shares and other securities up to a total annual amount equal to five times the
living  minimum  (€  894.60  in  2009).  No  tax  deductions  are  allowed  except  for  deductions  for  contributions  to
supplementary  pension  insurance  and  pension  savings schemes.  There  are  two  kinds  of  tax  allowances:  the  basic
allowance available to every taxpayer and the supplementary allowance for a spouse whose income, after deducting
social security contributions, is below the basic allowance level. Additionally, a resident taxpayer is entitled to a tax

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Part III

credit  for  each  child  living  in  the  same  household  with  him  if  his  employment  or  business  income  exceeds  the
amount equal to six times the minimum salary, i.e. € 1 773 for 2009. The credit per child is € 19.32 per month.

A  final  withholding  tax  of  19 %  is  levied  on  income  from  participation  certificates,  vouchers  and  investment
coupons;  interest  on  bank  deposits  and  current  accounts;  income  from  private  life  or  pension  insurance  and
payments from the supplementary pension insurance. However, a taxpayer may opt for including such income into
the aggregate income so that the tax withheld is treated as a prepayment. 

Corporate taxation

The corporate tax rate was reduced from 25 % to 19 % with effect from 1 January 2004. Exceptions and exemptions
such as tax holidays, tax breaks, individual tax bases and special tax rates applicable under the old tax regime have
been eliminated  from the  corporate income  tax  law,  providing for more  transparency.  A number of amendments
have been made to the tax law in order to adapt it to EU regulations on direct taxation such as the Parent-Subsidiary
Directive, the Merger Directive, the Interest and Royalties Directive and the Savings Directive.

Taxable income is calculated based on the income computed according to the accounting rules and is adjusted for
several items for tax purposes. These include non-deductible items such as expenses related to non-taxable income,
bad debts; contributions to the share capital as well as directors' remuneration and remuneration of members of the
board  of  directors,  members  of  the  supervisory  board,  and  members  of  other  legal  bodies  if  not  paid  in  the
framework  of  an  employment  relationship.  For  depreciation  purposes,  a  straight-line  or  a  specific  accelerated
depreciation  method  may  be  used.  Capital  gains are  included  in  the  company's  taxable  ordinary  income.  Income
from  participation  certificates  and  interest  on  corporate  bonds,  bearer  deposit  certificates,  deposit  accounts  or
current  bank  accounts  are subject to a  19 %  withholding  tax.  This is  treated as  an  advance  payment  of corporate
income tax and the income is included in the taxable corporate income of resident companies. Tax losses may be
carried forward for up to five years. No group taxation provisions exist; all entities are taxed separately. The thin
capitalisation rules which were abolished with effect from 1 January 2004 will be reintroduced as of 1 January 2010. 

VAT and excise duties

Prior to the tax reform in 2004 Slovakia applied two VAT rates: a standard rate of 20 % and a reduced rate of 14 %.
The tax reform introduced a unified 19 % VAT tax rate for all goods and services as of 1 January 2004. In 2007, a
10 %  reduced  rate  was  reintroduced;  it  applies  to  medicines,  certain  other  medical  and  pharmaceutical  products,
and, since 2008, to books. 

The tax reform also introduced amendments to excise duties on mineral oils, tobacco and tobacco products, and
beer in order to harmonise Slovak tax law with EU regulations. These amendments increased excise duty rates on
these  types  of  products,  so  that  Slovak  excise  duties  have  reached  the  required  levels  earlier  than  negotiated  in
Slovakia's EU Accession Treaty. 

Social contributions

Both employees and employers have to pay contributions for pension insurance (4 % and 14 % respectively), health
insurance (4 % and 10 % respectively), disability insurance (both 3 %) and sick leave insurance (both 1.4 %), as well
as unemployment insurance (both 1 %). Additionally, employers have to pay 0.8 % of employees' wages for accident
insurance, 4.75 % to a solidarity fund and 0.25 % to the guarantee fund. A contributions ceiling applies to all types of
insurance except accident insurance. Part of social contributions (nine percentage points) is accumulated in private
pension  funds.  In  2009,  the  contribution  ceilings  for  employers'  and  employees'  social  security  contributions  are
€ 2 674.90  for  reserve  fund  as  well  as  for  pension,  disability  and  unemployment  insurance,  € 2 006.17  for  health
insurance and € 1 003.09 for sick leave insurance and guarantee fund.

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Developments in the Member States

<@>TAB_PRINT_SI.pdf

Slovenia

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
15.0
8.5
3.3
1.1
2.1

15.2
8.5
3.3
0.9
2.5

Ranking 1)
10
7
11
17
7

15.8
8.7
3.0
1.8
2.3

7.4
5.6
1.2
0.6

14.3
5.5
7.8
1.0

20.7
n.a.
2.7
14.1
n.a.

13.9

20.7
19.9
6.9
13.0
0.7

3.0
2.1
1.2
0.2
0.7
0.9

0.0

15.6
8.3
3.4
1.4
2.5

7.6
5.7
1.3
0.6

14.5
5.5
7.7
1.3

20.6
n.a.
2.8
14.4
n.a.

13.4

21.0
20.1
7.1
13.0
0.9

3.3
2.3
1.3
0.2
0.8
0.9

0.0

15.9
8.6
3.4
1.3
2.5

7.8
5.7
1.6
0.6

14.3
5.4
7.6
1.3

21.0
n.a.
2.8
14.1
n.a.

13.7

20.8
19.9
7.1
12.8
0.9

3.5
2.6
1.6
0.2
0.8
0.9

0.0

16.0
8.5
3.4
1.3
2.8

8.0
5.7
1.7
0.5

14.2
5.4
7.5
1.3

21.2
n.a.
2.9
14.1
n.a.

13.8

20.9
19.9
7.1
12.7
1.0

3.5
2.7
1.7
0.2
0.8
0.8

0.0

15.8
8.5
3.4
1.1
2.8

8.3
5.7
1.9
0.6

14.2
5.4
7.5
1.4

21.2
n.a.
2.9
14.1
0.2

13.6

20.8
19.8
7.1
12.7
1.0

3.9
3.0
1.9
0.3
0.8
0.9

0.0

15.8
8.6
3.3
0.9
2.9

8.7
5.5
2.8
0.4

14.3
5.6
7.5
1.2

21.5
n.a.
2.8
14.1
0.3

13.4

20.7
19.8
7.3
12.5
0.9

4.7
3.7
2.8
0.2
0.8
0.9

0.0

9.2
5.8
3.0
0.4

14.0
5.5
7.4
1.2

9.5
5.7
3.4
0.4

13.7
5.4
7.2
1.1

% of GDP
20.8
n.a.
3.4
13.6
0.4

21.3
n.a.
2.9
13.9
0.3

% of GDP
13.3

13.2

20.3
19.4
6.9
12.5
0.9

4.9
4.0
3.0
0.3
0.7
0.9

0.0

19.7
18.8
6.5
12.3
0.9

5.3
4.4
3.4
0.3
0.7
0.9

0.0

€ bn
5.2
2.9
1.1
0.4
0.7

3.3
2.0
1.2
0.1

4.7
1.9
2.5
0.4

7.2
n.a.
1.2
4.7
0.1

4.6

6.8
6.5
2.2
4.2
0.3

1.8
1.5
1.2
0.1
0.2
0.3

13.2

1.0
0.8

0.2
0.1

18
20
12
20

5
19
1
13

17
n.a.
13
4
5

8

10
10
14
5
15

24
22
16
20
20
23

12

6
4
3
14
6

10
11

TOTAL

37.5

37.7

38.0

38.2

38.3

38.7

38.4

38.2

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.9
2.4
1.8
0.4
0.1

23.5
37.7
15.7
11.1
19.6
6.9

4.4
0.6

3.3
2.7
2.2
0.4
0.1

23.0
37.5
17.5
12.4
22.2
7.9

2.8
-0.6

3.3
2.7
2.2
0.4
0.2

23.9
37.6
17.4
13.1
24.6
7.5

4.0
-0.6

3.3
2.6
2.2
0.5
0.3

24.0
37.7
17.0
13.2
21.0
7.8

2.8
-1.8

3.3
2.6
2.2
0.5
0.2

23.9
37.5
18.9
14.7
23.0
8.8

4.3
-1.6

3.2
2.5
2.1
0.5
0.2

23.6
37.6
22.1
17.7
33.6
7.3

4.3
-1.3

% of GDP
3.0
2.3
2.2
0.5
0.2

3.0
2.3
2.1
0.5
0.2

%
24.1
36.9
23.1
19.2
32.9
7.8

6.8
2.3

23.8
37.4
22.0
17.9
30.4
8.0

5.9
0.2

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

SLOVENIA

Overall trends in taxation

Structure and development of tax revenues

Slovenia's total tax-to-GDP ratio (including social security contributions) amounted to 38.2 % in 2007, a value that
slightly  exceeds  the  EU  average  (37.5 %)  and  equals  the  euro  area  average  (38.2 %).  Compared  to  its  neighbours,
Slovenia's tax ratio lies well below Hungary's, Italy's and Austria's.

Slovenia  displays  a  relatively  high  share  of  indirect  taxes  (39.2 %  of  total  taxes).  Social  contributions  play  an
important role, too, with a share of 36.0 %, i.e. 6.5 percentage points above the EU average; this share has, however,
progressively decreased since 2001. Given the predominance of indirect taxes and social contributions, direct taxes
yield  a  low  share  at  24.9 %  of  the  total  (EU  32.3 %).  It  is  worth  noting  that  employers  liable  for  payment  of  social
security contributions were also subject to a payroll tax (until 2008), introduced in the second half of 1996 to finance
a cut of social security contributions from 42 % to 38 % of wages. As for employees' social contributions, measured as
a percentage of GDP they are the highest in the EU.

Central government accounts for the largest part of tax revenue (54.5 %). Local governments collect only 9.0 % of
total taxes, i.e. 2.1 percentage points below the EU average (11.1 %) and slightly above the euro area average (7.9 %).

The total tax-to-GDP ratio has fluctuated within a narrow band ever since 2000. A major change in the tax system
occurred in 1999 when VAT replaced the previous sales tax; apart from a temporary increase in the transition year,
however, the overall levels of indirect taxation remained roughly the same.

Taxation of consumption, labour and capital; environmental taxation

At 13.3 %, revenue from consumption taxes lies above the EU and euro area averages (12.4 % and 11.9 % of GDP,
respectively). A modest decrease in revenue has taken place in the second half of the period under consideration but
the ITR has varied little overall, oscillating around the 24 % mark.

In line with the overall near constancy of taxation levels, the ITR on labour has remained quite stable since 2000 at
around 37 %. Given a relatively high level of employees' social security contributions, its value lies 2.5 percentage
points above the EU average.

Revenues from taxes on capital overall have almost doubled since 2000; in particular, a threefold increase of revenue
from taxes on income of corporations has taken place. Nevertheless, both levels remain lower than the EU average
(8.0 % and 3.7 % of GDP respectively).

In 2007, environmental taxes represented 3.0 % of GDP. This share dropped by 0.3 percentage points from a 3.3 %
value in 2001–2004, but remains above the EU average (2.7 %1)). As in most countries, taxes on energy account for
the lion's share of environmental tax revenues; their revenue is high also in the international comparison (Slovenia
ranks fourth in the Union in this respect). Despite their lower absolute revenue, pollution/resource taxes, too, are
well developed in Slovenia, taking the sixth highest level in the EU.

1)

 The decline in energy tax revenues between 1998 and 2000 is essentially a statistical artefact. See Annex B, Part C — environmental taxes for
details.

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Current topics and prospects; policy orientation

To address the issue of the high tax burden on labour, reforms launched in 2005 started phasing out the payroll tax,
which was lifted completely in 2009. These reforms also introduced a differentiation in the taxation of individual
incomes according to their character; while 'active' income is still taxed at progressive rates applied to the annual tax
base, 'passive' income (i.e. income from interest and dividends and capital gains) is taxed at a flat rate, as in dual
income systems.

In 2006, an important reform resulted in: (i) a reduction in the number of personal income tax brackets from five to
three and in the top tax rate from 50 % to 41 %; (ii) retention of schedular taxation of passive income (income from
property) at a single 20 % final rate; and (iii) a gradual reduction of corporate income tax from 25 % to 20 % (by
2010).  The  general  investment  tax  credit  was  scrapped,  retaining  tax  relief  for  regional  investment  in  R&D.  The
government has also been aiming at reducing the compliance burden. A new Tax Procedure Act, applicable as from
January  2007,  includes  several  measures  meant  to  simplify  tax  procedures  and  increase  the  legal  certainty  for
taxpayers. In 2008, several amendments to the personal and corporate income tax were introduced with retroactivity
from  January  2008.  As  concerns  PIT,  the  additional  general  allowance  was  increased  and  different  investment
allowances  were  introduced.  An  investment  allowance  for  investment  in  equipment  or  intangible  assets  was  also
introduced in the area of CIT. In 2008, the government also increased the excise duties on unleaded petrol, diesel
fuel and alcohol beverages with effect from January 2009.

Main features of the tax system

Personal income tax

Each individual is taxed separately; there is no spouse or family taxation regime. The annual tax base is computed
after deduction of compulsory social security contributions and certain allowances. Net 'active' income (see above) is
taxed according to a progressive rate, with three brackets ranging from 16 % to 41 %. The top rate applies to income
above € 14 820.83. The tax is levied at central government level, part of the revenues from the personal income tax
being  attributed  to  municipalities.  There  is  a  tax  credit  on  pensions.  Taxable  income  is  reduced  by  a  general
allowance equivalent to € 5 113 (if active income is up to € 8 557), € 4 082 (active income between € 8 557 and €
9 897) and € 3 051 (active income over € 9 897). Other allowances apply (e.g. disabled person allowance, seniority
allowance  for  taxpayers  older  than  65,  family  allowances  for  every  dependent  child,  and  other  special  personal
allowances such as student allowance).

Dividends, interest and capital gains (non-active income) are taxed according to a flat rate. The tax rate for dividends
and interest is 20 % (in 2006–2007 the tax rate for interest was 15 %). The tax rate for capital gains depends on the
holding period. The capital gains tax is reduced progressively every five years of the holding period down to 0 % after
20 years.

Corporate taxation

The current corporate tax rate for the year 2009 is 21 % (reduced to not less than 10 % for companies operating in
special  economic  zones  and  to  0 %  for  investment  funds,  pension  funds  and  insurance  undertakings  for  pension
plans,  under  certain  conditions)  and  will  be  cut  further  to  20 %  from  2010.  Companies  may  carry  forward  losses
indefinitely,  but  carry  back  is  not  allowed.  Furthermore,  companies  benefit  from  depreciation  allowances  on
buildings (at a maximum rate of 3 %), machinery and equipment (at a maximum rate of 20 %) and from incentives
on R&D activities and purchase of R&D services. 

The taxable base is computed following accounting principles for business. Entertainment and supervisory board
costs, as well as certain provisions, are deductible up to 50 % of the actual amount. The write-off of a receivable is

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Part III

allowed if recorded in the public accounts, but under strict limits. In general, capital gains from regular income are
included  in  taxable  profit  and  taxed  at  the  regular  tax  rate.  Various  exemptions  exist  such  as  the  participation
exemption for dividends and capital gains on the alienation of shares (under special conditions). As for incentives,
one fifth of the amounts spent on R&D (up to 40 % in certain regions), not exceeding the amount of the taxable base,
are deductable; other incentives exist for employment of trainees and disabled persons as well as for establishment in
a  special  economic  zone.  The  dividend  withholding  tax  rate  is  15 %  (unless  a  Double  Taxation  Treaty  specifies
otherwise). 

VAT and excise duties

VAT was introduced on 1 July 1999 replacing the previous General Sales Tax. The current rate is 20 %. The reduced
rate of 8.5 % applies to goods and services including, inter alia, foodstuffs, preparation of meals, live animals, seeds,
plants; supply of water, sewage and refuse disposal; medicines and medical appliances for the disabled; passenger
transport;  books  and  periodicals;  cultural  and  sporting  events;  construction,  renovation  and  supply  of  housing;
fertilisers and pesticides; accommodation provided in hotels and similar establishments. Slovenia has been granted a
transitional period (until 31 December 2010) regarding a reduced VAT rate for the preparation of meals and for the
supply  of  construction,  renovation  and  maintenance  work  for  residential  housing  not  provided  as  part  of  social
policy. 

Excise duties are regulated in the Excise Duty Act, which transposes relevant EU legislation in this area. Fuel excise
duties are below average EU levels, but above the EU minima. An excise duty on coal and coke was introduced and
excise duties on cigarettes, mineral oil and gas were adjusted in 2005 in order to bring legislation in line with EU
regulations. From 1 January 2007 excise duties are also due on electricity. 

Wealth and transaction taxes

There is a real estate tax, a property tax on premises owned by individuals and a tax on boats. The tax on real estate,
known  as  ‘compensation  for  the  use  of  building  ground’  depends  on  the  type  and  location  of  the  property.  The
property tax on premises depends on the type and the value of the property. The tax rate for dwellings varies from
0.1 % to 1 % of the value. The rate for business premises varies from 0.15 % to 1.25 %, that on premises used for rest
and recreation is in the range of 0.2 % to 1.5 %. For business premises that are not used for attendant activities or are
not  rented,  the  tax  rate  is  increased  by  50 %.  There  are  several  exemptions  to  the  property  tax,  for  example  for
buildings of less than 160 m2 or for premises used by the owner for business activity, or for newly constructed or
renovated buildings. The tax on boats depends on the length of the boat and the power of the engine. 

The  inheritance  and  gift  tax  is  levied  at  progressive  rates,  ranging  from  5 %  to  39 %.  The  rate  depends  on  the
relationship  between  the  deceased/donor  and  the  beneficiary  and  on  the  value  of  each  beneficiary's  share  of  the
inheritance/gift. Spouses and all direct descendants are exempt.

Social contributions

Social  security  contributions  cover  pension,  health,  unemployment  insurance  and  maternity  leave.  Employees
contribute 22.1 % of their total gross wage of  which the pension insurance (15.5 %) is the biggest amount. Social
contributions are also payable by employers on behalf of their employees (the total rate paid by employers is 16.1 %).
The taxable base for both the employer and the employee is the amount of the gross wage, which includes gross leave
pay,  fringe  benefits  and  remuneration  of  expenses  related  to  work  above  a  certain  threshold.  Contributions  are
deductible both from CIT and the PIT.

Taxation trends in the European Union                 221

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Part III

Developments in the Member States

<@>TAB_PRINT_ES.pdf

Spain

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

11.9
6.1
2.6
1.9
1.2

10.5
6.6
3.1
0.8

12.0
8.7
1.9
1.4

16.5
2.7
3.1
11.7
0.6

9.9

15.9
14.2
8.7
5.5
1.7

8.7
5.9
3.1
0.8
2.0
2.8

0.6

11.5
5.9
2.5
1.9
1.2

10.4
6.8
2.9
0.8

12.2
8.8
1.9
1.4

16.2
2.6
3.0
11.8
0.5

9.5

16.2
14.5
8.8
5.7
1.7

8.3
5.6
2.9
0.8
1.9
2.8

0.6

11.6
5.8
2.5
2.0
1.2

10.8
6.8
3.3
0.7

12.1
8.8
1.9
1.4

13.1
6.3
2.9
11.8
0.4

9.4

16.3
14.5
8.8
5.7
1.8

8.8
5.9
3.3
0.7
1.9
2.9

0.6

11.9
6.0
2.5
2.3
1.1

10.5
6.6
3.1
0.8

12.2
8.9
1.9
1.4

12.5
6.9
2.8
11.9
0.4

9.6

16.2
14.5
8.9
5.6
1.8

8.7
5.7
3.1
0.7
1.8
3.0

0.6

12.2
6.1
2.5
2.5
1.1

10.6
6.4
3.5
0.8

12.2
8.8
1.9
1.5

12.3
7.5
3.0
11.8
0.3

9.7

16.0
14.3
8.8
5.5
1.8

9.3
6.0
3.5
0.7
1.8
3.3

0.4

% of GDP
12.0
6.1
2.2
2.6
1.1

12.7
6.4
2.3
2.9
1.1

Ranking 1)
25
26
24
6
13

12.2
7.1
4.2
0.9

12.1
8.8
1.9
1.4

13.4
7.7
4.8
0.9

12.2
8.9
1.9
1.4

% of GDP
14.2
8.0
3.1
11.9
0.3

13.5
8.1
3.2
11.8
0.3

% of GDP
9.5

9.8

16.4
14.5
8.8
5.7
1.8

10.9
7.1
4.2
1.1
1.7
3.8

16.9
14.9
8.9
6.1
2.0

11.2
7.8
4.8
1.2
1.8
3.4

11
9
5
10

11
7
23
9

24
3
16
10
12

27

13
14
8
21
8

6
4
5
6
10
6

12.6
6.3
2.4
2.8
1.1

11.4
6.6
3.9
0.8

12.1
8.8
1.9
1.4

12.9
7.9
3.1
11.8
0.3

9.8

16.2
14.4
8.8
5.6
1.8

10.1
6.5
3.9
0.8
1.8
3.6

0.4

0.5

0.5

€ bn
126.3
64.4
23.4
27.2
11.4

140.6
81.3
50.1
9.2

128.1
93.4
20.4
14.3

149.5
84.3
32.7
125.0
3.6

99.4

177.6
157.1
93.4
63.7
20.6

118.0
81.8
50.1
12.9
18.9
36.2

TOTAL

33.9

33.5

33.9

33.9

34.5

35.6

36.5

37.1

13

389.7

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.2
1.7
1.5
0.4
0.0

15.7
28.7
29.7
20.1
30.7
13.6

5.0
1.9

2.1
1.7
1.4
0.4
0.0

15.2
29.5
28.3
18.9
28.5
13.1

3.6
1.7

2.1
1.7
1.5
0.4
0.0

15.4
29.8
30.0
20.1
31.4
13.0

2.7
0.9

2.1
1.6
1.4
0.4
0.0

15.8
29.9
30.3
19.7
31.2
12.5

3.1
0.3

2.0
1.6
1.4
0.4
0.0

16.0
29.9
32.7
21.1
35.2
12.4

3.3
-0.1

1.9
1.5
1.3
0.4
0.0

16.3
30.3
36.4
23.4
43.5
12.6

3.6
-0.2

% of GDP
1.8
1.4
1.2
0.4
0.0

1.9
1.4
1.2
0.4
0.0

%
15.9
31.6
42.4
29.4
59.7
14.7

3.7
0.6

16.4
30.8
40.9
26.5
53.3
13.7

3.9
0.3

19.1
14.7

4.3
0.2

27
24
21
16
20

26
17

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

222

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Developments in the Member States

Part III

SPAIN

Overall trends in taxation

Structure and development of tax revenues

The total tax-to-GDP ratio was 37.1 % in 2007, 0.4 percentage points lower than the EU-27 arithmetic average; this
ratio is in the low range for the euro area.

Spain collects revenues almost equally from direct taxes, social contributions and indirect taxes (respectively 13.4,
12.2 and 12.0 % GDP). Spain has the third-lowest indirect taxes collection in percentage of GDP in the EU (roughly
2.3 percentage points lower than the EU-27 average). This can partly be attributed to a standard VAT rate (16 %),
which is low by EU standards and to two reduced rates (4 % and 7 %) that apply to a sizeable share of the tax base.
Direct taxes and social contributions are respectively 1.0 and 1.2 percentage point higher than the EU-27 average.
Spain's buoyant economic activity in the last years has boosted tax revenues. Personal income taxes have soared to
7.7 %  of  GDP  after  a  trough  in  2004  at  6.4 %.  However,  the  most  noticeable  change  has  been  the  increase  in
corporate income tax receipts which reached 4.8 % of GDP in 2007 (up from 2.9 % in 2001 and 1.9 % in 1995). This
is the fifth highest ratio in the EU. Social security contributions have remained stable on average over the period,
with the lion's share of the burden resting on employers.

Spain has a quasi-federal tax system, with three levels of government. The central government and the social security
funds collect the majority of the revenues (respectively 38.3 and 32.1 per cent of total taxes). However the financing
system of the regions (Comunidades Autónomas) was reformed in 1997, leading to a marked increase in regional
taxes as a percentage of GDP ('State' in the table). The effect, visible already from 1997 appears more clearly starting
from 2002 as the State government share more than doubled to reach the current level of 8.0 % of the GDP.

Spain  used  to  be  a  low-tax  country,  but  the  overall  tax  burden  perceptibly  increased  between  2000  and  2007
(+ 3.2 percentage points) to come closer to the EU-27 average. Substantial fiscal consolidation was achieved since the
mid-1990s, with a budget deficit declining particularly rapidly. Until 2007, tax revenues were boosted by increased
VAT and CIT receipts, thanks to buoyant economic growth.

Taxation of consumption, labour and capital; environmental taxation

The ratio of consumption taxes in proportion to GDP (9.5 %) is the lowest in the EU-27, with 2.9 percentage points
lower than the EU-27 average. After an increasing trend throughout the 2001–2006 period, the implicit tax rate on
consumption  is  back  to  15.9 %  and  remains  the  second-lowest  in  the  Union  after  Greece  as  of  2007.  This
development mimics the one of VAT collection in percentage of GDP.

The ratio of taxes on labour income to GDP stood at 16.9 % in 2007, just 0.3 percentage points below the EU-27
average (17.2 %). However, throughout the years 2000–2007, Spain has displayed an average implicit tax rate (ITR)
on labour below the EU-27 and especially the euro area average, although this difference has decreased from slightly
more than seven percentage points in 2000 to 2.8 percentage points in 2007. The lowest level of the ITR was recorded
in 1999 (28.3 %) as a consequence of the personal income tax reform. Subsequent increases in the ITR on labour, as
seen from 2000 to 2007, could be attributed to a noticeable increase in taxable wages and salaries as a result of the
strong job creation process observed in the last few years. The ITR on labour has risen again by 0.8 percentage point
in 2007 to 31.6 %.

The ratio of capital taxes on GDP has increased substantially during recent years (+ 2.5 % in the 2003–2007 period).
Revenue from capital taxation is well above the EU-27 average (11.2 % GDP v. 8.0 %) and the implicit tax rate on

Taxation trends in the European Union                 223

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Part III

Developments in the Member States

capital shows an even more dramatic trend. This can be attributed to the strong increase in tax revenues raised on
capital income of corporations (+ 1.7 % of GDP in the period, an increase of more than 50 %), partly owing to strong
growth,  and  is  also  reflected  in  the  implicit  tax  rate  on  corporate  income,  which  soared  over  the  recent  period.
Similarly, the implicit tax rate on capital income of households and self-employed has been rising since 2003 to reach
14.7 %.

Environmental taxation is the lowest in the EU-27 (1.8 % of GDP). As in the majority of Member States, it is mostly
concentrated on energy (1.4 % of GDP).

Current topics and prospects; policy orientation

In 2007 and 2008, the personal income and corporate income tax systems have undergone new significant reforms.
The reforms were aimed at simplifying and increasing the neutrality of the tax system, and strengthening incentives
for  work,  saving,  risk-taking  and  investment.  Throughout  2008  and  2009,  several  measures  have  been  taken  in
relation with the global financial and economic crisis.

Main features of the tax system

Personal income tax

The personal income tax system was already simplified in 1999 and 2003. A new reform took effect from 2007. The
tax scale applicable to the general component of taxable income has been reduced from five brackets to four (24 %,
28 %, 37 % and 43 %). Savings, including capital gains, are now taxed at a single flat tax rate of 18 %, regardless of
how  long  the  assets  have  been  held.  As  for  dividends,  under  certain  conditions  the  first  € 1 500  are  exempt;  any
excess is taxed at an 18 % rate. Personal and family allowances have been increased and since 2007 are included, as a
general rule, in the first income bracket, which is taxed at a zero rate. Until 2007, they were deducted from the tax
base, which decreased the progressivity of the tax. In the context of measures taken to alleviate the consequences of
the  global  financial  crisis,  Spain  has  increased  tax  credits,  social  security  rebates  and  deadlines  of  payments  to
specific categories of workers. In addition, an additional tax credit of € 400 has been granted to working and self-
employed taxpayers to support household purchasing power.

Corporate taxation

The tax rate has been reduced from 35 % to 32.5 % in 2007 and to 30 % in 2008 (from 40 % to 37.5 % and 35 % for
2007  and  2008,  respectively,  for  entities  engaging  in  oil  exploration,  research,  and  exploitation).  For  small  and
medium companies (those with a turnover less than € 8 million), a 25 % tax rate (applicable to the first € 120 202.41)
applies. Some tax credits, including those for exports, are to be gradually phased out by 2011, 2012 or 2014. The rules
regarding  tax  credits  for  reinvestment  have  also  been  revised,  in  particular  with  reference  to  the  kind  of  assets
involved. Capital gains on the sale of certain assets are now effectively taxed at 18 % (the same tax rate as the PIT).
Finally,  the  R&D  tax  credit  has  been  expanded  to  companies  with  more  than  25 %  of  their  research  activity  in
another EU Member State or member of the EEA.

VAT and excise duties

The standard VAT rate is 16 %. Two reduced rates of 7 % and 4 % apply to specific categories of goods, namely, inter
alia,  to  sports  activities,  food,  health  products,  housing,  entertainment  services,  hotels  and  restaurants,  and
agricultural services; and to some essential goods and books. In 2006, the Ecofin Council ratified the agreement to
extend  reduced  VAT  for  hairdressing  and  building  workers  until  the  end  of  2010.  In  the  Canary  Islands,  a  special
regime is applied with a standard rate of 5 %. A special duty on imports and certain goods in the Canary Islands is

224

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Developments in the Member States

Part III

also applied. The recent reform introduced a special VAT consolidation regime applicable to corporate groups, and
the possibility of claiming immediate VAT refunds

Wealth and transaction taxes

Inheritance and gift taxes are levied on behalf of the 17 autonomous regions, which set their own tax rates within
certain limits. If they do not, national limits apply. A tax on wealth transfers applies to rights and assets located in
Spain. For the transfer of real estate, this tax is levied at different rates depending on the Autonomous Community
where the land is located. If no specific rate is set, a 7 % rate is levied on the value of real estate. A 100 % tax rebate
has been introduced in the wealth tax in 2008.

Local taxes

Regional governments receive a significant share of total tax revenue (33 % of personal income tax; 35 % of VAT;
40 %  of  excise  duties  on  hydrocarbons,  tobacco,  beer  and  alcohol;  100 %  of  excise  duties  on  electricity  and  car
registration). Indirect tax revenues are transferred according to a territorial consumption index. Statutory personal
income tax rates can be modified by the regional governments provided the structure retains progression and the
number of tax brackets is unchanged. Taxes on inheritance and gift tax, registration duties and fees on lotteries and
gambling are wholly assigned to territorial governments with almost complete jurisdictional powers. If the estimated
expenditure exceeds potential revenues, the regional government receives a compensatory transfer from the central
government. Two out of the 17 Comunidades Autónomas (Basque Country and Navarra) have a special tax regime
and  apply,  in  particular,  their  own  personal  income  and  corporate  income  taxes.  For  the  others,  fiscal  revenue
sharing  forms  the  object  of  multi-annual  agreements.  The  financing  system  of  the  autonomous  communities
(accepted only by 11) of 1997–2001 was extended to the 2002–2007 period; during 2008–2009 the system has been
provisionally applied until conclusion of a new financing agreement in the Consejo de Política Fiscal y Financiera (a
high-level  body  in  charge  of  the  decision-making  process  regarding  financing  issues  and  representing  all  the
Autonomous  Regions).  Afterwards, the  LOFCA  (Ley  Orgánica de  Financiación  de las Comunidades  Autónomas)
will also be reformed.

Social contributions

Each professional category has minimum and maximum contribution bases. For 2009 the maximum monthly base is
€ 3 166.20; the minimum monthly base varies depending on the type of work. The total rate for the general regime
(including general risk, unemployment insurance and professional education training) is 6.35 % for the employees
and 29.90 % for employers. 

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Developments in the Member States

<@>TAB_PRINT_SE.pdf

Sweden

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

% of GDP
17.0
9.2
2.8
0.8
4.3

17.0
9.1
2.9
0.7
4.3

Ranking 1)
4
5
18
20
1

16.5
8.7
3.2
0.7
4.0

22.1
17.2
3.8
1.1

13.2
10.2
2.8
0.2

30.7
n.a.
14.9
5.6
0.5

12.4

31.0
27.3
12.9
14.4
3.7

8.4
6.3
3.8
1.7
0.7
2.1

0.0

16.6
8.8
3.2
0.7
3.9

19.6
16.0
2.6
1.0

13.7
10.7
2.8
0.3

28.1
n.a.
15.5
5.9
0.5

12.6

31.2
27.6
13.4
14.2
3.6

6.1
4.3
2.6
0.9
0.7
1.9

0.0

16.8
8.9
3.2
0.7
4.0

17.6
14.7
2.1
0.9

13.5
10.4
2.8
0.2

26.1
n.a.
15.6
5.8
0.4

12.7

30.0
26.5
13.2
13.4
3.5

5.1
3.3
2.1
0.6
0.7
1.8

0.0

16.9
9.0
3.2
0.7
4.1

18.3
15.2
2.2
0.9

13.1
10.1
2.8
0.2

26.3
n.a.
16.0
5.7
0.4

12.7

30.3
26.3
13.0
13.3
4.0

5.3
3.5
2.2
0.6
0.7
1.8

0.0

16.7
8.9
3.1
0.7
4.0

19.1
15.4
2.9
0.8

12.8
9.9
2.7
0.2

26.8
n.a.
16.0
5.6
0.3

12.6

30.0
26.0
12.7
13.3
4.0

6.1
4.3
2.9
0.7
0.7
1.8

0.0

16.9
9.2
3.0
0.7
4.0

19.9
15.5
3.6
0.7

12.8
9.8
2.7
0.2

27.9
n.a.
15.9
5.5
0.3

12.9

29.6
25.9
12.6
13.3
3.7

7.1
5.4
3.6
1.0
0.8
1.7

0.0

19.8
15.5
3.6
0.7

12.1
9.2
2.7
0.2

19.0
14.6
4.0
0.5

12.2
9.3
2.7
0.3

% of GDP
26.8
n.a.
15.7
5.5
0.2

27.5
n.a.
15.7
5.5
0.3

% of GDP
12.7

12.6

29.0
25.3
12.4
12.9
3.7

7.3
5.6
3.6
1.3
0.6
1.8

0.0

28.3
24.9
12.4
12.5
3.4

7.3
5.8
4.0
1.2
0.6
1.5

0.0

€ bn
56.4
30.5
9.2
2.5
14.2

63.0
48.3
13.2
1.5

40.4
30.7
8.8
0.9

88.8
n.a.
52.0
18.3
0.7

41.9

93.7
82.4
41.1
41.3
11.3

24.1
19.2
13.2
3.9
2.1
4.9

159.8

8.7
7.3

1.3
0.1

2
2
6
19

10
5
16
21

5
n.a.
1
22
27

11

1
1
1
4
2

15
15
6
7
21
15

2

11
7
20
17
16

2
2

TOTAL

51.8

49.9

47.9

48.3

48.7

49.6

49.0

48.3

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

2.7
2.4
-
0.3
0.1

26.3
47.2
43.4
32.4
41.0
22.7

4.4
1.9

2.8
2.4
-
0.3
0.1

26.6
46.2
34.2
23.7
30.8
15.9

1.1
0.0

2.8
2.5
1.4
0.3
0.1

26.8
44.8
29.3
19.0
23.5
13.6

2.4
-0.4

2.9
2.5
1.4
0.3
0.1

26.9
44.7
30.3
20.0
25.3
13.6

1.9
-1.1

2.8
2.4
1.4
0.3
0.0

26.9
44.7
28.8
20.3
22.7
15.2

4.1
0.3

2.8
2.4
1.4
0.4
0.0

27.5
45.0
35.9
27.1
31.7
18.7

3.3
1.0

% of GDP
2.6
2.2
1.2
0.4
0.0

2.7
2.3
1.2
0.4
0.0

%
27.8
43.1
35.9
28.6
32.8
19.4

2.5
1.8

27.4
44.5
29.1
22.2
21.7
20.5

4.2
2.2

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

226

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Developments in the Member States

Part III

SWEDEN

Overall trends in taxation

Structure and development of tax revenues

Swedish taxation levels are the second highest in the EU. In 2007, the tax-to-GDP ratio (including social security
contributions)  stood  at  48.3 %,  compared  with  37.5 %  for  the  EU-27  average.  Compared  to  the  neighbouring
countries, the rate is marginally lower than in Denmark (48.7 %), but significantly higher than in Finland (43.0 %).

The Swedish tax system relies largely on direct taxation, in particular personal income taxation, for raising revenue.
Hence, the tax mix differs quite markedly from the Union average: direct taxes account for 39.4 % of the Swedish tax
revenue, while indirect taxes and social contributions respectively account for 35.3 % and 25.3 % of tax revenue. This
compares to EU-27 averages of around 32.3 %, 38.4 %, and 29.5 % respectively. 

The  structure  by  level  of  government  differs  from the  EU  average. Social security funds  account  for  a  rather  low
proportion of revenues, around 40 % of the EU-27 average, while local government revenues, at 32.6 % of total tax
revenues,  amount  to  almost  three  times  the  EU  average.  Only  Denmark  has  a  similarly  high  share  of  local
government revenue.

The  overall tax burden  increased by nearly  four percentage  points  from  1995 to  2000, when  it  reached a  peak  of
51.8 %  of  GDP.  From  2001  to  2007,  however,  the  ratio  has  stayed  below  50 %  of  GDP  reaching  the  lowest  value
(47.9 %) in 2002. Changes in the overall tax-to-GDP level were largely driven by PIT and CIT revenue, which were
particularly low in 2002 and rather high in 2005. Revenues from indirect taxes changed only slightly over time.

Taxation of consumption, labour and capital; environmental taxation

Revenue from consumption taxes (12.7 % of GDP) is close to the EU-27 average (12.4 %). However, the implicit tax
rate on consumption was at 27.8 % in 2007, the second highest in the Union and 5.6 percentage points above the EU-
27 average. There are two reasons for the high ITR: Sweden has one of the highest statutory VAT rates and above
average  rates  for  excise  duties,  and  the  Swedish  share  of  private  consumption  in  GDP  is  one  of  the  lowest  in  the
Union. 

The ratio of taxes on labour in proportion to GDP is the highest in the Union, by a margin of over 3.5 percentage
points  from  the  second  (Denmark).  The  ITR  on  labour  showed  an  upward  trend  until  1998,  mainly  because  of
different  fiscal  measures  to  increase  tax  revenue.  Since  then,  the  implicit  tax  rate  declined  until  2003,  remaining
stable until 2006. In 2007, the observed rate of 43.1 % is the lowest value measured so far. 

The implicit tax rate on capital of Sweden is, at 35.9 % for 2007, well above the EU-25 average (28.7 %). 

During  1995–2007,  revenues  from  capital  taxation  over  GDP  have  undergone  significant  changes.  The  strong
increase by around three quarters from 1995 (4.8 % of GDP) to 2000 (8.4 %), is largely due to high economic growth.
Among others, it led to a strong increase in revenue from the taxation of capital gains due to the booming stock
markets1). 

1)

 It is not possible within national accounts to account for the capital gains part of taxable income. For this reason, the increase in the capital
tax burden for Sweden is overestimated in that period. 

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Another  explanation  lies  in  deductible  net  interest  payments  that  have  diminished  substantially  due  to  dropping
interest rates. As also seen in the ITR on capital, revenue from taxes on capital fell sharply up to 2002 (5.1 %) due to a
slowdown in growth. In recent years, however, it has increased again because of the pickup in the economy. In 2007,
revenue from taxes on capital as per cent of GDP in Sweden (7.3 %) is somewhat below the EU-27 average (8.0 %).

Environmental taxes as a proportion of GDP (2.6 %) are in line with the EU-27 average (2.7 % in 2007). Their level
has been rather constant over the 1995–2007 period. Revenue from environmental taxes consists, to a relatively large
extent, of energy taxes.

Current topics and prospects; policy orientation

The focus of the new government's tax policy is on improving long-run employment levels by stimulating labour
supply as well as reducing unemployment, for example by introducing an in-work tax credit and through changes in
the system for social security contributions. The government is also actively seeking to orient the tax system further
towards supporting environmental policy goals without undermining competitiveness, e.g. by considering measures
to offset the burden falling on companies affected by the EU emissions trading scheme. 

In January 2009, the Budget Bill for 2009 came into force. The corporate tax rate was reduced from 28 % to 26.3 %.
Furthermore, a one percentage point reduction in the rate of social security contributions for employees as well as
self-employed was introduced, as well as reductions for persons aged under 26. The 3:12 rule, applicable to closely
held companies was amended by reducing the amount taxed as employment income. A limitation on the interest
deduction  available  to  affiliated  companies  was  introduced.  The  lower  tax  bracket  for  the  central  government
income tax was increased. In addition, the in-work tax credit, the tax-free personal allowance for taxpayers aged over
65 and the amount of non-deductible commuting expenses were increased. A tax credit for renovations, conversions
and building maintenance (for households) was also introduced.

Main features of the tax system 

Personal income tax

In 1991, Sweden introduced a dual income tax system. It combines a highly progressive taxation of labour income
(the  top  marginal  tax  rate  was  67 %)  with  a  30 %  flat  tax  on  broadly  defined  capital  income.  In  order  to  prevent
income transformation, special rules have been in place for active owners of closely held companies. Accordingly,
dividends and capital gains to active owners are split into capital income and earned income. However, the rules have
been changed several times; the last major reform was undertaken in 2006, when the portion that could be taxed as
capital income was enlarged, especially for companies with many employees. 

The policy of the green tax shift, which started already in 1991 with the introduction of a carbon tax, continued in
2004  with  higher  taxes  on  energy  use  and  lower  taxes  on  labour,  mainly  through  raising  the  basic  allowance.  In
addition, the uniform state income tax on labour income was removed in 2004, leading to a cut by SEK 200 (€ 21)
per year on all incomes. In 2007, Sweden introduced an in-work tax credit. The tax credit varies with earned income
and the maximum tax credit amounts to almost SEK 12 000 (€ 1 270) per year. A higher tax credit can be received by
people older than 65, with a maximum tax credit of about SEK 20 000 (€ 2 110) per year. A second step of the in-
work tax credit was introduced in 2008, and a third step in 2009. Overall, the in-work tax credit represents a tax cut
of SEK 60 billion between 2006 and 2009 (1.9 % of GDP).

At the central level, PIT rates of 20 % (taxable income above SEK 379 200 or € 40 000) and 25 % (taxable income
above SEK 538 800 or € 58 000) apply. In addition, a local income tax applies at a rate between 28.89 % and 34.9 %. 

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Part III

To increase labour supply and combat black market activities, a special tax credit was introduced in July 2007 for
households  that  purchase  certain  household  services.  The  tax  credit  equals  50 %  of  labour  costs  of  the  services
purchased up to a ceiling of SEK 100 000 (€ 10 800) per person and year (in 2008). Since 2008, the tax reduction is
also granted for household services received as a taxable benefit from the employer.

Corporate taxation

Taxation  of  corporations  follows  the  classical  system.  Double  taxation  is  eliminated  or  reduced,  in  the  case  of
corporate shareholders, by participation exemption, and in the case of individual shareholders by the relief granted
for dividends paid by small companies. The corporate income tax has been imposed since 1994 at a flat rate of 28 %,
which  was  reduced  to  26.3 %  in  January  2009.  Capital  gains  are  taxed  as  regular  corporate  profit.  Capital  losses,
generally deductible against profit, can normally be carried forward indefinitely.

VAT and excise duties

The standard VAT rate is 25 %. A reduced rate of 12 % applies to foodstuffs and to services related to tourism. A
reduced rate of 6 % applies to domestic daily and weekly newspapers and periodicals, to domestic transportation of
persons and ski-lift services, and to cinema, circus and concert tickets. 

Zero-rated  goods  and  services  include  prescription  medicines,  gold  for  investment  purposes,  and  a  number  of
financial services as well as insurance and reinsurance services. 

Wealth and transaction taxes 

The inheritance and gift tax was abolished as of 2005 and the wealth tax in 2007.

Concerning  the  tax  on  real  estate,  new  rules  apply  as  from  January  2008:  a  municipal  fee  replaces  the  central
government real estate tax. However, the central government decides on the rules. For owner-occupied houses, the
fee is SEK 6 000 (€ 650) per year and limited to a maximum of 0.75 % of the assessed value. For apartment buildings,
the fee is SEK 1 200 (€ 130) per flat and year and limited to 0.4 % of the assessed value of the house. As of 2008, a
capital gains tax on housing of 22 % applies (previously 20 %). In the case of the selling of permanent housing and re-
investment of the capital gain, a deferral of taxation is possible up to a limit of SEK 1.6 million (€ 173 000). Since
2008, a yearly interest of 0.5 % is charged.

Social contributions

  Employers  pay  most  social  security  contributions  for  employed  individuals.  In  2009  the  total  employer's
contribution rate is 31.42 %. Employees pay an additional pension insurance premium of 7 % (up to a ceiling), which
may  be  fully  credited  against  his  or  her  income  tax  liability.  Self-employed  taxpayers  must  pay  their  own  social
security contributions computed on their business income at a rate of 29.71 %, without a ceiling. 

As  from  2007,  social  security  contributions  are  waived  for  persons  who  have  been  in  receipt  of  unemployment
benefit,  sickness  benefit,  disability  pension  or  social  allowance  for  more  than  one  year.  From  2008  onwards,
employers  are  repaid  double  the  employer’s  contribution  when  employing  persons  who  have  received  sickness
benefits  or  disability  pensions  for  more  than  one  year.  To  facilitate  young  people's  entry  into  the  labour  market,
employer's social security contributions are reduced to 21.31 % (21.30 % in 2008) for employees between the age of
18 and 25. A reduction also applies to self-employed taxpayers. 

A special wage tax, paid by the employer, applicable to income that does not give a right to social security benefits
existed until 2008. To enhance the position of older people in the labour market, the tax was abolished for active
income. However, it is still applicable to non-active income, e.g. pension contributions.

Taxation trends in the European Union                 229

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Developments in the Member States

<@>TAB_PRINT_UK.pdf

United Kingdom

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

2000

2001

2002

2003

2004

2005

2006

2007

2007

13.9
6.6
4.0
1.6
1.8

16.7
10.6
3.3
2.8

6.2
3.5
2.5
0.2

34.6
n.a.
1.5
n.a.
0.6

11.8

14.0
13.8
3.5
10.3
0.2

10.9
6.5
3.5
1.5
1.5
4.4

13.5
6.6
3.8
1.4
1.7

16.8
10.6
3.4
2.8

6.2
3.5
2.5
0.2

34.4
n.a.
1.5
n.a.
0.6

11.6

14.0
13.8
3.5
10.3
0.2

10.9
6.6
3.5
1.6
1.5
4.3

13.4
6.6
3.7
1.3
1.7

15.7
10.2
2.7
2.8

5.9
3.3
2.4
0.2

33.0
n.a.
1.6
n.a.
0.4

11.5

13.3
13.2
3.3
9.8
0.2

10.1
5.8
2.8
1.5
1.5
4.3

13.2
6.8
3.6
1.3
1.6

15.4
9.8
2.8
2.9

6.6
3.6
2.7
0.2

33.2
n.a.
1.7
n.a.
0.3

11.5

13.6
13.4
3.6
9.8
0.2

10.2
5.8
2.9
1.5
1.5
4.3

13.0
6.7
3.4
1.3
1.6

16.4
10.2
3.2
2.9

6.7
3.7
2.8
0.2

34.0
n.a.
1.7
n.a.
0.3

11.2

14.0
13.9
3.7
10.2
0.2

10.9
6.5
3.4
1.6
1.5
4.4

 % of GDP
12.9
6.6
3.2
1.5
1.5

13.0
6.6
3.2
1.5
1.6

Ranking 1)
20
24
13
13
11

17.2
10.4
3.8
3.0

6.8
3.7
2.8
0.2

16.8
10.5
3.2
3.1

6.7
3.7
2.8
0.2

 % of GDP
34.3
n.a.
1.7
n.a.
0.3

34.9
n.a.
1.7
n.a.
0.3

 % of GDP
10.8

11.0

14.1
14.0
3.7
10.2
0.2

11.8
7.2
4.0
1.8
1.5
4.6

14.0
13.9
3.7
10.2
0.2

11.5
6.8
3.4
2.0
1.5
4.6

5
6
16
1

24
24
14
23

2
n.a.
20
n.a.
14

22

19
19
24
9
23

3
7
15
3
12
2

0.0

0.0

0.0

0.0

13.2
6.8
3.6
1.2
1.6

15.2
9.8
2.6
2.7

6.3
3.5
2.5
0.2

32.6
n.a.
1.6
n.a.
0.4

11.6

13.3
13.2
3.5
9.7
0.2

9.8
5.6
2.7
1.4
1.5
4.2

0.0

€ bn
263.4
134.4
65.9
31.6
31.5

344.5
215.2
65.6
63.7

137.0
75.4
57.3
4.4

703.5
n.a.
34.5
n.a.
6.9

222.3

287.8
284.0
75.4
208.6
3.8

234.9
140.3
70.2
40.1
30.0
94.6

Less: amounts assessed but unlikely to be collected

0.0

0.0

0.0

TOTAL

36.7

36.4

34.9

34.7

35.2

36.1

36.9

36.3

17

744.8

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

3.0
2.4
-
0.6
0.0

19.4
25.3
44.7
26.8
31.0
17.1

3.9
1.3

2.8
2.2
-
0.5
0.1

19.1
25.0
45.6
27.7
31.8
17.6

2.5
0.8

2.7
2.2
-
0.5
0.1

19.0
24.1
41.6
24.0
23.9
18.2

2.1
0.2

2.7
2.1
1.9
0.5
0.1

19.2
24.3
36.9
21.1
19.4
17.4

2.8
0.5

2.6
2.0
1.9
0.5
0.1

19.1
24.8
38.8
22.4
19.9
19.1

2.8
0.7

2.5
2.0
1.8
0.5
0.1

18.7
25.5
41.3
24.6
24.5
18.7

2.1
0.4

 % of GDP
2.5
1.8
1.7
0.5
0.1

2.4
1.9
1.7
0.5
0.1

%
18.4
26.1
42.7
25.5
23.2
22.5

3.0
1.7

18.6
25.8
44.4
27.1
27.7
20.4

2.8
0.9

50.2
37.5

10.9
1.8

15
14
9
13
9

22
24

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The ranking is calculated in descending order of 2006 data. A "1" indicates this is the highest value in the EU-27. No ranking is given if more than 10 % of data points are missing.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

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Developments in the Member States

Part III

UNITED KINGDOM

Overall trends in taxation

Structure and development of tax revenues

In 2007, the United Kingdom tax-to-GDP ratio (including social security contributions) stood at 36.3 %, a value that
remains below the EU-27 average (37.5 %).

The tax structure shows a comparatively high weight of direct taxes (fifth highest ratio amongst Member States),
which largely reflects a marked reliance on personal income taxes but also on a high level of direct taxes other than
corporate and personal income taxes (3.1 % of GDP compared to an EU-27 average of 0.8 %). This category includes
in particular council taxes on land and buildings and motor vehicle duties. After a declining trend at the dawn of the
century, revenue from personal income taxes increased between 2004 and 2007 (+ 0.7 % of GDP). At the same time,
corporate income taxes, which increased from 2.7 % of GDP to 3.8 % of GDP between 2002 and 2006, went back to
3.2 % of GDP in 2007. This value is below the EU-27 and EA-16 averages (respectively 3.5 % and 3.8 %). Direct taxes
represent the primary source of revenues (46.3 % of the total taxes), markedly larger than indirect taxes (35.4 %), and
far outweighing social contributions (18.4 %), the fourth lowest share of taxes in the EU after Denmark, Ireland and
Malta.

Roughly 95 % of total revenue is raised by the central government, confirming the United Kingdom as the second
most fiscally centralised Member State in the EU, after Malta.

The overall tax burden increased by two percentage points from 1995 to 2000, almost entirely due to rises in direct
taxation.  After  that  peak  the  tax  burden  tended  to  decline  between  2000  and  2003  (– 2  percentage  points)  but
increased again between 2003 and 2006 (+ 2.2 percentage points). It came down in 2007 at 36.3 % of GDP, about the
same proportion as in 2001, slightly more than a percentage point below the EU-27 average.

Taxation of consumption, labour and capital; environmental taxation

Looking at the economic classification of taxes, taxation of consumption (10.8 % of GDP) stood at 18.4 % in 2007
when measured as a percentage of final consumption expenditure of households. This ITR sets the United Kingdom
3.8 percentage points below the EU-27 average.

As a result of relatively low social security contributions, labour taxes revenue (14.0 % of GDP) is lower than in most
other European countries (EU-27 17.2 %). The ITR on labour employed is, at 26.1 %, the fourth lowest in the EU-27
and lies well below the EU-27 average (34.4 %). The index has shown recently a tendency to slightly increase since its
lowest point in 2002 at 24.1 %.

Revenue from taxes on capital (11.5 % of GDP), the third highest proportion in the EU-27, is much higher than the
EU-27 average (8.0 %) with all sub-categories — bar capital income of self-employed which is at par — being above
this average. The high contribution of taxes on capital to total tax revenue (10.2 percentage points over the 21.3 %
EU-27  average)  is  reflected  in  the  relatively  high  implicit  tax  rate  on  capital  (42.7 %).  Taxes  on  capital  stock  (i.e.
national domestic rates on business properties and council tax paid by owner-occupiers and tenants on the value of
their dwellings) contribute substantially to the United Kingdom's relatively high tax burden on capital as they are not
well captured in the capital base of the ITR.

From 1995 to 2001, both of the implicit tax rate on capital and business income and of the revenues from taxes on the
stocks of capital/wealth increased. In the following years, the ITR on capital dropped somewhat before picking up

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Developments in the Member States

again in the most recent period. The increase in the implicit tax rate on capital and business income can be partly
attributed1)  to  the  pro-cyclical  behaviour  of  the  implicit  tax  rate;  base  widening  due  to  economic  growth  and
increased incorporation has to some extent offset the effects of reductions in statutory rates.

Revenues from environmental taxes in percentage of GDP have fallen compared to the beginning of the period. This
is  mainly  due  to  the  evolution  of  the  collection  of  customs  duty  on  hydrocarbon  oils  in  recent  years,  which
constitutes  about  72 %  of  total  the  United  Kingdom’s  environmental  taxes  (the  motor  vehicles  duty  and  the  air
passengers’ duty constitute respectively another 16 % and 6 %). Its level has risen slower than GDP since 2001 (1.8 %
p.a. compared to an average 2.6 % p.a. for GDP). This explains the downwards trend which set the United Kingdom
0.2 % below the EU-27 average in 2007 against 0.1 % above it in 1995.

Current topics and prospects; policy orientation

During  recent  years,  fiscal  policy  has  focused  on  increasing  the  attractiveness  of  employment  by  improving  the
financial incentives to work and the tax system has been reorganised towards tax credits instead of direct delivery of
social services. Sizeable tax measures have also been taken recently to promote a low-carbon economy by use of the
tax system. Most recently, important measures have been taken to decrease taxes, in particular VAT, to alleviate the
effects of the global financial crisis.

Main features of the tax structure

Personal income tax

From  fiscal  year  2008–2009,  the  basic  starting  marginal  tax  rate  of  10 %  has  been  suppressed  (except  for  savings
income) and the basic rate has been reduced from 22 % to 20 %. The higher rate remains unchanged at 40 % and is
applied to income above GBP 37 400 (approx. € 41 500). The 2008 Pre-Budget Report increased personal income tax
allowances by GBP 130 above indexation and made permanent increases announced in the 2008–2009 Budget. For
those aged under 65 the personal income tax allowance is increased to GBP 6 475 in 2009–2010. For taxpayers aged
between 65 and 74 the personal allowance is GBP 9 490 and GBP 9 180 for those over 74. From April 2010, a new
higher rate (50 %) will be applied for annual incomes above GBP 150 000 and the PIT allowance will be restricted for
annual incomes over GBP 100 000.

Since April 2003, two tax credits have been available: the child tax credit (CTC), which is paid on top of universal
child  benefit,  and  the  working  tax  credit  (WTC)  which  is  intended  for  low-paid  working  adults,  means-tested
together with a full entitlement for families with a pre-tax income below GBP 5 225 per year2).

Finally, the government has introduced a single capital tax gains tax rate of 18 % from 2008–2009, with an annual
exempt  amount  of  GBP 9 600  per  year  and  has  increased  the  inheritance  tax  allowance  by  more  than  statutory
indexation.  It  stands  now  at  GBP 312 000  for  individuals.  In  addition,  a  temporary  exemption  from  Stamp  Duty
Land  Tax  was  introduced  for  acquisitions  of  residential  property  worth  not  more  than  GBP  175  000  for  land
transactions between September 2008 and end-2009.

1)

2)

It should also be kept in mind that both the ITR on capital and capital income are biased upwards (compared to other European Union
countries) because the ITR base does not capture the full extent of taxable profits of financial companies, particularly capital gains. A further
reason is that the United Kingdom figures allocate all tax on occupational (second pillar) and private pension benefits (third pillar) to capital
income whilst for most other Member States the second pillar is allocated to transfer income and income of the non-employed.

The  CTC  consists  of  a  family  element  of  GBP 545  per  year  (unchanged  in  2009–2010)  and  a  child  element  of  GBP 2 235  (up  from
GBP 2 085) per child and per year (increased for disabled or severely disabled children). The WTC consists of a basic element (GBP 1 890
per year) and an additional amount (GBP 1 860) for couples and single parents. An extra GBP 775 is given to people working at least 30
hours a week. From April 2009, the WTC threshold is GBP 6 420 (unchanged from 2008–2009).

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Part III

Corporation taxation

The corporation tax regime has been modified several times in the last decade. The main statutory rate was reduced
from 33 % in 1997 to 30 % in 1999.  The small company rate, which applies to firms with profits below GBP 300 000,
has been reduced progressively from 24 % in 1997 to 19 % in 2006, with a marginal rate applying to profits between
the small  companies and main rates. An additional rate was introduced in 2000 at an initial 10 % and applied to
company profits below GBP 10 000, but it was reduced to 0 % in 2002 and then completely abolished in 2005. The
2007 Budget introduced a series of measures: the corporate tax rate was reduced from 30 % to 28 % (effective April
2008), the small companies rate was raised from 19 % to 22 % phased over three years, the rates of capital allowance
on plant and machinery were reduced from 25 % to 20 % and the annual investment allowance (AIA), which allows
for capital spending of GBP 50 000 to be offset against profits in the first year for all firms, regardless of size and legal
form  was  introduced.  Additional  measures,  such  as  an  increase  in  R&D  tax  credits  and  a  phasing-out  of  capital
allowances on industrial buildings, have also been adopted in recent years. The 2008 Pre-Budget Report announced
that the final planned increase in the small companies’ rate would be deferred for one year, leaving the rate at 21% for
2009–2010.

VAT and excise duties

The  standard VAT rate is 17.5 %. However,  between  1 December  2008 and  31 December  2009, the  rate  has  been
temporarily reduced to 15 %. Several reductions and exemptions apply. In particular, a reduced rate of 5 % applies,
for  example  to  fuel  and  power,  but  also  on  the  installation  of  energy-saving  materials.  A  zero-rate  is  used  quite
extensively  as  it  applies  to  some  food  items,  books,  new  constructions,  passenger  transport,  some  supplies  to
charities and to children's clothing and footwear. 

Recently, important tax reforms have been implemented or planned on tobacco, fuel and other polluting activities.
Specifically, tax differentials between leaded and unleaded petrol have been increased and new differentials introduced
between ultra-low sulphur and standard petrol and diesel. The fuel duty rates will increase in the coming years (by
1.84 pence per litre from April 2009 and by 0.5 pence per litre above indexation in April 2010). The excise duty on
heavily polluting vehicles rose to GBP 300 (from GBP 210) in 2007–2008 and to GBP 400 in 2008–2009. No duty is
payable for the most environmentally friendly cars. A landfill tax was introduced in 1996 and a new climate change
levy on companies for the use of gas, coal and electricity came into effect in April 2001. The rates for air passenger
duty were doubled as of February 2007 to GPB 10 for European Economic Area destinations and GBP 40 for all other
destinations,  for  the  lowest  class  of  travel.  These  rates  are  doubled  for  all  other  classes  on  board  a  flight.  From
November 2009, the government will restructure the air passenger duty to a four-distance band structure at 2 000
mile intervals from London with the aim of sending better environmental signals. New rates will also be introduced.
Alcohol duty rates were increased by 6 % in real terms in March 2008 while the landfill tax will be increased from
GBP 32 per tonne to GBP 40. Following the reduction of VAT announced in the 2008 Pre-Budget Report, duty rates
were increased to maintain the overall level of taxation on alcohol constant.

Social contributions

The thresholds for paying national insurance contributions (NICs) are, since 2001, set to the level of the personal
income tax allowance, both for employers and employees. The self-employed pay NICs based on similar principles.
There  are  four  contribution  bands:  for  employees,  for  self-employed  at  GBP 2.30  per  week;  for  voluntary
contributions (fixed amount of GBP 8.10 per week); and for the self-employed with profits between GBP 5 435 and
GBP 40 040 at a rate of 8 % and a lower 1 % rate for profits above that threshold. Since 2003, a pension credit ensures
a minimum income to elderly people, also rewarding those who saved modest amounts for their retirement. NICs
are lower (9.4 %) for those who have contracted out of the State Second Pension and moved to a private pension
scheme. In 2008 the upper limit for paying NICs was increased to GBP 3 900 a year and from April 2009, it will be
fully aligned with the higher rate threshold of income tax. From April 2011, the NICs will be increased by 0.5.

Taxation trends in the European Union                 233

EU.fm  Page 234  Friday, May 29, 2009  9:54 AM

Part III

Developments in the Member States

<@>TAB_PRINT_EU27a.pdf

EUROPEAN UNION 27

ARITHMETIC AVERAGES

2000

2001

2002

2003

2004

2005

2006

2007

Revenue in 
2007

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government1)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

13.8
7.4
3.2
1.8
1.5

12.2
8.2
3.1
0.9

11.2
6.9
3.3
1.0

21.9
-
4.2
10.7
-

12.1

17.9
16.6
7.3
9.3
1.2

7.3
5.4
3.2
0.7
1.5
1.9

13.5
7.3
3.2
1.6
1.5

12.0
8.1
3.0
0.8

11.2
6.9
3.4
1.0

21.4
-
4.3
10.7
-

11.9

17.8
16.5
7.3
9.3
1.2

7.1
5.2
3.1
0.6
1.5
1.8

13.5
7.4
3.2
1.5
1.5

11.7
7.9
3.0
0.8

11.2
6.8
3.3
1.0

21.2
-
4.3
10.7
-

11.9

17.6
16.3
7.2
9.1
1.2

6.9
5.1
3.1
0.6
1.4
1.8

13.7
7.4
3.3
1.5
1.5

11.6
7.9
2.8
0.9

11.1
6.8
3.3
1.0

21.3
-
4.2
10.6
-

12.1

17.5
16.3
7.2
9.0
1.3

6.8
5.0
3.0
0.6
1.4
1.8

13.9
7.6
3.3
1.6
1.5

11.5
7.7
2.9
0.9

11.1
6.7
3.3
1.1

21.3
-
4.2
10.6
-

12.2

17.3
16.0
7.1
8.9
1.3

7.0
5.1
3.0
0.6
1.5
1.9

14.2
7.9
3.2
1.6
1.5

11.7
7.7
3.1
0.9

11.0
6.7
3.3
1.1

21.6
-
4.3
10.6
-

12.5

17.2
15.9
7.1
8.8
1.3

7.3
5.3
3.2
0.7
1.5
2.0

% of GDP
14.3
8.0
3.1
1.6
1.5

14.3
8.0
3.1
1.6
1.5

11.9
7.8
3.3
0.8

10.9
6.5
3.3
1.1

12.4
8.0
3.5
0.8

11.0
6.6
3.3
1.1

% of GDP
22.2
-
4.3
10.6
0.3

21.7
-
4.4
10.6
-

% of GDP
12.4

12.4

17.1
15.8
7.0
8.8
1.3

7.6
5.6
3.4
0.8
1.5
2.0

17.2
15.9
7.0
8.9
1.3

8.0
6.0
3.7
0.8
1.5
2.0

€ bn
1 706.1
874.8
322.4
222.6
286.3

1 684.0
1 154.4
370.5
159.1

1 529.9
883.1
471.6
175.3

2 559.5
345.1
510.3
1 465.3
39.7

1 366.4

2 388.7
2 192.5
953.4
1 239.1
196.2

1 164.8
809.8
425.5
128.3
255.9
355.0

TOTAL

37.2

36.6

36.3

36.4

36.4

36.9

37.0

37.5

4 908.4

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)

2.8
2.0
-
0.7
0.1

20.9
35.9
-
-
-
-

3.9

2.7
1.9
-
0.7
0.1

20.4
35.5
-
-
-
-

2.0

2.7
1.9
-
0.7
0.1

20.7
35.1
-
-
-
-

1.2

2.8
2.0
-
0.7
0.1

21.1
35.0
-
-
-
-

1.3

2.9
2.1
-
0.7
0.1

21.4
34.8
-
-
-
-

2.5

2.8
2.0
-
0.7
0.2

21.9
34.5
-
-
-
-

2.0

% of GDP
2.7
1.9
-
0.7
0.2

2.7
1.9
-
0.7
0.2

%
22.2
34.4
-
-
-
-

2.9

22.0
34.4
-
-
-
-

3.1

302.9
219.1

71.7
12.1

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

234

Taxation trends in the European Union

EU.fm  Page 235  Friday, May 29, 2009  9:54 AM

Developments in the Member States

Part III

<@>TAB_PRINT_EU27w.pdf

EUROPEAN UNION 27

GDP-WEIGHTED AVERAGES

2000

2001

2002

2003

2004

2005

2006

2007

Revenue in 
2007

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government1)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

13.8
7.0
3.0
1.7
2.3

13.9
9.8
2.8
1.3

12.7
7.3
4.1
1.4

21.5
-
3.9
14.6
-

11.4

20.3
18.7
7.8
10.9
1.6

9.0
6.2
3.2
0.9
2.1
2.8

13.6
6.8
2.9
1.6
2.3

13.5
9.7
2.6
1.2

12.7
7.2
4.0
1.4

20.9
-
3.8
14.5
-

11.1

20.1
18.5
7.8
10.7
1.6

8.5
5.8
3.0
0.8
2.0
2.7

13.6
6.8
3.0
1.6
2.3

13.0
9.4
2.3
1.2

12.6
7.2
3.9
1.4

20.3
-
3.9
14.5
-

11.1

19.9
18.3
7.8
10.5
1.6

8.1
5.4
2.7
0.8
2.0
2.7

13.6
6.8
3.0
1.6
2.2

12.7
9.2
2.2
1.3

12.8
7.3
4.0
1.4

19.9
-
3.9
14.6
-

11.1

20.0
18.3
7.9
10.4
1.7

8.1
5.4
2.6
0.8
2.0
2.7

13.6
6.8
2.9
1.7
2.2

12.7
9.0
2.4
1.3

12.7
7.2
3.9
1.5

20.1
-
4.0
14.3
-

11.1

19.6
17.9
7.8
10.1
1.7

8.3
5.5
2.8
0.8
1.9
2.8

13.7
6.9
2.8
1.7
2.3

12.9
9.1
2.6
1.3

12.6
7.2
3.9
1.5

20.3
-
4.1
14.3
-

11.1

19.5
17.9
7.8
10.1
1.7

8.7
5.8
3.0
0.9
2.0
2.8

% of GDP
13.8
7.1
2.6
1.8
2.3

13.9
7.0
2.7
1.8
2.4

13.4
9.2
3.0
1.3

12.5
7.2
3.9
1.5

13.6
9.4
3.0
1.3

12.4
7.2
3.8
1.4

% of GDP
20.7
-
4.1
14.2
0.3

20.6
-
4.2
14.4
-

% of GDP
11.1

11.1

19.4
17.8
7.7
10.1
1.6

9.3
6.4
3.4
1.0
2.0
2.9

19.4
17.8
7.7
10.0
1.6

9.4
6.6
3.4
1.0
2.1
2.9

€ bn
1 706.1
874.8
322.4
222.6
286.3

1 684.0
1 154.4
370.5
159.1

1 529.9
883.1
471.6
175.3

2 559.5
345.1
510.3
1 465.3
39.7

1 366.4

2 388.7
2 192.5
953.4
1 239.1
196.2

1 164.8
809.8
425.5
128.3
255.9
355.0

TOTAL

40.6

39.7

39.0

39.0

38.9

39.2

39.7

39.8

4 908.4

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)

2.7
2.1
-
0.6
0.1

20.0
37.2
-
-
-
-

3.9

2.7
2.0
-
0.6
0.1

19.6
36.8
-
-
-
-

2.0

2.7
2.0
-
0.6
0.1

19.6
36.4
-
-
-
-

1.2

2.7
2.0
-
0.6
0.1

19.6
36.5
-
-
-
-

1.3

2.7
2.0
-
0.6
0.1

19.7
36.2
-
-
-
-

2.5

2.6
1.9
-
0.6
0.1

19.7
36.2
-
-
-
-

2.0

% of GDP
2.5
1.8
-
0.6
0.1

2.5
1.9
-
0.6
0.1

%
20.0
36.5
-
-
-
-

2.9

19.8
36.4
-
-
-
-

3.1

302.9
219.1

71.7
12.1

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

Taxation trends in the European Union                 235

EU.fm  Page 236  Friday, May 29, 2009  9:54 AM

Part III

Developments in the Member States

<@>TAB_PRINT_EU25a.pdf

EUROPEAN UNION 25

ARITHMETIC AVERAGES

2000

2001

2002

2003

2004

2005

2006

2007

Revenue in 
2007

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government1)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

13.8
7.3
3.2
1.8
1.5

12.6
8.5
3.1
0.9

11.2
6.8
3.4
1.0

22.3
6.4
4.3
10.7
0.6

12.0

18.2
16.9
7.3
9.6
1.3

7.5
5.5
3.3
0.7
1.5
2.0

13.5
7.2
3.1
1.6
1.5

12.4
8.5
3.0
0.8

11.3
6.8
3.4
1.0

21.8
6.4
4.3
10.7
0.5

11.8

18.2
16.9
7.3
9.6
1.3

7.2
5.3
3.1
0.6
1.5
1.9

13.6
7.3
3.1
1.6
1.5

12.2
8.3
3.0
0.9

11.2
6.8
3.4
1.0

21.7
7.1
4.2
10.7
0.4

11.9

18.0
16.7
7.3
9.4
1.3

7.1
5.2
3.1
0.6
1.5
1.9

13.7
7.4
3.2
1.6
1.6

12.0
8.3
2.8
0.9

11.2
6.8
3.4
1.1

21.6
7.3
4.3
10.7
0.4

12.0

18.0
16.6
7.2
9.4
1.4

7.0
5.1
3.0
0.6
1.5
1.9

13.9
7.5
3.2
1.6
1.6

11.9
8.1
2.9
0.9

11.2
6.7
3.4
1.1

21.5
7.4
4.3
10.7
0.3

12.1

17.7
16.4
7.1
9.2
1.3

7.2
5.1
3.0
0.6
1.5
2.0

14.1
7.7
3.2
1.6
1.6

12.2
8.1
3.1
1.0

11.1
6.7
3.3
1.1

21.8
7.5
4.4
10.6
0.3

12.3

17.6
16.3
7.1
9.2
1.3

7.5
5.5
3.2
0.7
1.5
2.1

% of GDP
14.1
7.8
3.0
1.7
1.6

14.1
7.8
3.0
1.7
1.6

12.4
8.2
3.3
0.9

11.1
6.6
3.3
1.1

12.8
8.4
3.6
0.8

11.1
6.6
3.3
1.1

% of GDP
22.5
7.7
4.3
10.7
0.3

22.0
7.6
4.4
10.7
0.3

% of GDP
12.2

12.2

17.6
16.2
7.1
9.2
1.3

7.8
5.8
3.4
0.8
1.5
2.1

17.7
16.3
7.1
9.2
1.3

8.2
6.1
3.7
0.9
1.6
2.1

€ bn
1 684.8
861.2
316.9
221.5
285.2

1 673.5
1 149.4
365.7
158.4

1 515.2
873.8
466.8
174.6

2 537.9
345.1
500.7
1 450.7
39.2

1 346.4

2 370.6
2 174.9
944.1
1 230.7
195.8

1 156.4
803.2
420.7
127.3
255.2
353.2

TOTAL

37.6

37.1

36.9

36.9

36.9

37.3

37.5

38.0

4 862.1

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)

2.8
1.9
-
0.8
0.1

21.1
35.9
25.5
18.5
24.7
11.3

3.9

2.8
1.9
-
0.7
0.1

20.7
35.7
24.3
17.5
23.7
10.5

2.0

2.8
1.9
-
0.7
0.1

21.0
35.4
23.6
16.8
22.6
10.7

1.2

2.8
2.0
-
0.7
0.1

21.2
35.2
23.6
16.7
20.9
11.1

1.3

2.9
2.0
1.6
0.7
0.1

21.5
34.9
24.0
17.1
20.2
11.9

2.4

2.8
2.0
1.5
0.7
0.2

21.9
34.7
25.2
18.2
21.9
12.9

2.0

% of GDP
2.7
1.8
1.5
0.7
0.2

2.8
1.9
1.5
0.7
0.2

%
22.2
34.8
28.7
21.1
25.5
13.8

2.9

22.0
34.8
25.7
18.7
22.5
12.6

3.1

299.4
216.1

71.2
12.1

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

236

Taxation trends in the European Union

EU.fm  Page 237  Friday, May 29, 2009  9:54 AM

Developments in the Member States

Part III

<@>TAB_PRINT_EU25w.pdf

EUROPEAN UNION 25

GDP-WEIGHTED AVERAGES

2000

2001

2002

2003

2004

2005

2006

2007

Revenue in 
2007

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government1)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

13.8
7.0
3.0
1.7
2.3

14.0
9.8
2.8
1.4

12.7
7.3
4.1
1.4

21.5
7.8
3.9
14.6
0.6

11.4

20.4
18.7
7.8
10.9
1.6

9.0
6.2
3.2
0.9
2.1
2.8

13.7
6.8
2.9
1.6
2.3

13.6
9.7
2.6
1.2

12.7
7.2
4.0
1.4

21.0
7.3
3.8
14.6
0.5

11.1

20.2
18.6
7.8
10.8
1.6

8.5
5.9
3.0
0.8
2.0
2.7

13.6
6.8
3.0
1.6
2.3

13.0
9.5
2.3
1.2

12.6
7.2
3.9
1.4

20.3
7.8
3.9
14.5
0.4

11.1

20.0
18.3
7.8
10.5
1.6

8.1
5.4
2.7
0.8
2.0
2.7

13.6
6.8
3.0
1.6
2.3

12.8
9.3
2.2
1.4

12.8
7.3
4.0
1.5

20.0
7.9
3.9
14.6
0.4

11.1

20.0
18.3
7.9
10.4
1.7

8.1
5.4
2.6
0.8
2.0
2.7

13.6
6.8
2.9
1.7
2.3

12.7
9.0
2.4
1.3

12.7
7.3
3.9
1.5

20.1
8.0
4.0
14.3
0.3

11.1

19.6
18.0
7.8
10.2
1.7

8.3
5.5
2.8
0.8
2.0
2.8

13.7
6.9
2.8
1.7
2.3

13.0
9.1
2.6
1.3

12.6
7.2
3.9
1.5

20.3
8.0
4.1
14.3
0.3

11.0

19.6
17.9
7.8
10.1
1.7

8.7
5.8
3.0
0.9
2.0
2.9

% of GDP
13.8
7.1
2.6
1.8
2.3

13.9
7.0
2.7
1.8
2.4

13.5
9.3
3.0
1.3

12.5
7.2
3.9
1.5

13.7
9.4
3.0
1.3

12.4
7.2
3.8
1.4

% of GDP
20.8
8.5
4.1
14.3
0.3

20.7
8.3
4.1
14.4
0.3

% of GDP
11.0

11.0

19.5
17.9
7.8
10.1
1.6

9.4
6.4
3.4
1.0
2.1
3.0

19.4
17.8
7.7
10.1
1.6

9.5
6.6
3.5
1.0
2.1
2.9

€ bn
1 684.8
861.2
316.9
221.5
285.2

1 673.5
1 149.4
365.7
158.4

1 515.2
873.8
466.8
174.6

2 537.9
345.1
500.7
1 450.7
39.2

1 346.4

2 370.6
2 174.9
944.1
1 230.7
195.8

1 156.4
803.2
420.7
127.3
255.2
353.2

TOTAL

40.6

39.8

39.1

39.1

39.0

39.3

39.9

39.9

4 862.1

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)

2.7
2.1
-
0.6
0.1

20.1
37.2
33.1
22.8
27.6
14.7

3.9

2.7
2.0
-
0.6
0.1

19.6
36.8
31.3
21.2
28.4
14.0

2.0

2.7
2.0
-
0.6
0.1

19.7
36.4
30.0
19.7
25.1
14.0

1.2

2.7
2.0
-
0.6
0.1

19.6
36.6
29.2
19.2
23.1
14.2

1.3

2.7
2.0
1.6
0.6
0.1

19.7
36.2
29.9
19.6
23.2
14.7

2.4

2.6
1.9
1.5
0.6
0.1

19.7
36.3
31.2
20.7
25.2
15.1

2.0

% of GDP
2.5
1.8
1.4
0.6
0.1

2.6
1.9
1.5
0.6
0.1

%
20.0
36.6
34.2
23.4
30.5
16.5

2.9

19.8
36.4
33.0
22.3
28.7
15.6

3.1

299.4
216.1

71.2
12.1

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

Taxation trends in the European Union                 237

EU.fm  Page 238  Friday, May 29, 2009  9:54 AM

Part III

Developments in the Member States

<@>TAB_PRINT_EA16a.pdf

EURO AREA 16

   ARITHMETIC AVERAGES

2000

2001

2002

2003

2004

2005

2006

2007

Revenue in 
2007

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government1)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

13.8
7.0
3.0
2.1
1.6

12.4
7.8
3.6
1.0

11.9
6.5
4.0
1.3

21.6
6.4
3.0
12.3
0.6

11.8

17.7
16.3
7.0
9.4
1.4

8.5
6.3
3.7
0.7
1.8
2.2

13.5
7.0
2.9
1.9
1.6

12.2
7.8
3.4
1.0

11.9
6.6
4.0
1.3

21.3
6.4
3.0
12.3
0.5

11.6

17.8
16.4
7.1
9.3
1.4

8.2
6.2
3.6
0.8
1.8
2.1

13.5
7.1
3.0
1.8
1.6

12.0
7.6
3.4
1.0

11.9
6.6
4.0
1.3

21.0
7.1
3.0
12.4
0.4

11.7

17.7
16.3
7.1
9.2
1.4

8.1
6.0
3.6
0.7
1.8
2.0

13.7
7.2
3.0
1.8
1.7

11.7
7.5
3.1
1.0

12.0
6.6
4.0
1.4

20.9
7.3
2.9
12.5
0.4

11.8

17.7
16.3
7.1
9.2
1.4

7.9
5.8
3.3
0.7
1.8
2.1

13.9
7.3
3.1
1.9
1.7

11.4
7.3
3.1
1.0

11.9
6.6
4.0
1.4

20.8
7.4
2.9
12.4
0.3

11.9

17.5
16.1
7.1
9.0
1.4

7.9
5.7
3.2
0.7
1.7
2.2

14.1
7.5
3.0
1.9
1.7

11.7
7.4
3.3
1.0

11.9
6.5
3.9
1.4

20.9
7.5
3.1
12.4
0.3

12.0

17.4
16.0
7.0
9.0
1.4

8.2
5.9
3.4
0.7
1.7
2.3

% of GDP
14.1
7.6
2.8
2.0
1.7

14.1
7.6
2.9
2.0
1.7

11.9
7.5
3.4
0.9

11.7
6.5
3.9
1.4

12.5
7.7
3.8
0.9

11.7
6.5
3.9
1.4

% of GDP
21.5
7.7
3.2
12.4
0.3

21.0
7.6
3.1
12.4
0.3

% of GDP
11.9

11.9

17.3
15.9
7.0
8.9
1.4

8.5
6.2
3.6
0.9
1.7
2.3

17.3
15.9
7.0
9.0
1.4

9.1
6.8
4.0
1.0
1.8
2.3

€ bn
1 234.3
621.1
209.3
175.2
228.6

1 140.4
794.2
258.1
88.1

1 251.5
721.3
373.5
156.8

1 533.5
345.1
357.3
1 361.3
29.0

963.1

1 832.5
1 666.0
779.8
886.2
166.5

830.6
592.7
308.3
80.6
203.8
238.0

TOTAL

37.9

37.6

37.4

37.4

37.2

37.6

37.7

38.2

3 616.6

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)

2.8
1.8
-
0.9
0.1

20.5
34.6
27.3
20.3
26.5
12.2

3.9

2.7
1.8
-
0.9
0.1

20.1
34.5
26.3
19.6
25.7
12.3

1.9

2.8
1.8
-
0.8
0.1

20.5
34.2
25.5
18.7
25.4
12.5

0.9

2.8
1.9
1.6
0.8
0.1

20.7
34.3
25.2
18.2
23.4
12.6

0.8

2.9
1.9
1.6
0.8
0.1

21.1
34.1
25.0
17.8
22.3
12.0

2.1

2.8
1.9
1.5
0.8
0.1

21.3
34.1
25.9
18.5
23.9
12.1

1.7

% of GDP
2.6
1.7
1.5
0.8
0.1

2.7
1.8
1.5
0.8
0.1

%
21.5
34.3
29.8
22.0
28.7
14.5

2.6

21.4
34.2
26.9
19.5
25.2
12.9

2.9

210.0
151.6

52.1
6.3

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

238

Taxation trends in the European Union

EU.fm  Page 239  Friday, May 29, 2009  9:54 AM

Developments in the Member States

Part III

<@>TAB_PRINT_EA16w.pdf

EURO AREA 16

GDP-WEIGHTED AVERAGES

2000

2001

2002

2003

2004

2005

2006

2007

Revenue in 
2007

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government1)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

13.8
6.9
2.7
1.7
2.5

12.9
9.2
2.6
1.1

14.6
8.2
4.6
1.8

17.9
7.8
3.7
15.5
0.6

11.1

21.5
19.6
8.8
10.8
1.9

8.7
6.2
3.1
0.8
2.3
2.5

13.5
6.8
2.7
1.7
2.4

12.5
9.1
2.4
1.0

14.4
8.2
4.5
1.7

17.5
7.3
3.7
15.4
0.5

10.9

21.3
19.4
8.8
10.6
1.9

8.3
5.9
2.9
0.7
2.2
2.4

13.5
6.7
2.7
1.7
2.4

12.1
8.9
2.2
0.9

14.4
8.2
4.4
1.8

16.9
7.8
3.6
15.4
0.4

10.8

21.2
19.3
8.8
10.5
1.9

7.9
5.5
2.7
0.7
2.1
2.5

13.5
6.6
2.8
1.7
2.4

11.9
8.7
2.0
1.1

14.5
8.3
4.4
1.8

16.7
7.9
3.7
15.5
0.4

10.7

21.2
19.3
8.9
10.4
1.9

7.9
5.5
2.6
0.7
2.2
2.5

13.5
6.6
2.6
1.8
2.4

11.7
8.4
2.2
1.0

14.3
8.2
4.3
1.8

16.7
8.0
3.8
15.2
0.3

10.7

20.7
18.8
8.8
10.0
1.9

8.1
5.5
2.7
0.6
2.1
2.6

13.7
6.7
2.5
1.9
2.5

11.8
8.5
2.4
1.0

14.2
8.1
4.3
1.8

16.7
8.0
3.9
15.2
0.3

10.7

20.6
18.7
8.7
9.9
1.9

8.4
5.7
2.9
0.7
2.1
2.6

% of GDP
13.8
7.0
2.4
2.0
2.6

13.9
6.8
2.5
2.0
2.6

12.3
8.7
2.7
1.0

14.2
8.1
4.2
1.8

12.7
8.9
2.9
1.0

14.0
8.1
4.2
1.8

% of GDP
17.2
8.5
4.0
15.2
0.3

17.0
8.3
3.9
15.4
0.3

% of GDP
10.8

10.8

20.5
18.6
8.7
9.9
1.9

9.0
6.3
3.3
0.8
2.2
2.7

20.5
18.6
8.7
9.9
1.9

9.3
6.6
3.5
0.9
2.3
2.7

€ bn
1 234.3
621.1
209.3
175.2
228.6

1 140.4
794.2
258.1
88.1

1 251.5
721.3
373.5
156.8

1 533.5
345.1
357.3
1 361.3
29.0

963.1

1 832.5
1 666.0
779.8
886.2
166.5

830.6
592.7
308.3
80.6
203.8
238.0

TOTAL

41.2

40.3

39.8

39.8

39.5

39.6

40.3

40.4

3 616.6

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)

2.6
2.0
-
0.6
0.1

19.6
39.5
30.5
21.8
25.5
13.7

3.9

2.6
1.9
-
0.6
0.1

19.2
39.1
28.5
20.0
27.1
13.3

1.9

2.6
1.9
-
0.6
0.1

19.2
38.9
27.8
19.0
25.4
13.2

0.9

2.7
2.0
1.6
0.6
0.1

19.1
38.9
27.8
18.9
24.2
13.6

0.8

2.6
1.9
1.5
0.6
0.1

19.1
38.5
28.1
18.9
24.4
12.9

2.1

2.5
1.9
1.5
0.6
0.1

19.2
38.4
28.9
19.4
25.4
13.1

1.7

% of GDP
2.4
1.7
1.4
0.6
0.1

2.5
1.8
1.4
0.6
0.1

%
19.6
38.7
32.1
22.6
33.1
14.3

2.6

19.4
38.5
31.0
21.4
30.0
13.8

2.9

210.0
151.6

52.1
6.3

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés  in BE and comunidades autónomas  in ES.

n.a.: not applicable, - : not available

Source:  Commission services

Taxation trends in the European Union                 239

report2009.book  Page 240  Thursday, May 28, 2009  1:35 PM

Part III

Developments in the Member States

<@>TAB_PRINT_NO.pdf

Norway

A. Structure of revenues
Indirect taxes
    VAT
    Excise duties and consumption taxes
    Other taxes on products (incl. import duties)
    Other taxes on production

Direct taxes
    Personal income
    Corporate income1
    Other

Social contributions
     Employers´
     Employees´
     Self- and non-employed

B. Structure by level of government
Central government 
State government2)
Local government
Social security funds
EU institutions

C. Structure by economic function
Consumption

Labour
    Employed
          Paid by employers
          Paid by employees
    Non-employed 

Capital
    Capital and business income
           Income of corporations 1
           Income of households
           Income of self-employed (incl. SSC)
    Stocks of capital / wealth

Less: amounts assessed but unlikely to be collected

2000

2001

2002

2003

2004

2005

2006

2007

2007

13.6
8.4
2.8
1.9
0.5

20.1
10.3
8.9
0.9

8.9
5.3
3.6
-

27.3
n.a.
6.4
8.9
n.a.

-

-
-
-
-
-

-
-
-
-
-
-

-

13.4
8.4
2.7
1.8
0.6

20.2
10.4
8.9
0.9

9.2
5.6
3.7
-

26.6
n.a.
7.0
9.2
n.a.

-

-
-
-
-
-

-
-
-
-
-
-

-

13.4
8.5
2.7
1.7
0.5

19.8
10.7
8.1
1.0

9.9
5.9
3.9
-

27.6
n.a.
5.6
9.9
n.a.

12.8

19.0
17.9
6.0
12.0
1.0

11.3
6.1
4.5
0.6
1.0
5.2

13.0
8.2
2.7
1.6
0.5

19.5
10.5
8.0
1.0

9.8
5.9
3.9
-

26.3
n.a.
6.2
9.8
n.a.

12.4

18.8
17.8
5.9
11.9
1.0

11.0
5.7
4.2
0.6
0.9
5.3

12.8
8.1
2.4
1.8
0.5

21.1
10.3
9.8
1.0

9.4
5.7
3.7
-

28.0
n.a.
5.9
9.4
n.a.

12.2

18.2
17.2
5.7
11.5
1.0

12.9
6.7
5.2
0.6
0.9
6.2

12.2
7.9
2.3
1.6
0.5

22.4
9.7
11.8
1.0

8.9
5.4
3.5
-

28.8
n.a.
5.8
8.9
n.a.

11.7

17.0
16.0
5.4
10.6
0.9

14.8
7.5
5.9
0.6
1.0
7.3

% of GDP
12.6
8.3
2.1
1.6
0.6

12.3
8.0
2.1
1.6
0.6

23.0
9.1
12.9
0.9

8.7
5.3
3.4
-

22.0
9.6
11.3
1.0

9.1
5.5
3.5
-

% of GDP
29.1
n.a.
5.5
9.1
n.a.

29.7
n.a.
5.6
8.7
n.a.

% of GDP
12.0

11.7

16.5
15.6
5.4
10.2
0.9

15.8
8.0
6.7
0.7
0.7
7.7

17.3
16.3
5.5
10.8
1.0

14.3
7.6
6.1
0.7
0.8
6.7

0.0

0.0

0.0

0.0

0.0

0.0

€ bn
35.8
23.5
6.0
4.6
1.6

62.4
27.4
32.2
2.8

25.7
15.7
10.0

82.7
n.a.
15.5
25.7
n.a.

34.1

49.0
46.3
15.8
30.6
2.7

40.8
21.6
17.5
2.0
2.1
19.2

TOTAL

42.6

42.9

43.1

42.3

43.3

43.5

44.0

43.6

123.9

Of which environmental taxes
    Energy
          Of which transport fuel taxes
    Transport 
    Pollution/resources

D. Implicit tax rates
Consumption
Labour employed 
Capital
     Capital and business income
     Corporations
     Households

Real GDP growth (annual rate)
Output gap (potential)

8.2
3.6

3.8
0.8

-
-
-
-
-

-
-
-
-
-
-

-
-
-
-
-

-
-
-
-
-
-

3.3
-

2.0
-

3.3
1.7
-
1.3
0.3

29.3
38.7
41.5
22.5
21.6
17.4

1.5
-

3.2
1.6
-
1.3
0.3

27.9
39.0
37.9
19.7
19.2
14.2

1.0
-

3.2
1.5
0.9
1.4
0.3

28.2
39.2
40.5
21.0
20.6
14.6

3.9
-

3.0
1.4
0.9
1.4
0.2

28.8
38.5
40.9
20.7
19.4
14.4

2.7
-

% of GDP
2.9
1.3
0.8
1.3
0.3

3.0
1.3
0.8
1.4
0.3

%
30.3
37.8
41.8
22.2
20.6
28.7

3.1
-

29.9
37.9
43.2
22.0
21.4
24.2

2.3
-

See Annex B for explanatory notes. For classification of taxes please visit: http://ec.europa.eu/taxtrends 
1) The difference between the revenue from "corporate income" taxes in part A of the table and that from "income of corporations" in part C is mainly due to
      the exclusion from the latter of the special tax on petroleum income, which is booked under stocks of capital/wealth.
2) This level refers to the Länder  in AT and DE, the gewesten en gemeenschappen / régions et communautés in BE and comunidades autónomas  in ES.
n.a.: not applicable, - : not available

Source:  Commission services

240

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report2009.book  Page 241  Thursday, May 28, 2009  1:35 PM

Developments in the Member States

Part III

NORWAY

Overall trends in taxation

Structure and development of tax revenues

Norway's total tax-to-GDP ratio amounted to 43.6 % in 2007; a value which exceeds the weighted European Union
average by almost four percentage points. Compared with other Nordic countries, Norway's ratio is slightly higher
than  Finland's,  but  well  below  the  Danish  and  Swedish  level.  The  level  and  structure  of  revenues  in  Norway  are
clearly influenced by the important role played by oil and gas extraction in the economy.

The Norwegian tax system is characterised by a high share of direct taxes, accounting in 2007 for 50.4 % of revenue,
i.e.  16.1  percentage  points  above  the  EU-27  weighted  average;  amongst  EU  countries,  only  Denmark  displays  a
higher share of direct tax revenues at 61.2 %. The high revenue from direct taxes is attributable in particular to the
corporate tax which yields, with 11.3 % of GDP, almost four times the EU-27 weighted average. Note that this is the
result of the statistical classification of the special tax on petroleum income, which is considered as corporate tax
revenue alongside the ordinary corporate income tax, thereby doubling its revenue. Revenues from indirect taxes
and from social contributions correspondingly cover a smaller share of budgetary revenue; they are also lower than
the EU average in terms of their ratio to GDP. Indirect taxes, standing at 12.6 % of GDP, are slightly below EU-27
weighted average (13.8 % of GDP) mainly due to below average revenue from excise duties (2.1 % of GDP) and other
taxes on production (0.6 % of GDP). 

In 2007, 66.7 % of taxes were paid to the central government, while local government (municipalities and counties)
received 12.5 % of the total; a share somewhat above the EU weighted average (10.4 %). Social security funds receive
a relatively low share of government receipts, 20.8 % compared with 35.2 % in the EU-27 weighted average.

The overall tax ratio has increased by one percentage point  since 2000. While  direct taxes from personal income
relative to GDP have decreased slightly, taxes on corporate income have increased considerably. This is mainly due to
a  sharp  increase  in  petroleum  tax  revenue,  which  has  more  than  doubled  since  2000.  While  indirect  taxes  have
followed a slight downward trend, social security contributions have hardly changed as compared to 2000.

Taxation of consumption, labour and capital; environmental taxes

Revenue from taxation of consumption, at 12.0 % of GDP, has been on a slight downward trend since 2002 (12.8 % of
GDP), only reversed in 2007. Current levels are slightly above the EU-27 weighted average (11.1 % of GDP). The ITR
on consumption (30.3 % in 2007), however, is well above the EU-27 weighted average (20.0 %), only comparable to
those of the other Nordic countries, and has been increasing since 2003. This difference in ratios is due to a high
VAT  rate  and  a  remarkably  low  share  of  the  final  consumption  expenditure  of  households  when  compared  to
Norway's GDP (about 41 %). 

Taxation of labour has been on the decline since 2002 in revenue terms, except for 2007, when the surtax on personal
income  tax  was  increased.  The  ITR  on  labour  has  been  on  a  downward  trend  since  2004.  The  value  of  37.8 %
recorded in 2007 is between the EU-27 weighted average and the euro area average (36.5 % and 38.7 %, respectively).
It is just above the Danish value but significantly below the levels recorded in Sweden and Finland.

Capital taxation yields, at 14.3 % of GDP, the highest level of revenue of all countries analysed in the report, about
five percentage points above the EU-27 weighted average. Oil taxation contributes significantly to this peculiarity.
The special tax on petroleum income, which is booked as a tax on the stocks of capital/wealth, is a major component
of the revenue from capital taxation; oil companies then also pay corporate income tax at the ordinary rate. These

Taxation trends in the European Union                 241

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Part III

Developments in the Member States

high  tax  revenues  are  mirrored  in  the  ITR  on  capital,  which  stands  at  41.8 %,  about  one  quarter  above  EU-25
weighted average. 

Norway levies a wide range of environmental taxes, including not only the traditional excises on mineral oils but also
significant  levies  on  electricity  consumption,  CO2  emissions,  greenhouse  gases,  pesticides,  sulphur  and  a  tax  on
NOX emissions — only introduced in 2007. Transport taxes, in particular, are high — twice the EU-27 average —
owing to a heavy tax burden on vehicles. In contrast, energy taxes, at 1.3 % of GDP, yield less revenue than the EU
weighted  average. Pollution/resource taxes yield 0.3 % of GDP,  a comparatively high  value; note that this amount
does not include the special tax on oil companies' profits. Overall, in 2007 the share of environmental related tax
revenues on GDP was 2.9 % compared to 2.5 % for the EU-27 weighted average. 

Current topics and prospects; policy orientation

The 2009 budget brought measures to strengthen the distributional profile of the tax system. For instance, the tax
base of the net wealth tax was broadened and the 80 % rule that constrains the wealth tax for the very wealthy with
low taxable income was abolished. The basic allowance in the net wealth tax was increased. Rates of the inheritance
and gift tax were reduced considerably as well as allowances were increased. At the same time, the assessment value
of unquoted shares was increased. Further measures include an increase in the threshold for the surtax and in the tax
free allowance for pension income and increased commuters' and labour union fee allowances. The tax exemption
on dividends and gains received by companies was modified by making 3 % of such income taxable. Moreover, the
government aims at setting further environmental incentives by introducing a tax deduction for low CO2 emission
cars  and  increasing  tax  for  high  emission  cars.  Excises  taxes  are  increased  on  energy,  beverages  and  on  tobacco
products. 

An  amendment  to  the  2009  budget  introduced  targeted  measures  in  order  to  alleviate  problems  for  the  business
community  due  to  the  global  financial  crisis.  The  amendment  introduces  the  allowance  to  carry  back  losses
(maximum NOK 20 million (€ 2.3 million)) to the preceding two years. The rules are temporary and affect the fiscal
years 2008 and 2009. Thus, losses incurred for instance in 2008 can be carried back and set off against the income in
the fiscal years of 2006 and 2007. The tax value of the 2008 loss will then be paid to the company in autumn 2009.
The amendment also extends the scope of the R&D scheme for businesses.

Main features of the tax system

Personal income tax

Norway, like  several  other Nordic countries,  has  adopted  a  dual  tax  system.  Income from  labour  and  pensions  is
taxed at progressive rates, while the remaining forms of income are (mainly) taxed at a flat rate.

The basic element of the personal income tax is levied on so-called ordinary income, which includes all kinds of
income, but also various allowances. The tax rate on ordinary income is 28 %; this rate combines State, county and
municipal taxes (Finnmark and Nord-Troms benefit, however, from a lower 24.5 % rate). The surtax (toppskatt) is the
progressive element of the PIT. It is levied on the so-called personal income — i.e. gross wage income, gross pension
income and a calculated income for the self-employed — provided annual personal income exceeds NOK 441 000
(€ 50 912)    (NOK 420 000  (€  48 488)  until  2008).  The  surtax  is  levied  at  a  rate  of  9 %  on  income  between
NOK 441 000  and  NOK 716 600  (€  82 729)  (NOK 682 000  (€  78 735)  till  2008)  and  at  a  rate  of  12 %  on  income
above. 

The 2006 tax reform abolished the imputation system of taxation of dividends. The reform introduced a tax exempt
amount on dividends received by individuals equivalent to the risk-free return on invested capital (this is normally
set at the after-tax return on three-month government paper). This tax-free return may be carried forward and be set

242

Taxation trends in the European Union

report2009.book  Page 243  Thursday, May 28, 2009  1:35 PM

Developments in the Member States

Part III

against future dividend income or capital gains; the excess is taxed at the ordinary rate of 28 %. This, in combination
with lower marginal tax rates on labour income, has made it no longer particularly profitable to have labour income
taxed as dividends, thus reducing the problem of income shifting.

Corporate taxation

Companies are subject to corporate income tax of 28 %. Income and capital gains are pooled and taxed at the same
rate. Special regimes apply to activities related to the exploration for and exploitation of petroleum resources. 

Since  2004  an  exemption  regime  for  corporate  shareholders  has  been  in  force.  Dividends  derived  by  corporate
shareholders  from  resident  companies,  savings  banks  and  unit  trusts  are  in  principle  exempt  from  tax,  as  well  as
capital gains on the disposal of shares in such entities. However, 3 % of such income is taxable in order to balance the
deduction of costs related to such income. In general, all expenses incurred in acquiring, securing and maintaining
income are deductible. Royalties and management fees are usually deductible, but must be made on an arm's-length
basis if such payments are made to related parties. 

Capital gains derived from the sale of business assets are normally included in taxable income (with profit and loss
account deferral). Losses may be carried forward — and also backward for the years 2008 and 2009 — to be set off
against  profits  in  succeeding  years.  A  tax  credit  is  granted  to  companies  engaging  in  research  and  development
projects approved by the Research Council of Norway.

VAT and excise duties

The Norwegian VAT standard rate is 25 %, and has general use. There is a reduced rate of 14 % on foodstuffs and a
rate  of  8 %  on  passenger  transport,  broadcasting  services,  admission  to  cinemas,  accommodation  in  hotels  and
camping sites and business letting of holiday homes. A zero rate applies to the sale of books and newspapers.

Wealth and transaction taxes

There is an inheritance and gift tax, with a zero rate up to taxable amounts of NOK 470 000 (€ 54 260) (NOK 250 000
(€ 28 862) until 2008). From this level, the rates range from 6 % to 15 % — considerably reduced in 2009 by 2, 10 and
15 percentage points respectively — depending on the status of the beneficiary and the size of the taxable amount.

Resident individuals are subject to national net wealth tax (tax rate 0.4 % — progressive element abolished in 2009)
and municipal net wealth tax (0.7 %) above a certain threshold with respect to their worldwide net wealth. The tax
base was broadened in 2007, 2008 and 2009, by increasing tax values for homes and for commercial real estate and by
broadening the base for securities, but at the same time higher basic allowances were granted. The wealth tax is due
independently of the income tax. The rule limiting the total tax burden to 80 % of total net income was abolished in
2009, while at the same time increasing the zero tax bracket from NOK 350 000 (€ 40 406) to NOK 470 000(€ 54 260).

Social contributions

The national insurance contributions payable by employees are computed on gross salary and pension income. The
general  rate  of  7.8 %  applies  to  employment  income  including  benefits  in  kind  and  remuneration  of  directors,
members  of  committees,  and  so  on.  A  reduced  rate  of  3 %  applies  to  pensions  and  life  annuities,  as  well  as  to
employment  income  derived  by  individuals  under  17  or  over  69  years.  There  is  an  exemption  for  incomes  up  to
NOK 39 600 (€ 4 572) from the contributions. For income above this amount, the contributions are at a balancing
rate of 25 % until the general rate of 7.8 % on all income is achieved. The contributions payable by individuals are not
deductible for income tax purposes. Regionally differentiated rates in employers’ social security contributions were
reintroduced in 2007 ranging from 0 % to 14.1 %. The self-employed pay national insurance contributions at a rate
of 11 %.

Taxation trends in the European Union                 243

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report2009.book  Page 245  Thursday, May 28, 2009  1:35 PM

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OECD, Organisation for Economic Co-operation and Development, Taxing Wages 2006-2007, 2007 edition, 2008a.

OECD, Organisation for Economic Co-operation and Development, Revenue Statistics 2008 edition, 2008b.

Ravets,  C.,  and  C.  Hublard,  ‘Le  SEC  95:  nouveaux  concepts  et  premiers  résultats’,  Association  de  comptabilité
nationale, Paris, 19–21 January 2000.

Valenduc, C., ‘Effective  or  implicit tax  rates?’, paper presented  at  the conference  on corporate and  capital income
taxation  in  the  European  Union:  The  EU  Commission  report  on  companies'  taxation  and  beyond  organised  by
Facultes universitaires catholiques de Mons and CESifo, December 2001.

248

Taxation trends in the European Union

report2009.book  Page 249  Thursday, May 28, 2009  1:35 PM

TablesAnnex A

report2009.book  Page 250  Thursday, May 28, 2009  1:35 PM

report2009.book  Page 251  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_TOT_G.pdf

Table Tot_G: Total Taxes (including SSC) as % of GDP

Difference1)
1995 to 2007 2000 to 2007

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
44.0
45.2
43.8
34.2
30.9
-
36.9
34.0
36.2
48.7
48.4
48.8
39.5
40.0
39.8
33.1
30.5
36.4
31.2
29.8
33.1
32.1
33.2
29.1
37.1
33.5
32.7
43.3
43.8
42.7
43.3
41.5
40.1
41.6
30.9
26.7
30.5
28.5
33.2
29.9
28.6
28.5
36.7
39.8
37.1
39.8
38.3
41.6
34.7
30.4
26.8
38.9
38.3
40.2
42.1
45.3
41.4
34.8
32.2
37.1
36.8
33.9
32.1
29.4
28.9
-
38.2
37.7
39.2
29.4
33.2
40.3
43.0
44.6
45.7
48.3
49.9
47.9
36.3
36.4
34.7

45.2
32.5
33.8
49.4
41.9
31.3
31.6
34.6
33.9
44.1
41.8
30.0
29.5
30.1
39.1
38.5
28.2
39.9
43.2
32.6
34.3
30.4
37.5
34.1
47.2
51.8
36.7

45.3
29.6
34.8
47.8
39.5
31.1
28.5
33.7
33.9
43.1
40.9
31.2
28.3
28.4
39.3
38.0
31.5
37.7
43.9
32.7
34.7
28.1
38.0
33.2
44.6
47.9
34.9

44.9
32.2
35.7
48.0
39.6
30.9
29.0
32.3
33.9
42.9
41.3
33.0
28.5
28.1
38.1
37.7
31.4
37.4
43.8
32.2
34.8
27.7
38.2
33.1
44.0
48.3
34.7

44.5
33.2
36.7
49.6
39.2
31.3
32.1
31.3
36.5
43.9
42.1
36.5
30.4
29.4
35.8
37.2
33.7
39.1
41.7
33.8
35.9
28.6
38.4
29.4
43.5
49.0
36.9

45.0
33.1
37.4
49.0
38.7
30.7
30.3
31.2
34.5
43.2
40.6
33.4
28.5
28.3
37.2
37.6
32.8
37.5
43.4
31.5
34.1
27.3
38.3
31.6
43.5
48.7
35.2

45.5
-
33.3
49.3
40.9
34.2
31.8
32.5
33.0
44.0
42.5
27.7
33.7
32.0
39.4
39.0
25.6
39.4
44.4
35.4
33.2
28.7
37.8
36.7
46.1
51.5
35.9

45.5
30.6
34.0
50.1
41.7
32.7
31.8
33.3
33.6
44.9
42.5
28.0
32.0
31.8
38.3
39.1
27.3
40.4
44.0
34.9
34.1
31.3
38.2
35.4
45.8
51.8
36.2

44.9
34.0
37.1
50.8
38.8
30.9
30.7
31.5
35.6
43.6
40.4
35.5
29.0
28.5
37.5
37.5
33.8
37.6
42.2
32.8
35.1
27.9
38.7
31.5
44.0
49.6
36.1

44.4
-
34.7
49.2
40.7
34.4
33.1
29.4
33.1
43.9
41.8
26.4
30.8
27.9
37.6
40.6
25.4
40.2
42.9
37.2
32.9
-
38.1
39.4
47.0
50.4
34.4

44.9
-
35.0
48.9
40.7
34.4
32.4
30.6
33.2
44.1
43.7
25.8
32.1
31.0
39.3
39.0
27.5
39.7
44.4
36.5
33.0
-
37.0
37.3
46.3
50.9
34.8

0.1
-
0.7
-0.1
-0.3
-3.3
-1.9
3.0
4.4
0.6
3.2
14.9
-2.7
1.4
-0.4
-1.9
7.9
-1.2
0.7
-2.3
4.7
-
-1.0
-10.9
-2.7
0.3
1.7

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

42.0

42.4

42.2

42.0

42.3

42.6

42.9

43.1

42.3

43.3

43.5

44.0

43.6

1.6

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

40.8
37.4

40.6
37.2

39.7
36.6

39.0
36.3

39.0
36.4

38.9
36.4

39.2
36.9

39.7
37.0

39.8
37.5

EA-16 averages
weighted
arithmetic

39.8
36.9

40.7
37.3

41.1
37.5

41.0
37.5

41.5
37.8

41.2
37.9

40.3
37.6

39.8
37.4

39.8
37.4

39.5
37.2

39.6
37.6

40.3
37.7

40.4
38.2

EU-25 averages
weighted
arithmetic

39.5
37.4

40.2
37.4

40.4
37.7

40.4
37.8

40.9
37.9

40.6
37.6

39.8
37.1

39.1
36.9

39.1
36.9

39.0
36.9

39.3
37.3

39.9
37.5

39.9
38.0

-
-

0.7
2.1

0.4
0.6

15.7
22.1

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

16.9
25.0

16.3
25.1

16.5
26.0

16.0
24.5

16.1
23.7

16.2
21.4

15.8
19.8

15.5
20.6

15.6
21.7

15.5
23.0

14.5
21.0

13.8
19.3

-1.9
-2.9

-1.3
1.7
3.1
-0.7
-2.4
1.8
-0.4
-2.5
3.2
-0.8
1.5
11.6
1.0
-0.2
-2.4
1.3
6.5
-1.0
-1.2
2.3
2.5
-1.0
0.7
-4.7
-4.2
-3.5
-0.4

1.0

-0.8
0.4

-0.7
0.7

-0.7
0.4

-2.3
-4.4

Tables

Annex A

Ranking Revenue2)

2007
3
20
14
1
10
21
23
22
13
4
5
8
24
25
16
9
19
11
7
18
15
27
12
26
6
2
17

2007
147 226
9 889
46 886
110 254
956 780
5 049
59 499
73 189
389 711
818 864
664 427
6 520
6 432
8 500
13 326
40 212
1 889
220 837
113 942
107 537
59 962
36 425
13 163
16 135
77 225
159 762
744 769

123 910

Taxation trends in the European Union                 251

report2009.book  Page 252  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_TOT_G_exSSC.pdf

Table Tot_G: Total Taxes (excluding SSC) as % of GDP

Difference1)
1995 to 2007 2000 to 2007

Ranking Revenue2)

2007
5
14
24
1
19
21
12
25
17
10
6
3
22
23
11
13
8
15
9
20
16
26
18
27
4
2
7

2007
101 748
7 388
26 162
107 999
588 320
3 366
50 067
46 601
261 642
511 242
464 149
5 320
4 595
6 051
9 626
26 516
1 567
144 084
75 485
70 366
40 909
24 172
8 430
9 715
55 829
119 402
607 721

98 173

-0.9
4.0
0.9
0.1
-0.7
1.8
-0.9
-3.7
3.0
-1.0
0.5
10.5
2.2
0.5
-2.5
0.6
7.0
0.9
-0.6
3.2
1.1
0.2
1.3
-2.2
-4.2
-2.5
-0.9

0.8

-0.5
0.7

-0.2
0.7

-0.4
0.5

-1.6
1.7

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
30.4
31.0
29.5
25.6
20.9
-
20.6
19.8
21.8
47.7
46.7
47.7
24.3
23.3
22.9
22.0
19.7
24.1
26.3
25.2
28.2
20.4
22.6
19.8
24.9
21.3
20.9
27.0
27.7
24.2
30.2
29.5
27.4
34.0
24.1
20.2
21.8
19.3
21.2
21.3
19.7
21.1
26.5
28.8
27.3
26.2
25.4
26.7
28.8
23.4
20.6
25.4
24.7
24.3
27.9
30.4
26.5
22.8
18.8
25.8
25.1
23.4
22.4
19.5
17.8
-
24.5
23.2
22.4
17.7
18.8
25.3
31.1
32.6
31.6
36.1
36.2
35.7
29.7
30.3
28.6

30.9
20.1
19.9
46.6
22.8
20.1
24.1
22.1
21.8
27.0
28.8
24.5
19.0
19.7
28.4
25.1
25.0
24.5
29.3
19.8
23.9
17.4
23.7
18.6
32.8
34.5
29.0

31.3
20.6
20.0
48.5
24.5
21.6
27.6
23.1
21.7
28.6
30.3
21.3
21.3
22.6
28.2
25.9
21.2
24.8
29.0
21.2
24.0
20.2
24.0
21.4
33.2
40.4
30.1

30.9
24.5
20.5
48.6
23.3
21.0
27.3
20.3
24.4
27.5
29.6
28.6
21.7
21.0
25.9
24.7
27.5
25.0
27.3
21.6
24.5
18.8
24.4
17.7
31.3
36.9
30.2

31.3
21.5
19.6
47.6
25.0
20.3
27.2
24.1
21.9
28.0
29.7
23.4
19.6
20.7
29.1
25.7
21.8
24.5
28.4
19.6
24.0
19.3
23.2
20.0
35.3
38.6
30.5

31.2
23.7
21.0
49.7
22.5
20.6
26.0
20.4
23.5
27.3
27.9
27.3
20.6
20.4
27.1
24.9
27.4
24.6
27.6
20.5
23.7
18.2
24.4
18.8
32.0
36.8
29.3

31.3
-
19.3
48.3
23.5
22.9
27.6
22.2
21.1
27.9
30.3
20.8
23.0
22.9
29.2
24.9
19.4
24.5
29.3
23.7
23.2
19.6
23.5
21.9
33.5
38.5
29.9

30.6
21.6
20.7
46.8
22.8
20.2
24.6
20.5
21.7
26.5
29.0
26.0
19.7
19.6
27.4
25.2
24.9
23.6
29.0
19.4
23.8
18.2
24.0
19.3
32.3
35.2
28.4

31.0
22.5
21.4
47.8
22.2
20.3
25.6
20.1
22.3
27.0
28.2
25.7
19.8
19.9
26.5
25.4
26.3
23.6
28.6
19.1
23.0
18.1
24.1
18.6
31.8
35.9
28.6

30.1
-
20.5
48.1
23.3
22.7
28.5
19.8
21.1
25.3
27.6
19.5
20.0
20.0
27.7
26.5
19.1
25.0
27.9
25.6
23.1
-
23.1
23.5
33.4
37.1
28.4

30.7
-
20.4
47.9
23.0
23.0
28.1
20.6
21.2
26.0
29.2
18.8
21.4
22.5
29.3
24.7
20.7
24.6
29.2
24.7
23.0
-
22.7
22.3
33.5
37.9
28.7

0.9
-
-1.3
-0.1
1.3
-2.0
-1.9
0.7
4.0
2.9
2.8
13.8
0.6
0.2
-0.7
-0.5
8.1
1.1
1.4
-3.0
2.7
-
2.1
-7.6
-0.6
0.4
1.1

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

32.2

32.8

32.6

31.8

32.2

33.7

33.6

33.2

32.5

33.9

34.6

35.2

34.6

2.4

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

27.9
26.2

27.8
25.9

27.0
25.4

26.5
25.2

26.3
25.2

26.2
25.3

26.6
25.8

27.2
26.1

27.4
26.6

EA-16 averages
weighted
arithmetic

24.3
24.6

24.9
24.9

25.4
25.2

26.2
25.6

26.7
25.9

26.7
26.1

25.9
25.6

25.5
25.5

25.3
25.4

25.1
25.3

25.4
25.7

26.1
26.0

26.4
26.5

EU-25 averages
weighted
arithmetic

25.7
25.8

26.2
25.9

26.6
26.2

27.4
26.5

27.9
26.6

27.9
26.4

27.1
25.8

26.5
25.7

26.3
25.6

26.3
25.7

26.7
26.2

27.3
26.5

27.5
26.9

23.4
28.0

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

24.7
29.0

24.2
29.1

23.8
29.0

23.6
28.4

23.8
28.3

23.8
28.9

23.5
29.3

23.3
28.6

24.0
29.8

24.3
31.5

23.0
30.9

22.2
30.0

-
-

2.2
2.6

1.8
1.1

-1.2
2.0

252

Taxation trends in the European Union

report2009.book  Page 253  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_TOT_T_exSSC.pdf

Table Tot_T: Total Taxes (excluding SSC) as % of Total Taxation

Tables

Annex A

Ranking Revenue2)

2007
13
7
27
1
25
16
2
23
15
24
12
5
10
11
9
19
3
21
18
20
14
17
22
26
8
6
4

2007
101 748
7 388
26 162
107 999
588 320
3 366
50 067
46 601
261 642
511 242
464 149
5 320
4 595
6 051
9 626
26 516
1 567
144 084
75 485
70 366
40 909
24 172
8 430
9 715
55 829
119 402
607 721

98 173

Difference1)
1995 to 2007 2000 to 2007

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
69.1
68.7
67.3
74.7
67.5
-
55.8
58.2
60.4
98.0
96.4
97.8
61.5
58.2
57.7
66.7
64.7
66.1
84.1
84.8
85.0
63.7
68.1
67.9
67.1
63.7
64.0
62.4
63.2
56.5
69.9
71.2
68.5
81.6
78.1
75.6
71.4
67.7
63.9
71.2
68.8
74.0
72.2
72.5
73.5
65.9
66.5
64.1
82.9
77.1
77.2
65.2
64.3
60.5
66.2
67.1
64.0
65.4
58.4
69.5
68.2
69.1
69.8
66.4
61.7
-
64.0
61.5
57.0
60.2
56.9
62.7
72.3
73.1
69.2
74.7
72.5
74.4
81.6
83.1
82.5

69.2
66.2
58.1
96.4
59.6
64.7
86.0
69.7
64.5
63.5
71.1
78.2
66.5
68.9
74.3
66.6
77.4
61.4
65.8
60.3
69.9
63.3
61.9
58.5
74.8
74.5
83.2

69.6
73.7
55.7
97.9
59.5
67.1
85.1
64.8
66.8
62.7
70.2
78.6
71.2
71.4
72.3
66.4
81.7
64.0
65.4
63.9
68.3
65.8
63.4
60.1
72.1
75.3
81.7

68.1
67.2
57.9
97.5
57.5
65.6
84.7
63.5
64.0
61.9
70.2
78.8
68.9
69.7
71.8
66.8
79.3
63.1
66.3
60.3
68.3
65.8
62.8
58.3
73.3
72.9
81.9

68.7
-
57.9
97.9
57.4
67.1
87.0
68.4
64.0
63.5
71.3
75.2
68.1
71.7
74.2
63.9
76.1
62.0
66.0
67.1
69.9
68.2
62.0
59.5
72.7
74.7
83.2

68.9
68.2
57.1
97.6
57.4
66.1
84.7
64.3
64.8
62.5
69.6
77.0
69.5
70.3
71.3
67.4
80.1
62.9
66.1
60.8
67.4
66.2
62.8
58.7
73.2
73.6
81.3

68.2
68.0
57.3
97.5
57.7
64.6
84.5
65.6
64.2
62.5
70.3
78.5
67.2
69.6
72.3
66.2
79.3
64.8
66.6
60.4
69.0
61.8
62.4
56.0
73.4
71.9
83.1

68.7
67.4
58.8
96.7
58.8
66.0
86.5
69.5
64.5
63.7
71.4
76.3
66.7
71.0
73.7
66.1
77.5
61.5
65.8
60.7
70.4
64.5
63.0
60.4
72.5
77.9
83.1

69.5
69.7
56.6
97.8
58.0
66.5
84.7
64.8
66.0
62.7
68.9
76.8
71.1
71.4
72.1
66.5
81.1
65.5
65.5
62.4
67.6
65.3
63.2
59.8
72.7
74.3
81.3

67.8
-
59.0
97.8
57.2
66.1
86.2
67.2
63.8
57.6
65.9
74.0
64.8
71.8
73.8
65.3
75.1
62.1
65.1
68.8
70.4
-
60.5
59.6
71.1
73.7
82.7

68.4
-
58.4
97.9
56.5
66.9
86.7
67.5
64.0
58.9
66.7
73.0
66.8
72.7
74.5
63.4
75.4
62.0
65.9
67.9
69.7
-
61.4
59.8
72.4
74.4
82.5

76.6

77.4

77.3

75.6

76.1

79.1

78.5

77.1

76.9

78.3

79.6

80.2

79.2

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

68.3
69.7

68.6
69.4

68.1
69.0

67.8
69.0

67.3
69.1

67.5
69.3

67.9
69.7

68.5
70.2

68.8
70.5

EA-16 averages
weighted
arithmetic

61.1
67.3

61.2
67.3

61.6
67.7

63.9
68.6

64.4
69.0

64.7
69.1

64.3
68.6

63.9
68.5

63.6
68.2

63.7
68.2

64.1
68.7

64.8
69.0

65.4
69.4

EU-25 averages
weighted
arithmetic

65.0
69.2

65.1
69.1

65.8
69.3

67.8
70.0

68.3
70.1

68.6
69.8

68.2
69.4

67.8
69.3

67.3
69.3

67.5
69.4

67.9
69.9

68.5
70.2

68.8
70.5

1.8
-
-4.6
0.1
3.8
0.5
-0.9
-4.2
3.2
5.9
1.4
6.0
7.5
-2.8
-1.3
1.8
5.8
4.7
2.2
-4.1
-1.5
-
7.0
-2.5
3.1
0.3
-0.9

2.6

-
-

4.3
2.5

3.8
1.3

14.7
41.3

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

14.3
41.4

14.4
40.6

13.4
40.5

13.0
38.0

13.2
38.3

13.2
39.6

13.6
41.5

13.5
40.0

13.3
40.5

13.0
41.2

13.1
42.2

13.0
42.2

-1.7
0.9

-0.1
8.5
-2.3
1.6
1.9
1.9
-1.9
-6.0
2.6
-1.1
-1.3
3.4
5.0
2.3
-2.0
-0.7
5.6
3.9
0.5
5.2
-1.7
3.1
2.1
1.7
-2.5
0.3
-1.6

0.2

0.2
1.1

0.7
0.2

0.2
0.7

-0.2
3.8

Taxation trends in the European Union                 253

report2009.book  Page 254  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_A.1_G.pdf

Table A.1_G: Indirect Taxes as % of GDP: Total

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
13.5
13.3
12.9
18.9
14.6
-
11.3
11.0
12.3
18.0
17.4
17.0
12.9
12.2
12.0
14.2
12.4
13.2
13.5
12.5
14.5
12.3
13.8
12.8
12.0
11.5
10.7
15.3
15.4
16.0
15.0
14.7
12.4
20.0
13.0
11.4
12.6
11.8
14.1
12.0
12.2
12.4
12.9
13.6
11.8
16.0
15.3
17.8
15.2
13.3
12.3
13.1
12.9
11.8
14.4
15.3
14.8
14.5
12.5
14.2
15.3
14.0
13.9
12.8
11.4
-
15.0
15.6
15.5
11.6
11.4
14.5
13.3
13.4
14.2
17.0
16.6
15.9
12.9
13.5
13.4

13.3
14.4
10.8
17.5
12.1
12.5
12.4
13.3
11.6
15.4
14.7
13.3
11.2
12.4
13.0
15.0
13.6
12.7
15.4
13.2
14.5
11.6
15.9
11.6
13.7
16.8
13.4

13.8
15.0
11.3
17.2
12.5
12.4
13.7
14.2
11.9
15.8
15.2
12.4
12.3
12.6
14.0
16.1
12.6
12.5
15.3
12.6
14.1
12.2
15.8
12.5
13.9
16.5
13.9

13.5
-
11.0
18.3
12.0
12.5
13.8
13.5
11.5
16.4
15.6
11.1
15.0
13.9
13.1
15.8
11.4
12.3
15.6
13.1
14.3
11.3
16.0
12.8
14.5
17.4
13.5

13.9
13.7
11.5
18.3
12.6
11.8
13.7
14.1
12.0
16.4
15.3
10.7
13.7
13.7
13.3
16.3
12.4
12.7
15.7
13.6
14.6
12.3
16.6
12.4
14.5
18.5
13.8

13.7
18.7
11.8
18.0
12.1
13.5
13.7
11.8
12.6
15.6
14.5
17.1
12.7
11.4
13.3
15.8
15.4
12.9
14.8
13.9
15.3
12.9
15.8
12.8
14.1
16.9
13.0

13.8
19.4
11.3
18.1
12.4
13.8
14.2
12.3
12.7
15.5
15.1
17.9
13.2
11.4
12.7
15.3
15.3
13.1
14.4
14.5
15.7
12.7
15.2
11.6
13.8
17.0
13.0

13.4
15.8
11.1
17.4
12.2
12.2
12.6
12.5
11.9
15.3
14.3
16.4
12.1
11.7
12.6
15.6
12.9
12.7
15.3
13.2
15.1
12.3
16.0
12.1
14.2
16.9
13.2

13.6
17.5
11.8
17.6
12.0
12.3
13.2
11.9
12.2
15.5
14.3
17.0
11.9
11.2
13.4
16.3
14.9
12.9
15.1
13.1
14.4
11.7
15.8
12.5
14.0
16.7
13.2

13.4
-
12.1
17.4
11.9
13.4
14.5
13.2
10.7
16.6
12.2
11.0
13.0
11.9
11.8
17.1
11.7
12.0
15.2
14.4
14.0
-
15.7
13.8
14.3
16.4
13.5

13.6
-
11.5
17.6
11.9
13.7
14.1
13.3
11.0
16.6
12.7
10.2
13.9
13.7
12.8
15.6
12.4
12.2
15.7
13.9
13.8
-
15.3
13.1
14.9
16.7
13.6

Difference1)
1995 to 2007 2000 to 2007

0.6
-
-1.0
1.0
0.9
1.0
-1.1
-0.5
1.4
-0.7
2.6
8.6
-1.5
-0.4
1.1
-1.8
2.8
1.3
-0.4
0.3
1.4
-
-0.5
-2.9
-0.9
1.1
-0.6

-0.3
3.9
-0.1
0.8
0.4
1.8
-0.2
-1.8
0.1
-0.5
-0.2
7.5
0.2
-0.5
-1.1
-0.1
2.6
0.6
-0.9
1.9
1.3
0.5
-0.8
-0.9
-0.7
0.5
-1.0

16.0

15.9

15.8

15.9

15.3

13.6

13.4

13.4

13.0

12.8

12.2

12.3

12.6

-3.4

-1.0

Ranking Revenue2)

2007
15
2
27
3
18
13
14
23
25
7
9
1
22
24
19
5
8
17
12
11
6
21
10
26
16
4
20

2007

45 069
5 452
14 320
40 854
313 280
2 170
25 673
28 133
126 344
289 719
230 189
3 126
2 653
3 425
4 690
16 165
825
74 230
38 988
44 802
24 990
15 805
5 163
6 359
23 836
56 416
263 384

35 777

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

14.2
14.0

14.0
13.8

13.6
13.5

13.6
13.5

13.6
13.7

13.6
13.9

13.7
14.2

13.9
14.3

13.8
14.3

EA-16 averages
weighted
arithmetic

13.1
13.2

13.2
13.3

13.3
13.3

13.9
13.6

14.1
13.8

13.9
13.8

13.5
13.5

13.5
13.5

13.5
13.7

13.5
13.9

13.7
14.1

13.9
14.1

13.8
14.1

EU-25 averages
weighted
arithmetic

13.3
13.7

13.4
13.6

13.5
13.7

14.0
13.9

14.2
14.1

14.0
13.8

13.7
13.5

13.6
13.6

13.6
13.7

13.6
13.9

13.7
14.1

13.9
14.1

13.8
14.1

13.6
7.2

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

13.3
7.4

14.2
6.7

14.3
7.4

13.8
7.8

11.4
5.9

12.2
6.4

12.5
6.7

13.3
6.3

14.3
6.4

14.1
7.3

15.0
8.1

16.0
8.7

-
-

0.8
1.1

0.5
0.5

2.4
1.5

-0.2
0.5

-0.1
0.4

-0.2
0.3

4.6
2.8

254

Taxation trends in the European Union

report2009.book  Page 255  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_A.1_T.pdf

Table A.1_T: Indirect Taxes as % of Total Taxation: Total

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
30.6
29.4
29.4
55.1
47.1
-
30.5
32.3
33.9
37.1
35.9
34.9
32.7
30.6
30.2
43.0
40.9
36.2
43.1
41.9
43.9
38.4
41.5
44.1
32.4
34.4
32.6
35.4
35.1
37.6
34.6
35.4
31.0
47.9
41.9
42.7
41.2
41.3
42.4
40.3
42.6
43.5
35.2
34.1
31.9
40.2
40.1
42.8
43.7
43.6
46.1
33.6
33.7
29.3
34.2
33.8
35.8
41.7
38.8
38.3
41.7
41.2
43.3
43.4
39.5
-
39.2
41.4
39.5
39.4
34.2
35.9
30.9
30.0
31.0
35.3
33.2
33.2
35.4
37.0
38.8

30.4
46.1
33.5
34.9
29.9
39.7
43.3
40.9
35.2
35.9
36.4
41.5
41.8
41.8
35.8
41.8
44.6
31.4
35.3
38.8
41.0
40.2
42.2
36.6
29.5
31.9
37.8

29.8
49.1
31.0
36.2
30.7
39.4
43.5
38.6
34.9
35.6
34.6
49.6
42.4
41.7
33.0
41.5
41.1
33.9
34.9
40.9
43.3
44.2
41.9
36.7
32.3
35.0
38.2

30.2
53.0
31.5
35.9
31.1
40.1
43.6
38.2
35.3
36.0
35.3
51.0
41.8
39.8
36.1
43.3
45.5
34.3
34.9
41.5
42.3
43.0
41.4
39.4
32.2
34.3
37.5

29.4
48.5
31.1
36.6
30.5
40.3
43.6
39.5
34.2
35.7
35.9
42.7
39.7
43.8
33.1
39.5
43.2
33.5
35.0
40.3
42.0
41.3
41.8
34.8
30.6
35.1
38.2

29.8
-
32.9
37.2
29.4
36.7
43.4
41.4
34.9
37.4
36.8
39.9
44.4
43.4
33.3
40.5
44.8
31.1
35.1
36.9
43.0
39.2
42.3
34.9
31.4
33.7
37.7

31.0
58.4
30.6
36.5
31.6
44.0
44.0
39.2
34.8
35.3
36.0
49.0
43.3
38.9
35.6
41.0
45.4
33.6
34.5
42.8
43.7
44.6
39.7
39.5
31.8
34.8
35.1

30.6
44.7
33.9
36.5
30.2
36.0
43.0
42.4
35.8
36.5
36.1
38.1
42.7
43.1
34.6
41.6
45.3
31.5
35.6
39.0
42.7
39.3
43.5
35.0
31.6
35.7
38.2

30.4
54.9
31.8
35.3
31.3
43.7
44.6
37.5
35.2
35.9
35.8
48.1
43.9
40.0
35.5
42.2
45.6
34.4
35.1
42.3
43.5
46.3
40.7
40.7
32.0
34.1
35.9

30.1
-
34.9
35.3
29.3
39.1
43.7
44.8
32.4
37.7
29.2
41.8
42.2
42.4
31.5
42.1
46.1
29.9
35.5
38.8
42.7
-
41.2
35.0
30.4
32.6
39.3

30.3
-
33.0
35.9
29.3
40.0
43.4
43.6
33.1
37.5
29.0
39.4
43.3
44.1
32.5
39.9
45.1
30.7
35.4
38.0
41.8
-
41.4
35.0
32.1
32.7
38.9

Difference1)
1995 to 2007 2000 to 2007

1.2
-
-3.3
2.2
2.6
6.8
-0.7
-5.6
-0.2
-2.2
3.6
5.3
-1.2
-3.2
3.3
-2.6
-2.4
4.3
-1.5
3.4
-1.6
-
-0.2
3.5
-0.1
2.1
-3.4

0.2
9.1
-2.9
2.2
2.9
3.2
-0.1
-2.5
-2.8
-0.5
-1.7
6.5
-0.5
-1.5
-0.6
-1.6
-0.9
2.2
-1.1
2.9
0.7
3.2
-3.0
2.8
1.4
3.4
-2.5

38.1

37.4

37.4

37.9

36.3

32.0

31.3

31.2

30.8

29.6

28.1

27.9

28.9

-9.2

-3.1

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

34.9
37.9

34.5
37.7

34.4
37.4

34.8
37.8

34.8
38.3

35.1
38.8

35.0
39.1

34.9
39.1

34.8
38.4

EA-16 averages
weighted
arithmetic

32.8
36.5

32.3
36.3

32.3
36.2

33.9
36.8

34.0
37.0

33.7
36.9

33.6
36.4

33.8
36.6

33.9
37.2

34.3
37.9

34.5
37.9

34.4
37.8

34.2
37.1

EU-25 averages
weighted
arithmetic

33.7
37.1

33.4
37.1

33.5
37.0

34.6
37.3

34.9
37.6

34.4
37.3

34.3
37.0

34.8
37.2

34.7
37.6

35.0
38.1

34.9
38.2

34.8
38.1

34.7
37.5

-
-

1.3
0.4

1.0
0.4

0.3
0.7

0.5
0.0

0.2
0.2

Tables

Annex A

Ranking Revenue2)

2007
26
1
27
15
23
6
5
14
24
16
20
2
9
10
19
11
3
22
21
8
7
4
13
12
25
18
17

2007

45 069
5 452
14 320
40 854
313 280
2 170
25 673
28 133
126 344
289 719
230 189
3 126
2 653
3 425
4 690
16 165
825
74 230
38 988
44 802
24 990
15 805
5 163
6 359
23 836
56 416
263 384

35 777

15.8
16.8

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

16.2
16.9

15.2
16.1

13.3
15.3

12.9
15.2

13.6
16.6

13.6
17.7

14.0
19.2

15.2
19.8

16.1
22.9

17.0
24.4

18.1
27.7

16.4
24.6

-15.8
-16.8

-13.6
-16.6

Taxation trends in the European Union                 255

report2009.book  Page 256  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_A.1.1_G.pdf

Table A.1.1_G: Indirect Taxes as % of GDP: VAT

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
7.1
6.9
12.1
9.1
6.6
6.3
10.4
9.6
7.0
6.6
9.3
8.2
7.6
6.8
7.2
7.5
6.1
5.9
7.2
7.2
6.2
6.3
11.3
6.2
8.2
6.7
8.2
7.3
5.8
5.8
7.9
8.1
7.7
6.4
7.6
7.3
7.7
8.1
8.4
6.8
8.8
7.8
8.1
6.3
8.5
8.3
6.7
7.3
8.3
8.0
9.2
8.8
6.6
6.6

7.1
12.1
7.2
10.1
6.2
8.7
7.6
6.8
6.3
7.3
6.0
9.7
7.8
7.1
6.1
8.4
8.3
7.2
7.9
7.7
8.7
8.1
8.6
7.9
8.7
9.2
6.7

7.1
12.4
6.6
10.3
6.3
9.3
7.8
7.1
6.4
7.2
6.3
10.4
8.6
7.6
5.7
7.6
8.0
7.4
7.7
8.1
8.8
7.9
8.5
7.5
8.6
9.1
6.6

6.9
10.7
7.3
9.8
6.2
7.7
7.3
6.8
6.1
7.2
5.9
9.1
7.0
6.5
6.0
8.9
7.4
7.3
8.0
7.2
8.0
6.7
8.5
7.8
8.5
8.9
6.8

6.9
9.2
6.3
9.6
6.4
8.4
7.0
7.6
5.8
7.1
6.2
7.1
6.7
7.4
5.8
7.8
7.0
7.2
8.2
7.2
7.9
7.1
8.6
7.0
8.1
8.9
6.6

7.2
9.7
6.5
9.6
6.8
8.5
7.3
7.2
6.1
7.3
6.5
5.8
7.0
7.6
5.6
8.6
6.0
6.9
8.1
6.9
8.0
6.5
8.7
7.0
8.2
8.7
6.6

7.1
8.3
6.6
9.8
6.8
7.8
7.1
7.1
6.1
7.7
6.1
4.8
7.4
7.9
5.4
8.1
5.3
7.0
8.4
7.5
7.7
6.1
4.8
6.8
8.3
8.8
6.6

6.8
9.8
6.4
9.6
6.3
8.2
7.0
7.0
6.0
7.1
5.9
8.8
7.2
6.7
5.7
8.1
6.2
7.3
8.0
7.1
8.0
7.2
8.5
7.5
8.5
9.0
6.8

6.8
-
6.1
9.8
6.6
8.1
7.1
6.7
5.6
7.6
6.1
5.0
8.0
8.1
5.6
7.9
4.5
6.8
8.2
7.1
7.5
6.2
0.0
7.5
8.3
8.8
6.4

6.8
-
6.4
9.7
6.5
9.4
7.1
6.2
5.3
7.8
5.4
4.5
8.3
7.0
5.2
7.5
5.9
6.7
8.1
6.9
7.4
-
0.0
7.6
8.1
8.5
6.6

6.6
-
6.3
9.4
6.5
9.6
7.0
6.1
5.2
7.4
5.5
4.6
9.2
7.7
5.2
7.7
6.1
6.5
7.7
6.2
7.1
-
0.0
8.4
7.9
9.1
6.5

6.8
-
6.3
9.7
6.4
9.6
7.1
6.4
5.5
7.7
5.6
4.5
8.0
8.4
5.4
7.7
6.0
6.7
8.3
7.4
7.3
-
0.0
7.2
8.5
8.7
6.6

Difference1)
1995 to 2007 2000 to 2007

0.5
-
0.3
1.0
0.5
-0.3
0.5
1.1
0.9
-0.2
0.7
6.7
-1.0
0.5
0.6
0.2
1.6
1.1
0.1
2.2
1.7
-
8.5
-1.6
0.4
0.2
0.1

-0.1
2.4
0.1
0.9
0.2
0.8
0.3
0.0
0.0
-0.2
-0.3
5.5
1.2
0.6
0.2
-0.7
1.7
0.7
-0.4
1.5
0.8
1.6
-0.1
-0.2
0.1
0.6
0.0

9.4

9.3

9.4

9.7

9.4

8.4

8.4

8.5

8.2

8.1

7.9

8.0

8.3

-1.1

-0.1

Ranking Revenue2)

2007
20
1
23
3
21
4
16
18
26
19
25
2
10
11
27
13
15
17
14
8
6
12
7
22
9
5
24

2007

23 908
3 503
8 366
23 642
170 080
1 423
14 414
16 513
64 434
135 666
95 682
1 774
1 733
2 330
2 112
8 010
420
42 873
20 970
25 923
14 339
10 086
2 942
3 699
15 000
30 516
134 436

23 539

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

6.5
6.1

6.6
6.8

-
-

6.6
6.2

6.7
6.8

-
-

6.6
6.2

6.7
6.9

-
-

6.7
6.2

6.8
6.8

7.0
7.1

6.9
6.6

7.0
7.1

7.0
7.4

6.9
7.0

7.0
7.3

6.8
7.3

6.8
7.0

6.8
7.2

6.8
7.4

6.7
7.1

6.8
7.3

6.8
7.4

6.6
7.2

6.8
7.4

6.8
7.6

6.6
7.3

6.8
7.5

6.9
7.9

6.7
7.5

6.9
7.7

7.0
8.0

6.8
7.6

7.0
7.8

7.1
8.0

7.0
7.6

7.1
7.8

-
-

0.5
1.6

0.4
1.0

29.6
9.6

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

28.6
9.7

28.1
9.7

27.0
9.8

17.5
5.0

15.7
4.1

14.7
3.8

14.6
3.9

16.4
4.1

17.4
4.9

19.8
6.2

21.0
6.7

21.3
6.3

-8.3
-3.3

0.1
0.6

0.0
0.6

0.1
0.5

5.6
2.2

256

Taxation trends in the European Union

report2009.book  Page 257  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_A.1.1_T.pdf

Table A.1.1_T: Indirect Taxes as % of Total Taxation: VAT

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
16.2
15.2
15.1
35.4
29.5
-
17.8
18.7
17.3
21.4
19.9
19.4
17.8
16.5
16.3
28.2
27.0
26.5
24.2
23.0
21.2
22.6
22.5
21.1
16.5
17.5
15.9
16.6
16.4
17.3
14.4
15.1
13.8
27.2
20.0
17.2
26.9
23.6
27.8
27.4
25.4
26.9
15.9
14.6
14.0
19.9
21.1
18.5
22.2
21.1
23.0
19.4
18.9
16.2
18.4
17.9
18.6
24.1
21.0
16.8
23.9
22.8
22.2
27.7
21.8
-
22.4
22.1
0.0
22.9
21.9
20.8
19.4
17.8
17.4
19.1
17.6
18.9
18.1
18.0
18.6

15.9
29.9
19.1
19.4
16.2
27.2
23.1
20.9
18.0
16.6
15.6
19.3
23.9
25.2
14.3
22.3
21.4
17.3
18.8
21.3
23.2
21.4
23.1
20.4
17.4
16.7
17.9

15.2
30.5
17.8
20.1
16.0
26.5
24.2
21.8
17.6
16.4
14.3
26.8
25.3
24.0
14.9
21.6
19.8
19.5
18.3
22.2
23.0
25.9
22.3
22.6
19.4
18.5
19.6

15.4
32.4
19.4
19.9
16.0
25.1
24.3
21.7
17.6
16.6
14.4
27.2
24.4
22.9
16.2
23.5
22.5
19.4
18.4
22.8
23.5
24.4
22.3
24.5
19.6
18.3
19.3

15.3
31.2
18.1
20.2
16.1
27.0
24.7
22.7
17.1
16.4
15.2
22.9
23.5
26.0
14.7
20.6
22.1
19.1
18.7
22.0
22.8
25.2
22.6
21.1
18.2
18.6
18.9

14.8
-
18.2
19.8
16.1
23.8
22.4
20.5
17.0
17.3
14.3
17.9
23.8
25.3
14.1
20.2
17.7
17.1
18.5
20.1
22.7
21.4
0.0
20.3
18.0
17.1
17.9

16.0
37.4
18.1
20.8
16.2
29.6
24.2
22.8
17.5
16.5
14.9
28.5
28.1
25.9
16.0
20.4
23.8
18.9
18.4
24.1
24.7
27.7
22.2
25.3
19.9
18.6
18.0

15.7
27.2
19.3
19.6
16.4
23.8
22.2
21.2
18.1
17.0
14.3
17.1
23.0
24.9
14.0
20.8
19.3
17.3
19.1
21.5
22.6
19.5
12.5
19.3
18.0
17.0
18.3

15.7
35.7
19.4
19.8
16.1
28.3
24.8
21.5
17.7
16.7
14.8
27.4
26.8
25.0
16.2
22.5
24.5
19.2
18.8
23.5
24.9
29.0
22.3
25.0
19.8
18.5
18.5

15.3
-
18.4
19.7
15.9
27.3
21.6
21.2
16.2
17.7
12.9
17.2
26.8
24.9
13.8
18.6
23.3
16.6
18.9
18.6
22.5
-
0.0
19.3
17.1
16.9
19.2

15.2
-
18.1
19.8
15.8
28.0
21.9
21.1
16.5
17.5
12.9
17.5
25.0
27.0
13.8
19.8
21.9
16.9
18.7
20.2
22.2
-
0.0
19.3
18.4
17.0
18.9

Difference1)
1995 to 2007 2000 to 2007

1.2
-
0.6
2.1
1.4
1.7
3.0
1.4
0.6
-0.7
0.6
10.0
-0.8
0.5
1.8
1.5
-0.7
3.2
-0.2
7.3
1.7
-
22.4
2.2
2.0
0.2
-0.6

0.3
5.6
-1.2
2.1
1.6
0.9
1.1
1.7
-1.4
-0.1
-1.2
7.9
3.1
2.2
1.5
-2.3
0.8
2.1
-0.4
2.8
0.7
6.3
-0.7
2.5
2.0
2.4
0.1

22.4

21.8

22.2

23.0

22.2

19.7

19.5

19.6

19.4

18.6

18.1

18.1

19.0

-3.4

-0.7

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

Tables

Annex A

Ranking Revenue2)

2007
25
1
21
14
22
2
7
11
24
23
27
5
6
4
26
15
13
17
19
8
9
3
12
10
16
18
20

2007

23 908
3 503
8 366
23 642
170 080
1 423
14 414
16 513
64 434
135 666
95 682
1 774
1 733
2 330
2 112
8 010
420
42 873
20 970
25 923
14 339
10 086
2 942
3 699
15 000
30 516
134 436

23 539

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

17.1
19.2

17.2
20.2

17.2
20.3

17.4
20.8

17.4
20.9

17.5
21.2

17.6
21.9

17.6
22.0

17.8
21.7

EA-16 averages
weighted
arithmetic

16.3
16.9

16.1
16.8

16.1
16.9

16.4
16.8

16.7
17.8

16.8
18.8

16.8
19.0

16.8
19.4

16.6
19.5

16.8
20.0

16.9
20.3

16.9
20.4

17.2
20.0

EU-25 averages
weighted
arithmetic

16.8
18.4

16.6
18.4

16.7
18.5

16.8
18.2

17.1
18.9

17.2
19.8

17.2
19.8

17.4
20.2

17.4
20.3

17.5
20.6

17.5
21.1

17.5
21.2

17.7
20.9

-
-

0.9
3.2

0.9
2.5

32.1
27.8

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

31.9
27.3

31.9
28.0

28.2
25.3

19.9
14.8

21.7
15.5

21.2
14.9

23.0
16.5

23.4
16.2

23.3
18.0

28.1
20.9

30.3
22.5

27.4
21.0

-4.7
-6.8

0.6
1.5

0.4
1.1

0.6
1.1

5.7
5.5

Taxation trends in the European Union                 257

report2009.book  Page 258  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_A.1.2_G.pdf

Table A.1.2_G: Indirect Taxes as % of GDP: Excise duties and consumption taxes

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
2.2
2.3
5.9
4.1
3.8
3.3
3.2
4.1
2.6
2.9
3.8
3.3
2.4
2.9
2.5
3.1
2.2
2.5
2.0
2.5
2.1
2.5
3.7
3.2
2.9
3.1
2.9
3.3
3.7
4.2
3.3
3.7
3.4
2.8
2.4
2.5
2.5
2.7
4.2
3.7
2.9
2.9
3.1
2.8
3.3
3.4
3.5
2.7
3.4
4.1
2.8
3.2
3.2
3.8

2.3
3.7
3.2
4.1
3.0
3.2
2.9
2.9
2.5
2.6
2.3
2.8
3.1
3.2
4.4
3.6
2.7
2.5
2.7
4.0
3.1
2.6
3.4
2.9
4.2
3.2
3.7

2.4
4.9
3.7
3.5
2.9
3.7
2.6
2.6
2.4
2.2
2.2
4.1
3.6
2.9
4.2
3.2
3.1
2.5
2.7
4.2
3.1
3.3
3.3
3.7
3.8
3.0
3.4

2.2
5.2
3.7
3.4
2.8
3.5
2.4
2.4
2.3
2.3
2.2
3.9
3.3
2.9
3.8
3.3
3.1
2.5
2.6
4.0
3.2
3.2
3.3
2.9
3.7
2.9
3.2

2.4
3.7
3.3
4.1
2.8
3.0
3.2
3.1
2.6
2.6
2.6
2.5
3.4
3.2
4.5
3.8
2.5
2.6
2.7
3.7
2.7
3.0
3.0
3.1
4.3
3.2
4.0

2.5
3.5
3.4
4.2
2.7
3.2
3.5
3.3
2.7
2.7
2.9
2.3
3.6
3.8
4.5
4.3
2.8
2.8
2.8
3.9
3.3
3.3
1.7
3.1
4.7
3.4
4.1

2.4
4.5
3.4
4.0
3.2
3.1
2.8
2.8
2.5
2.5
2.4
3.8
3.3
3.3
4.3
3.6
2.7
2.4
2.8
4.1
3.3
3.5
3.4
3.1
4.3
3.2
3.6

2.5
5.1
3.5
3.8
3.0
3.6
2.7
2.6
2.5
2.3
2.3
4.4
3.5
3.0
4.6
3.3
2.8
2.6
2.8
4.2
3.2
3.6
3.4
3.3
3.9
3.1
3.6

2.5
-
3.2
4.1
2.5
3.6
3.7
3.5
2.8
2.7
2.9
2.2
4.1
3.6
4.3
4.3
3.0
2.8
2.8
3.6
3.5
2.5
0.0
2.9
4.6
3.5
4.1

2.5
-
3.4
3.9
2.6
3.2
4.1
4.2
2.6
2.8
3.0
2.6
2.6
2.6
4.0
4.0
1.8
2.7
2.6
4.4
3.7
-
0.0
3.3
4.6
3.7
4.1

2.4
-
3.7
3.7
2.6
2.7
4.2
4.2
2.5
2.8
3.2
2.7
2.1
2.4
4.1
4.2
1.9
2.8
2.6
4.6
3.7
-
0.0
3.5
4.5
3.4
4.1

2.5
-
3.4
3.8
2.6
3.3
3.8
3.7
2.6
2.7
3.0
2.2
3.2
2.9
4.4
3.9
2.4
2.7
2.8
3.5
3.5
-
0.0
3.0
4.7
3.5
4.0

Difference1)
1995 to 2007 2000 to 2007

-0.2
-
0.1
-0.4
0.0
1.0
-1.8
-1.7
-0.3
-0.8
-1.1
1.1
0.7
0.5
-0.3
-0.9
1.5
-0.4
0.0
-0.4
-0.8
-
3.3
0.0
-1.2
-0.7
-0.9

-0.2
2.2
0.5
-0.8
-0.2
0.8
-0.9
-0.6
-0.4
-0.6
-0.5
1.2
-0.6
-0.3
-0.8
-0.5
0.9
-0.2
-0.2
0.6
0.2
0.1
0.2
0.4
-0.9
-0.4
-0.8

3.4

3.2

3.3

3.1

3.1

2.8

2.7

2.7

2.7

2.4

2.3

2.1

2.1

-1.3

-0.7

Ranking Revenue2)

2007
25
1
3
12
19
4
23
21
24
27
26
5
17
15
6
10
8
22
20
2
16
14
11
7
9
18
13

2007

7 348
1 698
4 819
7 339
63 760
577
4 526
5 715
23 367
37 869
32 098
587
604
835
1 344
3 377
184
13 817
6 847
12 965
4 715
3 804
1 134
1 937
6 019
9 237
65 872

5 988

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

2.8
3.0

3.1
3.1

-
-

2.8
2.9

3.1
3.2

-
-

2.8
2.9

3.0
3.1

-
-

2.8
2.9

3.1
3.2

3.1
3.3

2.8
3.0

3.1
3.3

3.0
3.2

2.7
3.0

3.0
3.2

2.9
3.2

2.7
2.9

2.9
3.1

3.0
3.2

2.7
3.0

3.0
3.1

3.0
3.3

2.8
3.0

3.0
3.2

2.9
3.3

2.6
3.1

2.9
3.2

2.8
3.2

2.5
3.0

2.8
3.2

2.7
3.1

2.5
2.9

2.7
3.0

2.6
3.1

2.4
2.8

2.6
3.0

33.9
4.6

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

29.9
4.7

32.3
4.6

30.5
4.6

22.2
2.9

19.5
2.2

18.9
1.9

19.3
2.1

20.7
2.1

25.0
2.9

24.4
2.7

25.2
3.0

30.9
3.9

-
-

-0.5
-0.2

-0.5
-0.1

-2.9
-0.7

-0.4
-0.1

-0.4
-0.2

-0.4
-0.2

11.5
1.7

258

Taxation trends in the European Union

report2009.book  Page 259  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_A.1.2_T.pdf

Table A.1.2_T: Indirect Taxes as % of Total Taxation: Excise duties and consumption taxes

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
5.0
5.1
17.2
13.2
10.3
9.6
6.7
8.5
6.7
7.3
11.4
10.8
7.6
9.6
7.8
9.3
6.0
7.5
4.6
5.7
4.8
5.9
9.0
10.2
9.4
10.8
9.8
11.7
10.1
10.5
8.4
9.6
9.7
9.2
6.3
6.5
6.0
6.0
12.1
11.5
7.9
8.6
10.4
9.8
8.6
9.0
12.0
8.2
7.8
9.1
5.8
6.3
8.8
10.4

5.1
15.7
10.2
6.8
7.2
11.1
7.6
7.8
6.2
5.2
5.2
10.7
10.9
10.0
10.7
9.0
9.1
6.4
6.1
11.9
8.9
11.1
8.6
9.8
8.4
5.9
8.8

5.4
14.3
10.0
7.0
7.5
12.0
8.4
8.2
6.6
5.0
5.5
11.4
12.4
10.3
11.2
8.6
9.1
6.6
6.5
12.8
8.8
11.8
8.6
11.6
8.6
6.1
9.4

5.3
13.8
9.5
8.3
8.0
10.0
9.5
8.7
7.4
5.8
5.8
11.5
11.6
11.6
11.3
9.7
8.5
6.5
6.5
12.7
9.4
12.7
8.8
9.4
9.7
6.6
10.4

5.5
15.5
9.4
7.7
7.7
11.9
9.0
8.5
7.1
5.4
5.5
13.1
12.2
10.7
12.3
8.8
8.6
6.8
6.6
13.2
9.3
13.3
8.9
10.5
9.0
6.3
10.1

5.5
11.3
10.1
8.5
6.6
9.7
10.9
10.0
8.2
6.0
6.9
8.2
11.3
11.8
11.7
10.9
10.3
6.9
6.3
11.1
9.7
10.6
4.6
8.6
10.2
6.5
11.3

5.1
12.6
9.3
8.5
7.6
10.5
10.1
8.7
7.5
6.0
5.7
9.0
10.9
11.4
11.2
9.5
8.5
6.5
6.3
12.1
9.1
9.4
9.0
8.9
9.3
6.7
10.7

5.3
11.4
9.6
8.2
6.7
9.6
10.3
8.9
7.8
5.9
6.2
8.4
11.6
10.7
11.6
10.0
8.9
6.5
6.2
11.2
7.8
9.8
8.1
9.1
9.0
6.1
10.8

5.5
-
9.7
8.3
6.2
10.6
11.5
10.9
8.5
6.2
6.8
7.9
12.3
11.4
11.0
11.1
11.6
7.0
6.3
10.0
10.6
8.7
0.0
8.0
10.0
6.8
11.4

5.7
-
9.9
7.8
6.5
9.4
12.3
14.4
7.8
6.3
7.3
9.7
8.5
9.1
10.6
9.8
7.1
6.6
6.1
11.8
11.1
-
0.0
8.4
9.7
7.4
11.9

5.6
-
9.6
7.7
6.4
9.7
11.9
12.2
7.8
6.2
6.9
8.5
9.9
9.4
11.2
9.9
8.8
6.8
6.4
9.7
10.5
-
0.0
8.1
10.2
6.8
11.5

5.4
-
10.1
7.5
6.6
7.5
12.7
14.4
7.7
6.5
7.9
10.0
6.4
8.4
10.9
10.1
6.9
7.0
6.2
12.4
11.6
-
0.0
8.7
9.9
7.2
11.8

Difference1)
1995 to 2007 2000 to 2007

-0.4
-
0.2
-0.9
0.1
3.9
-5.1
-6.6
-1.7
-1.9
-3.1
-1.0
3.0
1.4
-0.8
-1.7
2.8
-0.7
-0.2
-0.4
-3.7
-
8.6
3.3
-2.1
-1.4
-3.0

-0.3
5.8
0.6
-1.6
-0.1
1.8
-2.7
-1.1
-1.8
-1.3
-1.4
0.6
-2.2
-0.9
-1.5
-1.6
0.8
-0.3
-0.2
0.9
0.1
0.7
0.5
2.9
-1.2
-0.3
-2.0

8.0

7.6

7.7

7.5

7.4

6.6

6.3

6.3

6.3

5.5

5.2

4.9

4.8

-3.2

-1.7

Ranking Revenue2)

2007
25
1
6
20
19
4
18
16
23
27
26
11
10
8
7
14
9
21
22
2
15
5
13
3
17
24
12

2007

7 348
1 698
4 819
7 339
63 760
577
4 526
5 715
23 367
37 869
32 098
587
604
835
1 344
3 377
184
13 817
6 847
12 965
4 715
3 804
1 134
1 937
6 019
9 237
65 872

5 988

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

7.1
8.3

7.7
8.6

-
-

6.9
8.1

7.6
8.6

-
-

6.8
8.0

7.5
8.5

-
-

6.7
8.0

7.5
8.8

7.6
9.0

6.8
8.2

7.6
8.9

7.4
8.7

6.6
7.9

7.4
8.6

7.4
8.9

6.7
8.0

7.4
8.7

7.6
8.9

6.8
8.0

7.6
8.7

7.6
9.2

6.9
8.3

7.6
8.9

7.4
9.4

6.7
8.4

7.4
9.0

7.1
9.0

6.4
8.1

7.1
8.7

6.8
8.7

6.2
7.7

6.8
8.3

6.6
8.5

5.8
7.5

6.5
8.1

38.4
14.4

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

34.4
12.2

37.4
14.4

36.1
12.3

28.5
7.2

25.8
6.4

27.6
8.2

26.0
7.4

30.0
8.5

36.7
10.2

35.7
9.3

36.4
10.7

41.9
12.5

-
-

-1.3
-1.1

-1.2
-0.5

3.5
-1.9

-0.9
-0.2

-0.8
-0.6

-0.9
-0.5

16.1
6.2

Taxation trends in the European Union                 259

report2009.book  Page 260  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_A.1.3_G.pdf

Table A.1.3_G: Indirect Taxes as % of GDP: Other taxes on Products (incl. import duties)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
2.5
2.2
0.4
0.8
0.5
0.8
2.6
1.8
1.0
0.9
0.5
0.2
2.6
2.0
2.3
2.7
2.6
1.9
1.9
1.6
3.0
2.5
1.9
2.7
0.8
0.4
0.4
1.0
1.3
1.3
4.1
3.2
3.6
3.7
2.1
2.1
1.1
1.2
0.4
0.6
2.8
2.7
0.7
1.6
1.1
1.4
0.4
0.7
1.3
1.2
0.8
0.7
1.5
1.4

2.3
-
1.1
2.7
1.0
0.2
2.1
2.7
1.8
1.7
2.9
2.0
0.6
1.6
1.4
3.4
3.6
1.8
1.3
1.1
2.6
2.3
14.1
1.7
1.4
0.7
1.3

2.1
-
1.5
2.3
0.9
0.2
2.0
2.0
1.5
1.7
2.6
2.7
0.7
1.7
1.2
5.3
3.7
1.6
1.2
1.6
2.5
-
14.7
1.7
1.4
0.7
1.0

2.0
-
1.5
2.3
1.1
0.2
2.0
1.9
1.7
1.7
2.5
2.9
0.8
1.9
1.2
5.8
4.1
1.4
1.2
1.8
2.5
-
15.0
1.7
1.5
0.9
1.1

2.2
-
1.2
2.4
1.0
0.2
2.0
2.6
1.6
1.7
2.7
2.3
0.7
1.8
1.3
3.7
3.7
1.8
1.2
1.5
2.5
-
13.7
2.0
1.4
0.7
1.2

2.2
0.8
0.8
2.0
0.9
0.2
1.7
2.4
2.0
1.7
2.6
2.3
0.4
1.2
1.1
3.2
3.6
1.9
1.1
0.6
2.6
1.3
1.3
0.7
1.2
0.7
1.3

2.4
1.0
0.5
2.6
0.9
0.4
2.5
2.2
2.8
1.9
2.8
1.4
0.5
0.8
1.2
3.6
3.5
2.1
1.1
0.3
2.7
1.0
0.9
0.3
1.4
0.7
1.3

2.5
1.2
0.5
2.6
0.9
0.4
3.0
2.4
2.9
1.8
3.0
1.4
0.5
0.4
1.1
3.8
3.7
2.2
1.2
0.3
2.9
1.1
0.9
0.3
1.3
0.7
1.5

2.3
1.0
1.0
2.0
0.9
0.2
2.3
3.3
1.9
1.7
2.7
3.0
0.4
1.2
1.5
3.3
3.7
2.0
1.2
0.8
2.8
2.2
1.8
1.7
1.2
0.7
1.6

2.3
1.3
0.9
2.5
1.0
0.2
2.2
3.1
1.9
1.7
2.9
1.9
0.6
1.4
1.4
3.6
4.0
1.9
1.2
0.9
3.0
2.4
8.1
1.8
1.3
0.7
1.4

2.3
0.9
0.8
1.9
0.9
0.2
1.9
2.3
2.3
1.7
2.5
2.0
0.5
1.1
1.1
3.4
3.6
1.9
1.2
0.6
2.4
1.0
1.3
0.6
1.2
0.7
1.2

2.3
1.0
0.5
2.2
0.9
0.3
2.2
2.2
2.5
1.9
2.9
1.7
0.5
1.1
1.1
3.6
3.9
2.0
1.2
0.4
2.5
1.0
1.1
0.5
1.3
0.7
1.3

Difference1)
1995 to 2007 2000 to 2007

0.5
-
-1.0
0.3
-0.1
0.2
0.6
0.4
0.9
0.2
0.5
-1.0
-0.1
-1.5
0.1
-1.7
-0.5
0.7
-0.1
-1.4
0.3
-
-13.9
-1.3
-0.2
-0.1
0.5

0.2
-0.6
-0.5
0.6
0.1
0.3
0.3
-1.0
0.6
0.2
0.3
-1.1
0.3
-0.8
-0.2
0.8
-0.1
0.1
-0.1
-0.4
0.0
-1.5
-0.7
-1.3
0.1
0.1
0.0

2.6

2.7

2.5

2.4

2.2

1.9

1.8

1.7

1.6

1.8

1.6

1.6

1.6

-1.0

-0.3

Ranking Revenue2)

2007
8
24
22
7
18
23
5
9
6
12
3
11
19
27
15
1
2
10
16
26
4
21
17
25
14
20
13

2007

8 277
122
623
5 835
24 020
70
4 970
5 235
27 175
35 822
46 548
304
164
106
475
4 101
196
11 722
3 066
1 173
4 614
884
364
211
2 379
2 494
31 600

4 615

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

1.6
2.8

1.6
2.4

-
-

1.6
2.7

1.5
2.4

-
-

1.7
2.7

1.6
2.3

-
-

1.8
2.8

1.7
2.3

1.7
2.0

1.8
2.5

1.7
2.1

1.7
1.8

1.7
2.1

1.7
1.8

1.6
1.6

1.7
1.9

1.6
1.6

1.6
1.5

1.7
1.8

1.6
1.6

1.6
1.5

1.7
1.8

1.6
1.6

1.7
1.6

1.8
1.9

1.7
1.6

1.7
1.6

1.9
1.9

1.7
1.6

1.8
1.6

2.0
2.0

1.8
1.7

1.8
1.6

2.0
2.0

1.8
1.7

-
-

0.3
-0.8

0.2
-0.7

Convergence indicators
St.dev/mean 178.6 179.2 156.5 152.8
Max-min
13.9
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

14.5

14.7

13.5

89.7
7.9

55.7
3.5

57.3
3.5

54.9
3.4

55.9
3.4

57.3
3.6

57.4
3.3

59.4
3.5

59.3
3.7

-119.2
-11.0

0.1
-0.2

0.2
-0.1

0.2
-0.1

3.7
0.1

260

Taxation trends in the European Union

report2009.book  Page 261  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_A.1.3_T.pdf

Table A.1.3_T: Indirect Taxes as % of Total Taxation: Other taxes on products (incl. import duties)

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
5.6
4.9
1.2
2.7
1.3
2.4
5.3
3.8
2.5
2.2
1.4
0.6
8.4
6.6
7.2
8.3
7.0
5.7
4.4
3.8
7.0
6.0
4.7
8.6
2.6
1.5
1.3
3.4
3.6
3.4
10.2
8.5
10.4
12.1
5.3
5.5
2.7
2.7
1.1
1.9
7.7
7.8
2.4
5.7
2.8
3.6
1.3
2.0
3.1
2.6
1.6
1.4
4.2
3.8

5.1
3.1
2.9
4.0
2.2
0.6
7.2
9.6
5.7
3.8
6.5
10.1
1.5
3.9
3.9
8.5
13.2
5.0
2.9
2.3
8.2
7.4
4.8
4.9
2.6
1.3
4.3

5.6
3.5
1.3
5.3
2.4
1.3
9.2
7.6
8.0
4.1
7.2
3.7
1.7
1.3
3.2
10.2
10.8
5.6
2.8
0.8
8.0
3.8
2.4
1.1
3.0
1.5
4.1

5.0
-
3.2
5.5
2.4
0.5
6.5
8.4
5.5
4.0
6.8
7.2
1.9
4.9
3.6
8.6
14.3
4.5
2.8
3.0
7.9
8.0
37.3
4.6
3.0
1.4
3.5

5.0
-
3.4
5.0
2.3
0.6
6.3
8.6
5.0
3.9
6.1
8.8
2.2
5.7
3.3
9.5
13.4
4.5
2.8
4.0
7.5
-
37.0
5.5
3.1
1.3
3.3

4.8
2.6
2.2
4.2
2.3
0.6
5.9
7.0
5.9
3.8
6.3
7.5
1.5
4.2
2.8
8.3
11.3
5.1
2.6
1.8
7.4
4.5
3.5
2.0
2.6
1.4
3.7

5.3
3.0
1.3
5.1
2.3
1.3
8.3
6.9
7.8
4.3
6.8
4.0
1.6
2.8
3.1
9.6
10.3
5.7
2.6
0.9
7.8
3.7
2.4
1.1
3.1
1.5
3.7

5.0
4.2
2.7
4.9
2.3
0.5
6.9
9.3
5.6
3.8
6.9
6.7
1.7
4.3
3.7
9.2
14.5
4.8
2.8
2.6
8.7
7.6
21.2
5.0
2.9
1.3
3.7

4.8
-
4.2
4.7
2.3
0.6
6.1
6.9
4.7
3.8
6.2
10.3
2.4
6.3
3.2
13.1
14.8
4.0
2.8
4.3
7.5
-
38.6
4.3
3.1
1.5
3.0

5.1
3.0
1.5
4.6
2.3
1.0
7.3
7.1
7.3
4.3
7.1
5.0
1.7
4.0
3.1
9.6
11.9
5.2
2.7
1.2
7.4
3.5
2.8
1.5
2.9
1.4
3.7

5.0
2.7
2.2
4.0
2.2
0.6
6.7
7.1
6.6
3.9
6.0
6.0
1.6
4.1
2.8
9.1
11.4
5.0
2.7
1.8
7.0
3.5
3.5
1.9
2.7
1.4
3.5

4.6
-
4.1
4.7
2.7
0.6
6.2
6.7
5.1
4.0
6.3
10.9
2.5
6.6
3.3
13.9
15.2
3.5
3.0
4.8
7.9
-
38.2
4.3
3.4
1.8
3.1

Difference1)
1995 to 2007 2000 to 2007

1.1
-
-2.7
0.6
-0.2
0.7
2.2
0.5
1.9
0.4
0.7
-6.2
0.0
-5.3
0.2
-3.7
-4.8
1.8
-0.3
-3.8
-0.2
-
-35.4
-3.0
-0.3
-0.3
1.1

0.6
-1.9
-1.6
1.3
0.3
0.8
1.1
-2.4
1.2
0.5
0.5
-5.4
1.0
-2.7
-0.4
1.7
-2.8
0.3
-0.2
-1.2
-0.5
-5.0
-2.0
-3.6
0.4
0.3
0.0

6.2

6.3

5.9

5.8

5.2

4.6

4.1

4.0

3.9

4.2

3.6

3.6

3.7

-2.5

-0.8

Ranking Revenue2)

2007
8
26
23
10
19
22
3
5
7
12
6
11
18
25
14
2
1
9
17
27
4
20
16
24
15
21
13

2007

8 277
122
623
5 835
24 020
70
4 970
5 235
27 175
35 822
46 548
304
164
106
475
4 101
196
11 722
3 066
1 173
4 614
884
364
211
2 379
2 494
31 600

4 615

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

4.1
7.8

4.0
6.7

-
-

4.0
7.7

3.8
6.5

-
-

4.2
7.7

4.0
6.3

-
-

4.3
7.7

4.1
6.2

4.2
5.7

4.3
6.9

4.2
5.6

4.1
5.0

4.2
6.0

4.1
5.0

4.0
4.5

4.1
5.4

3.9
4.5

4.0
4.3

4.2
5.1

4.0
4.4

4.0
4.3

4.2
5.0

4.0
4.4

4.4
4.4

4.7
5.2

4.4
4.5

4.4
4.3

4.8
5.1

4.4
4.4

4.6
4.4

4.9
5.3

4.6
4.5

4.5
4.3

4.8
5.2

4.6
4.5

-
-

0.7
-2.6

0.5
-2.2

0.4
-0.7

0.6
-0.6

0.5
-0.5

Convergence indicators
St.dev/mean 184.4 194.3 175.5 167.6 103.7
Max-min
20.7
38.0
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

36.8

36.4

37.5

73.1
12.6

69.9
11.5

62.9
10.7

63.9
10.8

63.3
10.9

61.9
9.4

64.9
10.0

62.0
9.3

-122.4
-28.3

-11.1
-3.3

Taxation trends in the European Union                 261

report2009.book  Page 262  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_A.1.4_G.pdf

Table A.1.4_G: Indirect Taxes as % of GDP: Other taxes on production

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1.7
1.9
0.4
0.5
0.4
0.6
1.8
1.8
2.3
1.8
0.7
0.8
0.9
0.8
0.3
0.5
1.1
1.2
4.2
4.1
3.6
3.5
2.9
1.0
0.7
1.5
0.5
0.6
2.1
2.2
0.7
0.4
0.5
0.4
1.0
1.1
3.0
3.3
1.5
1.4
0.8
0.7
0.8
0.6
2.1
2.5
0.9
0.7
0.2
0.2
4.3
3.9
1.5
1.7

1.8
0.6
0.5
1.8
1.8
0.7
0.8
0.3
1.2
4.1
3.6
1.0
1.0
0.6
1.7
0.4
0.4
1.1
3.3
1.4
0.9
0.6
2.5
0.9
0.2
4.0
1.7

2.0
0.6
0.4
1.7
2.3
0.6
1.0
0.3
1.1
4.2
3.6
2.2
0.8
0.5
2.0
0.6
0.5
1.0
3.0
2.0
0.8
0.6
2.5
1.0
0.2
4.3
1.6

1.8
0.6
0.4
1.7
2.1
0.6
0.9
0.3
1.1
4.3
3.5
1.9
0.9
0.5
1.9
0.5
0.6
1.1
3.1
1.7
0.7
0.5
2.9
1.0
0.2
4.0
1.6

1.9
0.5
0.6
1.6
2.0
0.7
0.8
0.6
1.2
4.2
3.4
1.1
1.4
0.6
2.3
0.4
0.3
1.0
3.2
1.3
0.6
0.5
2.3
0.7
0.2
4.0
1.8

2.0
0.6
0.6
1.8
2.0
0.6
0.9
0.6
1.3
4.3
3.4
1.7
2.1
0.6
2.0
0.3
0.3
1.0
3.3
1.3
0.6
0.5
2.0
0.7
0.2
5.6
1.7

1.9
0.7
0.5
1.8
1.8
0.7
0.9
0.3
1.1
4.1
3.5
1.7
1.1
0.6
1.5
0.4
0.4
1.1
3.3
1.3
1.4
0.6
2.8
0.9
0.2
4.1
1.6

1.9
0.7
0.4
1.8
1.9
0.6
0.9
0.3
1.1
4.2
3.3
1.9
1.0
0.6
1.7
0.5
0.8
1.1
3.1
1.4
0.7
0.5
2.8
0.9
0.3
4.0
1.6

2.0
-
0.6
1.8
2.0
0.6
1.0
0.5
1.3
4.4
3.8
1.9
2.2
0.6
1.8
0.3
0.3
1.0
3.3
1.3
0.6
0.3
1.9
0.7
0.2
4.4
1.8

2.0
-
0.8
1.5
1.9
0.6
1.2
0.7
1.3
4.4
1.2
1.2
1.4
0.6
1.5
0.2
0.2
1.1
3.3
1.5
0.5
-
1.0
1.2
0.2
3.4
1.8

2.0
-
0.7
1.7
1.9
0.6
1.1
0.5
1.3
4.4
1.4
1.2
2.0
0.6
1.6
0.3
0.3
1.0
3.3
1.5
0.5
-
1.6
0.8
0.2
3.8
1.8

1.9
-
0.9
1.6
1.8
0.6
1.2
0.5
1.3
4.2
1.2
1.2
1.9
0.5
1.4
0.1
0.3
1.1
3.3
1.6
0.5
-
0.5
0.9
0.1
2.5
1.8

0.6

0.7

0.6

0.6

0.6

0.5

0.6

0.5

0.5

0.5

0.5

0.6

0.6

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

2.1
1.3

2.0
1.3

-
-

2.2
1.4

2.1
1.4

-
-

2.2
1.4

2.1
1.4

-
-

2.6
1.7

2.5
1.6

2.4
1.6

2.5
1.6

2.4
1.6

2.3
1.5

2.5
1.6

2.3
1.5

2.3
1.5

2.4
1.6

2.3
1.5

2.3
1.5

2.4
1.6

2.3
1.5

2.2
1.5

2.4
1.7

2.3
1.6

2.2
1.5

2.4
1.7

2.3
1.6

2.3
1.5

2.5
1.7

2.3
1.6

2.4
1.5

2.6
1.7

2.4
1.6

2.3
1.5

2.6
1.7

2.3
1.6

47.5
4.0

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

50.5
4.2

48.4
4.2

50.0
4.2

53.7
5.4

48.7
4.0

49.4
3.9

49.6
3.9

50.2
3.9

49.9
3.9

49.8
4.0

50.2
4.1

51.3
4.0

Ranking Revenue2)

2007
10
24
25
9
6
21
16
26
13
2
3
5
19
22
8
20
23
14
4
12
18
17
7
15
27
1
11

2007

5 535
129
512
4 038
55 420
100
1 763
670
11 368
80 362
55 861
461
152
153
759
678
26
5 818
8 106
4 740
1 322
1 031
723
512
438
14 169
31 476

1 635

Difference1)
1995 to 2007 2000 to 2007

-0.2
-
-0.5
0.2
0.5
0.1
-0.3
-0.3
-0.2
0.1
2.5
1.7
-1.2
0.1
0.7
0.5
0.2
-0.1
-0.3
0.0
0.3
-
1.6
0.0
0.1
1.7
-0.3

0.0

-
-

0.5
0.4

0.3
0.3

3.8
0.0

-0.2
-0.1
-0.2
0.1
0.3
-0.1
0.1
-0.3
-0.2
0.1
0.3
1.8
-0.7
0.0
-0.2
0.3
0.2
0.0
-0.2
0.3
0.2
0.3
-0.2
0.2
0.0
0.2
-0.2

0.1

0.0
0.1

0.1
0.1

0.0
0.1

2.6
0.1

262

Taxation trends in the European Union

report2009.book  Page 263  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_A.1.4_T.pdf

Table A.1.4_T: Indirect Taxes as % of Total Taxation: Other taxes on production

Tables

Annex A

Difference1)
1995 to 2007 2000 to 2007

Ranking Revenue2)

2007
11
24
25
12
6
20
14
26
15
1
3
5
18
21
7
22
23
17
4
9
19
16
8
13
27
2
10

2007

5 535
129
512
4 038
55 420
100
1 763
670
11 368
80 362
55 861
461
152
153
759
678
26
5 818
8 106
4 740
1 322
1 031
723
512
438
14 169
31 476

1 635

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
3.8
4.2
1.3
1.7
1.1
1.6
3.7
3.7
5.8
4.6
2.0
2.5
3.0
2.8
0.9
1.4
2.9
3.7
9.8
9.3
8.4
8.4
7.1
3.1
2.4
5.4
1.8
2.1
5.7
5.6
1.7
1.0
1.4
1.2
2.6
2.8
7.1
7.2
4.4
4.4
2.2
1.9
2.8
2.2
5.5
6.7
3.2
2.2
0.6
0.5
8.9
7.8
4.2
4.8

4.4
1.9
1.9
3.6
4.9
1.9
2.9
1.8
3.8
9.6
7.9
6.1
6.7
2.0
5.2
0.8
1.2
2.6
7.4
3.8
1.7
1.6
5.2
2.0
0.5
10.8
4.8

4.3
2.1
1.5
3.8
4.5
2.2
3.1
1.0
3.3
9.5
8.4
5.2
3.9
2.0
4.0
1.1
1.4
2.8
7.5
4.1
3.9
2.2
7.3
2.8
0.5
8.5
4.7

4.4
1.7
1.1
3.5
5.9
2.0
3.0
1.0
3.1
9.5
8.6
6.1
2.5
1.8
5.7
1.5
1.6
2.7
7.2
6.0
2.1
2.0
6.5
3.3
0.6
8.9
4.3

4.1
2.1
1.5
3.8
4.5
2.3
2.9
1.0
3.6
9.5
8.7
3.3
3.7
2.2
4.4
1.0
1.3
2.9
7.4
4.4
2.7
2.2
6.7
2.8
0.5
8.4
4.9

4.2
2.2
1.2
3.7
5.0
2.1
3.1
1.0
3.2
9.7
8.2
5.7
3.4
2.1
4.5
1.4
2.5
2.9
7.3
4.3
2.0
1.7
7.4
2.8
0.7
8.3
4.5

3.9
1.8
1.1
3.4
5.4
2.1
3.1
0.9
3.2
9.8
8.7
5.3
3.0
1.9
5.0
1.4
1.7
2.9
7.3
5.1
2.0
1.8
7.5
3.1
0.6
8.0
4.4

4.2
1.7
1.9
3.3
4.8
2.3
2.6
1.6
3.7
9.5
8.1
3.7
4.8
1.9
6.0
1.0
1.2
2.6
7.5
3.9
1.8
1.6
6.2
2.2
0.4
7.8
4.8

4.4
-
1.8
3.6
4.8
1.8
3.0
1.6
4.0
9.9
8.9
7.0
6.5
1.9
4.6
0.6
1.2
2.5
7.4
3.8
1.7
1.1
5.0
2.0
0.5
8.5
4.9

4.6
-
1.9
3.4
4.8
1.7
3.3
1.7
3.8
9.9
3.1
4.6
6.2
2.0
4.2
0.7
0.9
2.5
7.4
4.1
1.6
-
4.4
2.1
0.4
7.5
5.1

4.3
-
2.4
3.3
4.5
1.5
3.7
1.9
4.0
9.8
2.9
4.6
5.7
1.7
3.7
0.3
1.0
2.7
8.1
4.2
1.6
-
1.3
2.2
0.3
5.3
5.2

4.5
-
2.3
3.1
4.6
1.7
3.7
2.3
3.8
9.9
2.8
4.6
4.6
2.1
3.9
0.6
1.0
2.7
7.7
4.0
1.5
-
2.6
3.0
0.4
6.8
5.2

-0.5
-
-1.3
0.4
1.3
0.5
-0.8
-1.0
-1.1
0.1
5.5
2.5
-3.4
0.1
2.0
1.3
0.4
-0.1
-0.9
0.2
0.6
-
4.2
1.0
0.3
3.6
-1.0

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1.5

1.5

1.5

1.5

1.5

1.2

1.3

1.3

1.3

1.2

1.2

1.3

1.3

-0.2

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

5.3
3.5

5.2
3.4

-
-

5.3
3.7

5.2
3.6

-
-

5.3
3.7

5.3
3.7

-
-

6.4
4.3

6.1
4.1

5.9
4.0

6.1
4.2

6.0
4.1

5.7
3.7

6.0
4.1

5.8
3.9

5.8
3.8

6.1
4.1

5.8
4.0

5.8
3.8

6.1
4.1

5.8
3.9

5.8
3.9

6.1
4.3

5.8
4.1

5.8
3.9

6.2
4.4

5.8
4.0

5.9
3.9

6.4
4.4

5.9
4.0

5.9
3.9

6.4
4.5

6.0
4.1

5.8
3.9

6.3
4.4

5.9
4.0

-
-

1.0
0.8

0.7
0.6

44.0
9.4

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

42.2
9.5

44.0
9.5

44.2
9.4

45.6
10.3

42.1
9.0

42.1
8.8

41.9
9.0

42.5
9.0

42.4
9.0

43.2
9.2

43.9
8.9

44.4
9.2

0.4
-0.2

-0.4
-0.4
-0.8
0.3
1.0
-0.3
0.3
-0.7
-0.8
0.4
0.3
3.4
-2.4
-0.1
-0.3
0.7
0.2
0.0
-0.3
0.5
0.4
1.2
-0.7
1.0
0.1
1.1
-0.6

0.1

0.1
0.1

0.3
0.2

0.1
0.1

2.3
0.2

Taxation trends in the European Union                 263

Difference1)
1995 to 2007 2000 to 2007

Ranking Revenue2)

2007
4
25
19
1
15
24
12
23
11
14
6
7
21
20
9
16
8
13
10
22
17
26
18
27
3
2
5

2007

56 680
2 068
11 843
67 477
275 040
1 197
24 394
18 468
140 594
225 685
233 960
2 194
1 942
2 636
4 936
10 352
742
69 854
36 671
26 812
15 920
8 367
3 281
3 356
31 993
62 987
344 510

62 396

-0.6
0.2
1.0
-0.7
-1.1
0.0
-0.7
-1.9
2.8
-0.6
0.7
3.0
1.9
0.8
-1.4
0.7
4.4
0.3
0.3
1.5
-0.2
-0.3
2.1
-1.3
-3.6
-3.0
0.2

1.9

-0.3
0.2

-0.1
0.2

-0.2
0.2

-3.8
0.1

report2009.book  Page 264  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_A.2_G.pdf

Table A.2_G: Direct Taxes as % of GDP: Total

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
16.9
17.7
16.6
7.2
7.6
-
9.3
8.8
9.6
29.8
29.5
31.0
11.4
11.0
10.9
7.8
7.3
10.9
12.8
12.8
13.6
8.1
8.8
6.9
13.4
10.4
10.3
11.9
12.6
8.4
15.2
14.8
15.0
14.0
11.2
8.8
9.2
7.6
7.1
9.3
7.8
8.7
13.6
15.3
15.4
10.2
10.1
8.9
13.6
10.2
8.3
12.3
11.7
12.5
13.5
15.1
11.7
8.7
6.7
11.7
9.8
9.5
8.5
6.8
6.4
-
9.5
7.6
6.9
6.1
7.5
10.8
17.8
19.2
17.5
19.0
19.6
19.8
16.8
16.8
15.2

17.7
-
8.3
30.1
11.4
10.4
13.8
8.8
10.3
11.8
14.6
9.8
8.0
9.0
16.1
9.1
8.0
12.2
13.7
10.9
8.9
8.3
7.5
9.0
19.0
21.1
16.4

17.5
5.7
9.2
31.9
10.3
7.0
12.3
8.6
11.4
11.8
13.4
10.2
7.9
9.0
13.8
9.1
12.0
11.7
12.9
7.0
8.5
5.3
8.7
6.0
17.9
19.9
16.4

17.2
6.0
9.2
30.6
10.9
7.2
13.2
8.0
12.2
12.2
14.4
10.8
8.5
9.6
13.2
9.4
12.2
11.9
13.0
7.5
8.8
6.1
9.2
6.1
17.5
19.8
17.2

17.5
7.0
8.3
30.5
12.5
7.8
13.5
10.0
10.5
12.5
14.5
11.0
7.3
8.4
15.0
9.6
9.2
12.0
13.2
7.2
9.9
7.0
7.4
7.5
21.4
22.1
16.7

17.6
6.4
9.1
29.3
10.7
7.6
11.6
8.8
10.8
11.8
14.1
11.2
7.8
7.5
15.4
10.2
11.4
11.8
13.9
6.9
9.4
5.8
7.8
7.1
19.1
17.6
15.7

17.3
7.7
8.5
30.3
11.9
9.8
13.9
9.1
10.4
12.4
15.0
10.7
7.7
9.2
14.9
9.6
8.8
12.1
13.3
7.7
9.4
7.9
7.5
9.0
18.7
21.9
16.3

16.7
-
8.4
31.0
11.3
9.3
14.1
6.6
10.4
9.0
15.4
8.5
7.0
8.2
15.9
9.4
7.4
13.0
12.7
11.3
9.1
-
7.4
9.7
19.1
20.7
14.9

17.2
6.7
9.6
29.5
10.6
8.1
12.0
8.0
10.5
11.4
14.7
9.6
7.6
8.0
14.8
9.5
12.0
11.0
13.8
6.6
8.7
6.0
8.0
7.1
18.0
18.3
15.2

17.1
-
8.9
30.5
11.1
9.3
14.1
7.3
10.6
9.7
16.5
8.7
7.5
8.8
16.5
9.2
8.3
12.4
13.6
11.1
9.2
-
7.5
9.2
18.6
21.2
15.2

17.4
6.0
9.6
30.4
10.2
8.0
12.4
8.1
10.6
11.6
13.9
8.7
7.9
8.7
13.1
9.1
11.4
10.7
13.6
6.4
8.6
6.4
8.3
6.1
17.8
19.1
15.4

16.2

17.0

16.8

15.8

16.9

20.1

20.2

19.8

19.5

21.1

22.4

23.0

22.0

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

13.7
12.3

13.9
12.2

13.5
12.0

13.0
11.7

12.7
11.6

12.7
11.5

12.9
11.7

13.4
11.9

13.6
12.4

EA-16 averages
weighted
arithmetic

11.3
11.4

11.8
11.6

12.1
11.9

12.4
12.1

12.7
12.2

12.9
12.4

12.5
12.2

12.1
12.0

11.9
11.7

11.7
11.4

11.8
11.7

12.3
11.9

12.7
12.5

EU-25 averages
weighted
arithmetic

12.4
12.2

12.8
12.3

13.2
12.5

13.5
12.6

13.8
12.6

14.0
12.6

13.6
12.4

13.0
12.2

12.8
12.0

12.7
11.9

13.0
12.2

13.5
12.4

13.7
12.8

0.3
-
-0.3
-1.2
0.4
-3.1
-0.8
1.2
3.1
3.5
0.2
5.2
2.1
0.6
-1.8
1.4
5.3
-0.2
1.8
-3.1
1.3
-
2.6
-4.7
0.3
-0.7
1.7

5.8

-
-

1.4
1.5

1.3
0.6

42.2
24.0

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

40.9
23.2

42.9
24.4

38.4
22.6

38.0
22.9

40.0
23.5

38.8
23.1

39.2
23.5

39.8
23.6

41.4
24.4

42.9
26.6

39.2
24.7

36.2
23.7

-6.0
-0.4

264

Taxation trends in the European Union

report2009.book  Page 265  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_A.2_T.pdf

Table A.2_T: Direct Taxes as % of Total Taxation: Total

Difference1)
1995 to 2007 2000 to 2007

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
38.5
39.3
37.9
20.9
24.5
-
25.3
26.0
26.5
61.2
60.8
63.5
28.7
27.6
27.5
23.7
23.9
30.0
41.0
42.9
41.2
25.2
26.6
23.8
36.1
31.0
31.4
27.6
28.9
19.7
35.2
35.7
37.5
33.6
36.2
32.9
30.2
26.5
21.5
31.0
27.3
30.4
37.0
38.4
41.6
25.7
26.4
21.3
39.3
33.5
31.1
31.6
30.6
31.2
32.2
33.4
28.3
24.9
20.7
31.6
26.5
27.9
26.5
23.0
22.2
-
24.9
20.2
17.7
20.8
22.6
26.8
41.4
43.0
38.2
39.4
39.3
41.2
46.3
46.1
43.7

38.8
21.4
24.6
61.8
29.8
25.0
42.8
28.8
31.1
28.3
34.8
36.7
24.7
28.1
38.4
24.9
32.7
30.0
30.6
22.1
28.9
23.1
19.8
21.9
45.3
42.6
45.4

38.8
21.6
26.2
61.2
27.2
24.3
40.9
26.2
31.9
27.3
34.5
35.8
27.5
26.4
39.2
26.7
36.1
31.3
31.7
21.2
27.0
20.5
20.7
21.2
42.9
36.8
44.9

38.6
17.9
25.1
61.7
27.9
23.0
41.0
25.7
33.4
27.7
34.3
29.6
27.9
32.6
36.7
25.3
36.3
30.4
31.0
22.2
24.6
21.3
23.9
20.6
40.3
40.5
46.6

38.8
18.1
25.7
62.0
26.3
26.0
41.1
26.1
30.7
26.9
34.3
26.0
27.7
30.8
35.2
24.1
34.6
28.6
31.3
20.3
25.1
23.3
21.6
19.3
41.0
39.3
43.8

39.0
-
25.0
61.0
28.0
30.5
43.6
27.0
31.3
26.8
34.5
35.3
23.7
28.3
40.9
23.4
31.3
30.9
31.0
30.7
26.9
28.9
19.8
24.5
41.3
41.0
45.6

38.3
20.7
27.0
61.5
26.7
26.2
41.2
24.9
30.9
26.5
35.6
29.2
26.5
28.3
38.8
25.3
38.2
29.3
31.5
20.5
25.0
21.6
20.9
21.6
41.0
37.9
43.7

38.1
25.2
24.9
60.6
28.6
30.0
43.6
27.2
30.8
27.7
35.4
38.2
24.0
28.8
39.0
24.5
32.1
30.0
30.3
22.2
27.6
25.1
19.6
25.5
40.9
42.2
45.0

39.1
16.9
24.7
62.8
26.7
22.8
40.1
27.3
32.0
27.0
33.2
28.6
27.2
31.6
36.7
24.3
35.5
31.2
30.5
21.3
24.2
19.1
22.5
19.1
40.6
40.1
45.4

38.2
-
25.4
62.3
27.2
27.0
43.4
23.9
32.0
21.9
37.7
33.6
23.5
28.5
42.0
23.5
30.2
31.2
30.6
30.4
27.9
-
20.2
24.8
40.2
41.6
43.6

37.7
-
24.1
63.0
27.9
27.0
42.5
22.5
31.5
20.5
36.7
32.2
22.6
29.4
42.3
23.3
29.0
32.3
29.7
30.5
27.7
-
19.5
24.6
40.7
41.1
43.4

0.6
-
-1.2
-2.3
1.3
-6.3
-0.2
1.4
4.7
7.8
-2.3
0.7
8.7
0.6
-4.5
4.4
8.2
0.4
3.9
-6.7
0.1
-
7.2
-6.0
3.2
-1.8
2.5

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

38.5

40.0

39.9

37.7

39.9

47.1

47.2

46.0

46.1

48.7

51.4

52.2

50.4

11.9

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

33.7
32.1

34.4
31.9

34.1
31.9

33.2
31.5

32.7
31.1

32.6
30.7

33.0
30.8

33.8
31.3

34.3
32.3

EA-16 averages
weighted
arithmetic

28.5
30.8

29.0
31.1

29.5
31.6

30.3
32.0

30.7
32.2

31.3
32.4

31.0
32.4

30.3
32.0

29.9
31.2

29.6
30.4

29.8
30.9

30.6
31.4

31.5
32.5

EU-25 averages
weighted
arithmetic

31.5
32.1

31.8
32.1

32.6
32.4

33.5
32.8

33.7
32.7

34.4
32.7

34.1
32.6

33.3
32.3

32.7
31.9

32.7
31.5

33.1
31.8

33.9
32.3

34.4
33.1

-
-

3.0
2.2

3.0
1.0

30.9
45.7

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

30.5
43.5

29.1
42.2

26.6
41.2

26.6
41.0

28.0
42.0

27.2
40.6

28.0
40.7

28.5
41.1

28.9
43.9

29.8
45.9

28.0
43.8

26.3
40.4

-4.6
-5.3

-0.3
-0.5
0.7
-0.6
-1.0
-1.3
-1.8
-3.6
5.0
-0.7
0.4
-3.1
5.5
2.9
-1.4
0.9
6.5
1.7
1.6
2.9
-2.3
-0.1
5.1
-1.1
-3.8
-3.1
0.9

3.2

0.0
0.3

0.2
0.2

0.0
0.4

-1.6
-1.6

Tables

Annex A

Ranking Revenue2)

2007
7
26
20
1
16
24
4
21
9
17
10
11
15
14
8
19
6
13
12
22
18
25
23
27
3
5
2

2007

56 680
2 068
11 843
67 477
275 040
1 197
24 394
18 468
140 594
225 685
233 960
2 194
1 942
2 636
4 936
10 352
742
69 854
36 671
26 812
15 920
8 367
3 281
3 356
31 993
62 987
344 510

62 396

Taxation trends in the European Union                 265

report2009.book  Page 266  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_A.2.1_G.pdf

Table A.2.1_G: Direct Taxes as % of GDP: Personal income taxes

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
12.0
13.5
13.4
3.2
3.6
-
4.3
4.5
4.8
25.2
26.0
26.3
9.2
9.9
9.3
6.1
6.6
8.5
7.3
8.1
10.3
4.7
4.5
3.6
7.7
6.8
7.7
7.5
8.2
5.3
11.4
10.8
10.4
6.3
3.9
3.9
6.1
5.5
5.3
6.7
7.2
6.5
7.4
7.0
8.0
7.1
7.5
6.7
5.9
6.2
5.0
7.4
6.2
7.7
10.0
10.8
9.3
5.3
4.5
8.4
5.7
5.6
5.6
3.3
3.3
-
5.7
5.7
5.9
2.6
3.5
3.6
13.0
14.0
14.2
14.6
16.0
16.3
10.5
10.6
10.1

12.7
2.9
4.6
24.9
8.6
5.6
7.3
4.6
6.6
8.0
10.4
3.9
5.7
6.9
7.1
6.6
6.3
6.6
9.6
3.9
5.3
2.3
5.5
2.6
13.5
15.5
10.2

12.1
2.7
4.2
24.8
8.9
5.7
7.2
4.6
7.1
7.9
10.9
4.6
6.0
6.8
7.5
6.7
6.4
7.0
9.7
4.6
5.5
2.8
5.8
2.5
13.2
15.5
10.4

13.2
4.1
4.6
25.6
10.2
6.9
8.6
5.0
6.6
8.4
10.6
3.6
5.6
7.7
7.2
7.1
5.6
6.0
10.1
4.4
5.6
3.3
5.6
3.4
14.5
17.2
10.6

13.3
3.2
4.7
25.7
9.6
6.4
7.1
4.5
6.8
7.9
10.6
4.3
5.6
6.9
6.4
7.5
6.1
6.8
10.5
4.3
5.4
2.7
5.7
3.3
13.9
14.7
10.2

13.0
4.4
4.5
25.8
9.9
7.8
9.0
5.1
6.7
8.2
11.3
3.7
5.6
8.3
7.2
6.9
5.3
6.0
10.5
5.0
5.3
3.5
5.6
4.3
13.5
17.8
10.2

13.3
-
4.7
25.5
9.5
7.9
9.7
4.9
7.0
8.0
11.2
3.7
5.7
7.7
7.5
6.6
4.8
6.1
10.5
7.7
5.3
4.4
5.6
4.4
13.8
17.5
10.0

13.1
-
4.8
26.2
9.4
7.7
10.3
3.7
7.7
5.5
10.7
3.1
5.1
6.3
8.1
7.3
4.5
7.2
9.8
8.0
5.8
-
6.0
4.0
15.4
17.2
9.4

13.0
3.3
4.9
25.6
9.3
6.5
6.8
4.4
6.6
7.9
10.5
4.4
5.8
6.5
6.5
7.0
6.3
6.5
10.5
4.2
5.4
2.8
5.7
3.2
13.7
15.2
9.8

13.3
-
4.8
25.9
9.2
7.5
10.2
4.0
7.2
5.8
11.1
3.3
5.4
7.2
8.1
6.9
5.0
6.3
10.5
7.6
5.5
-
5.9
4.3
14.2
17.4
9.0

12.8
3.2
4.8
24.9
8.7
6.3
7.4
4.4
6.4
7.9
10.4
3.5
5.9
6.8
6.6
6.6
6.4
6.0
10.2
3.6
5.2
2.8
5.7
2.7
13.3
15.4
9.8

Difference1)
1995 to 2007 2000 to 2007

-1.4
-
-0.5
-1.1
-0.1
-2.3
-2.9
1.1
0.0
2.2
0.9
2.4
0.8
0.2
-0.7
0.4
0.9
-0.3
0.7
-3.0
0.1
-
-0.1
-1.0
-1.2
-1.7
0.4

-1.2
-0.9
-0.2
-0.4
-1.0
-0.8
-1.3
-0.3
1.1
-0.9
0.8
2.7
0.6
-1.1
0.2
0.0
0.3
1.4
-0.1
0.9
0.1
-0.1
0.1
-0.8
-1.4
-2.6
-0.1

10.3

10.7

10.9

11.7

11.4

10.3

10.4

10.7

10.5

10.3

9.7

9.1

9.6

-0.7

-0.6

Ranking Revenue2)

2007
4
26
24
1
8
17
13
23
9
10
5
16
18
15
12
14
19
11
7
22
21
25
20
27
3
2
6

2007

40 193
925
5 507
57 058
223 870
936
13 968
10 723
81 299
141 739
174 598
987
1 292
1 891
2 678
7 227
322
42 173
26 958
16 458
9 285
4 066
1 979
1 401
23 396
48 271
215 204

27 392

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

8.4
7.7

9.2
8.6

-
-

8.6
7.8

9.2
8.6

-
-

8.6
7.7

9.2
8.6

-
-

9.1
7.8

9.7
8.7

9.8
8.3

9.2
7.8

9.8
8.7

9.8
8.2

9.2
7.8

9.8
8.5

9.7
8.1

9.1
7.8

9.7
8.5

9.4
7.9

8.9
7.6

9.5
8.3

9.2
7.9

8.7
7.5

9.3
8.3

9.0
7.7

8.4
7.3

9.0
8.1

9.1
7.7

8.5
7.4

9.1
8.1

9.2
7.8

8.7
7.5

9.3
8.2

9.4
8.0

8.9
7.7

9.4
8.4

53.7
22.7

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

54.8
23.1

53.8
22.6

49.5
21.8

50.0
22.3

50.2
22.3

50.6
22.7

50.9
23.0

51.6
22.7

52.6
22.3

52.5
22.6

50.5
22.3

48.6
22.6

-
-

0.4
0.1

0.2
-0.3

-5.0
-0.1

-0.5
-0.2

-0.3
0.0

-0.4
-0.2

-1.5
0.4

266

Taxation trends in the European Union

report2009.book  Page 267  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_A.2.1_T.pdf

Table A.2.1_T: Direct Taxes as % of Total Taxation: Personal income taxes

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
27.3
29.9
30.6
9.4
11.6
-
11.7
13.3
13.3
51.8
53.6
53.9
23.4
24.7
23.4
18.5
21.5
23.3
23.5
27.1
31.0
14.7
13.6
12.5
20.9
20.2
23.6
17.3
18.8
12.3
26.3
26.1
26.1
15.1
12.5
14.8
20.1
19.3
16.0
22.2
25.3
22.7
20.1
17.7
21.7
18.0
19.6
16.1
17.0
20.3
18.8
19.1
16.1
19.2
23.7
23.9
22.4
15.3
13.9
22.6
15.5
16.5
17.3
11.2
11.3
-
15.0
15.2
15.0
8.7
10.6
8.9
30.3
31.5
31.1
30.2
32.0
34.1
28.9
29.1
29.1

27.3
8.1
11.6
50.0
22.7
18.2
22.4
14.7
19.3
18.0
25.8
12.5
19.8
23.1
21.0
18.1
19.0
17.8
23.2
13.6
15.2
10.0
15.0
8.5
30.3
31.6
28.1

29.1
10.2
13.6
53.2
23.5
21.0
23.4
13.6
19.4
18.5
25.4
13.5
20.4
23.3
17.2
18.6
20.0
17.5
23.9
13.1
15.5
10.1
15.0
9.7
31.0
31.5
28.2

28.4
9.7
12.8
50.9
22.4
20.5
24.5
14.2
18.5
18.2
25.6
10.5
20.8
24.0
17.8
17.5
19.5
16.0
23.4
11.6
15.3
10.4
15.0
8.4
30.5
31.6
27.8

29.2
12.6
13.5
51.9
24.4
22.1
27.2
14.4
19.5
18.9
25.4
12.0
18.8
25.6
18.3
18.5
19.8
15.0
23.3
13.5
16.2
11.0
15.0
9.9
30.6
33.1
28.8

29.3
-
14.1
51.8
23.2
23.3
30.6
15.1
21.3
18.1
26.3
13.5
16.8
24.0
19.1
17.0
18.7
15.5
23.7
21.7
16.0
15.3
14.8
11.8
30.0
33.9
27.9

28.6
14.5
13.1
51.6
23.6
23.9
28.4
15.4
19.8
18.3
26.5
13.3
17.6
26.0
18.8
17.7
19.3
14.9
23.9
14.2
15.6
11.2
14.6
12.2
29.4
34.3
28.2

29.4
11.0
13.4
53.6
24.3
20.7
24.9
13.5
20.1
18.3
25.9
13.6
19.7
24.2
16.2
19.9
19.4
18.1
24.0
13.1
15.6
9.5
15.0
9.8
31.2
30.7
29.1

29.5
-
13.7
53.4
23.1
22.3
31.0
12.4
23.3
12.5
25.6
11.9
16.7
22.7
21.7
17.9
17.7
17.9
22.9
21.5
17.6
-
15.7
10.1
32.7
34.2
27.4

29.6
-
13.8
52.9
22.7
21.8
31.3
13.2
21.7
13.2
25.3
12.6
16.8
23.3
20.6
17.6
18.4
15.9
23.6
21.0
16.6
-
16.0
11.6
30.8
34.2
26.0

28.3
8.6
12.3
49.0
22.2
18.2
23.7
14.5
18.6
18.4
25.7
10.9
19.6
24.1
19.0
17.6
18.6
17.5
22.7
12.0
15.2
8.1
14.2
8.4
30.7
31.3
28.4

Difference1)
1995 to 2007 2000 to 2007

-3.3
-
-1.5
-2.2
0.0
-4.8
-7.5
2.1
-2.7
5.0
0.2
0.3
4.1
-0.4
-1.6
1.9
-1.8
-0.1
1.2
-7.3
-1.8
-
0.1
-0.2
-0.8
-3.8
-0.2

-1.9
-3.3
-1.7
-0.1
-1.0
-3.5
-3.7
0.2
1.3
-1.6
0.9
3.1
1.2
-3.3
1.8
-0.5
-2.8
4.1
0.3
1.8
-0.7
0.2
0.0
-1.2
-0.3
-2.9
0.1

24.6

25.2

25.8

27.8

26.9

24.1

24.3

24.8

24.9

23.7

22.2

20.7

22.1

-2.5

-2.0

Ranking Revenue2)

2007
5
26
24
1
9
15
8
23
11
17
6
21
13
10
12
16
18
14
7
20
19
25
22
27
2
3
4

2007

40 193
925
5 507
57 058
223 870
936
13 968
10 723
81 299
141 739
174 598
987
1 292
1 891
2 678
7 227
322
42 173
26 958
16 458
9 285
4 066
1 979
1 401
23 396
48 271
215 204

27 392

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

23.9
21.3

24.2
21.1

24.4
21.3

24.1
20.9

23.6
20.7

23.1
20.2

23.1
19.9

23.2
20.2

23.5
20.6

EA-16 averages
weighted
arithmetic

21.2
20.5

21.0
20.3

20.9
20.2

22.2
20.4

22.2
20.2

22.3
20.0

22.7
20.3

22.4
20.0

22.0
19.8

21.4
19.3

21.4
19.3

21.5
19.5

21.9
19.9

EU-25 averages
weighted
arithmetic

23.3
22.4

23.0
22.2

22.7
22.0

24.0
22.3

24.0
22.0

24.2
21.8

24.5
22.1

24.2
21.8

23.7
21.6

23.2
21.0

23.2
20.8

23.3
21.1

23.6
21.4

40.3
45.0

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

40.4
43.3

39.5
41.2

35.6
39.9

36.5
40.4

36.9
41.9

37.4
43.0

37.8
44.1

38.1
43.5

38.7
42.4

38.1
40.9

37.5
41.9

36.9
43.1

-
-

0.7
-0.7

0.4
-1.0

-3.5
-1.9

-0.7
-0.5

-0.4
0.0

-0.6
-0.4

0.0
1.1

Taxation trends in the European Union                 267

report2009.book  Page 268  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_A.2.2_G.pdf

Table A.2.2_G: Direct Taxes as % of GDP: Corporate income tax

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
3.6
3.1
3.2
3.8
4.8
4.1
3.6
2.8
1.4
0.6
1.7
0.7
3.4
3.5
2.6
3.4
4.8
2.9
3.0
3.1
3.2
2.9
6.9
6.2
2.7
1.9
2.6
0.5
5.4
7.3
2.8
2.3
6.7
3.2
3.5
4.2
2.6
3.3
2.8
1.9
3.7
3.4
3.1
2.5
3.4
1.3
2.9
2.6
3.9
4.2
4.0
2.6
3.2
3.4

3.0
2.9
4.3
2.9
0.6
1.1
3.7
3.4
3.3
2.5
2.5
6.0
2.0
0.6
8.0
2.3
3.9
3.6
2.4
2.0
3.4
2.6
1.6
2.5
4.2
2.1
2.7

3.4
2.4
4.5
3.9
1.1
1.4
3.4
3.2
3.9
2.3
2.3
4.6
2.0
2.1
5.8
2.1
4.5
3.6
2.3
2.5
2.8
2.7
2.8
2.7
3.3
3.6
3.2

3.7
2.7
4.8
4.4
1.4
1.5
3.8
2.7
4.2
2.8
2.9
5.5
2.3
2.8
5.0
2.3
5.0
3.6
2.3
2.4
3.0
2.8
3.0
2.9
3.4
3.6
3.8

3.2
2.7
3.5
3.3
1.7
0.9
3.7
4.1
3.1
2.8
2.3
6.2
1.6
0.7
7.0
2.2
2.9
4.3
2.2
2.4
3.9
3.0
1.2
2.6
5.9
3.8
3.3

3.2
3.1
3.8
2.4
1.5
2.0
3.8
3.2
2.9
2.7
2.7
5.9
2.0
0.8
6.7
2.3
2.7
4.5
2.0
2.4
3.6
3.8
1.2
3.1
4.3
3.1
3.3

2.9
3.1
4.6
2.9
0.7
1.6
3.7
2.9
3.1
2.1
2.2
4.3
1.5
1.4
7.3
2.2
4.5
3.0
2.3
1.8
2.9
2.8
1.7
2.8
3.4
2.2
2.6

3.2
2.4
4.7
3.2
0.9
1.7
3.6
3.0
3.5
2.3
2.2
3.7
1.8
1.9
5.7
2.1
4.1
3.3
2.4
2.2
3.0
3.2
1.9
2.6
3.5
2.9
2.8

3.4
-
3.4
3.0
1.3
2.4
3.3
2.8
2.5
2.3
2.5
4.9
2.3
1.3
7.6
2.2
2.5
4.5
2.3
2.6
3.2
3.7
1.0
3.2
4.3
2.6
3.7

2.7
-
3.4
2.5
1.2
1.6
3.1
2.0
2.0
2.0
3.8
4.4
1.8
1.8
6.8
1.8
2.3
4.1
2.1
2.7
2.8
-
0.9
4.3
2.8
2.6
3.1

2.3
-
4.6
2.3
0.9
2.4
2.7
2.3
1.9
1.8
3.3
4.0
1.8
2.1
6.6
1.9
2.6
3.3
1.6
2.7
2.4
-
0.5
6.0
2.3
2.6
2.7

2.8
-
3.8
2.7
1.3
1.8
3.2
2.3
2.7
2.3
4.1
4.4
2.2
1.6
7.5
1.9
2.6
4.5
2.2
2.7
3.2
-
1.0
3.7
3.5
2.8
3.7

4.8

5.2

5.0

3.2

4.5

8.9

8.9

8.1

8.0

9.8

11.8

12.9

11.3

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

1.9
2.8

2.0
2.7

-
-

2.2
2.9

2.4
2.7

-
-

2.5
3.2

2.7
3.0

-
-

2.3
3.2

2.6
3.0

2.7
3.1

2.5
3.4

2.7
3.0

2.8
3.1

2.6
3.6

2.8
3.1

2.6
3.0

2.4
3.4

2.6
3.0

2.3
3.0

2.2
3.4

2.3
3.0

2.2
2.8

2.0
3.1

2.2
2.8

2.4
2.9

2.2
3.1

2.4
2.9

2.6
3.1

2.4
3.3

2.6
3.1

3.0
3.3

2.7
3.4

3.0
3.3

3.0
3.5

2.9
3.8

3.0
3.6

Ranking Revenue2)

2007
9
14
4
10
27
26
13
25
5
18
15
1
22
24
3
21
2
11
23
20
8
17
12
19
7
6
16

2007

12 123
937
6 162
8 191
33 060
261
6 393
5 867
50 065
56 173
49 660
1 079
572
734
1 977
2 786
367
20 125
7 066
8 509
6 029
3 814
1 161
1 609
6 970
13 202
65 596

32 165

Difference1)
1995 to 2007 2000 to 2007

1.3
-
0.3
1.3
0.5
-0.7
0.6
0.2
2.9
1.2
-0.1
2.9
0.9
0.5
-1.1
0.9
4.1
0.3
1.0
0.0
1.3
-
2.8
-3.1
1.6
1.4
0.5

6.6

-
-

1.0
1.3

1.0
0.9

0.4
0.6
1.4
0.3
-0.3
0.8
-0.4
-1.6
1.6
0.2
0.9
0.7
1.2
1.9
-1.5
0.6
3.8
-0.8
0.4
0.3
-0.2
0.1
2.2
0.3
-2.0
0.2
-0.1

2.4

0.2
0.4

0.3
0.2

0.2
0.4

67.2
6.0

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

48.3
6.4

52.4
5.9

51.3
6.6

48.4
5.9

54.0
6.3

57.9
6.8

65.9
7.5

59.3
6.6

42.1
4.8

40.4
4.7

35.1
4.1

42.7
5.5

-24.6
-0.5

-11.3
-0.8

268

Taxation trends in the European Union

report2009.book  Page 269  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_A.2.2_T.pdf

Table A.2.2_T: Direct Taxes as % of Total Taxation: Corporate income tax

Tables

Annex A

Difference1)
1995 to 2007 2000 to 2007

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
8.2
6.9
9.5
12.3
13.1
12.0
7.4
5.7
3.5
1.4
5.2
2.3
10.7
11.9
8.0
10.1
12.8
8.6
6.9
7.0
7.5
7.0
16.6
20.1
8.9
6.6
8.6
1.9
14.8
18.4
6.9
6.0
19.4
10.6
9.1
11.0
6.2
7.2
7.9
5.8
10.1
10.0
10.5
8.8
8.8
3.4
10.0
7.8
9.0
9.4
8.3
5.3
8.8
9.3

7.1
7.3
12.5
6.4
2.4
5.4
11.8
9.6
10.0
5.4
5.4
11.1
6.1
6.6
15.3
5.6
12.5
8.8
5.6
7.1
8.7
11.6
5.0
8.2
8.1
6.0
7.8

6.4
9.5
12.8
6.0
1.9
5.1
12.7
9.1
9.3
5.0
5.3
13.1
5.3
4.9
19.2
5.8
14.4
8.1
5.3
5.6
8.2
10.1
4.6
8.3
7.7
4.6
7.6

7.4
-
10.1
6.1
3.3
7.1
10.5
8.6
7.7
5.3
5.8
17.7
6.8
4.1
19.4
5.5
9.6
11.4
5.3
7.3
9.5
12.8
2.6
8.8
9.4
5.1
10.4

7.1
10.1
11.2
4.8
3.6
6.0
11.9
9.5
8.7
5.9
6.4
21.3
6.4
2.6
17.4
5.9
10.0
11.0
4.5
6.9
10.6
12.3
3.1
8.8
9.4
5.9
9.1

6.7
9.9
12.3
6.0
1.5
3.6
13.0
10.0
9.6
5.9
6.1
19.2
7.1
2.1
20.4
6.1
12.3
9.4
5.5
6.3
9.9
9.3
4.1
7.6
9.3
4.3
7.8

7.1
8.2
10.3
6.6
4.0
2.9
11.7
12.0
9.2
6.3
5.6
20.6
5.3
2.3
17.8
5.6
10.3
10.9
5.0
7.5
11.3
9.8
3.1
7.7
12.5
7.3
9.0

7.5
7.0
12.0
7.7
2.8
4.7
11.0
10.3
11.0
5.3
5.8
13.1
6.9
7.3
15.4
5.6
13.2
9.7
5.5
7.6
7.9
9.7
7.2
8.7
7.6
7.3
8.9

8.3
8.1
13.1
8.8
3.5
4.9
11.7
8.5
11.6
6.5
6.9
15.0
7.5
9.4
13.8
6.3
14.8
9.3
5.6
7.1
8.4
9.9
7.7
9.9
7.7
7.4
10.2

6.3
-
11.0
5.5
3.1
5.1
9.8
7.5
8.1
5.2
9.4
17.0
6.8
5.0
19.0
4.9
9.4
11.4
5.0
7.5
9.6
-
2.8
9.8
7.5
5.6
10.7

6.0
-
9.7
5.1
2.9
4.6
9.3
6.8
6.1
4.7
9.0
16.7
5.9
6.4
18.1
4.5
9.0
10.1
4.9
7.1
8.4
-
2.4
10.9
6.0
5.1
8.9

5.4
-
12.7
4.8
2.2
6.7
8.3
8.0
5.8
4.2
8.3
14.9
5.5
7.4
17.7
4.5
9.8
8.1
3.8
7.3
7.4
-
1.3
15.0
5.0
5.4
7.7

2.9
-
0.5
2.6
1.2
-1.5
2.4
0.0
7.1
2.7
-0.9
1.7
3.4
1.2
-2.8
2.4
9.6
1.0
2.4
0.6
2.7
-
7.5
-5.0
4.0
2.8
1.1

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

11.4

12.3

11.8

7.5

10.7

20.9

20.7

18.9

18.9

22.7

27.0

29.4

26.0

14.6

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

4.7
7.8

5.2
7.5

-
-

5.5
8.2

5.9
7.5

-
-

6.1
8.8

6.8
8.1

-
-

5.7
8.9

6.4
8.2

6.5
8.5

6.1
9.3

6.5
8.3

6.9
8.5

6.4
9.7

6.9
8.5

6.5
8.4

6.0
9.4

6.5
8.2

6.0
8.3

5.6
9.4

5.9
8.2

5.6
8.0

5.1
8.7

5.6
7.9

6.1
8.1

5.6
8.4

6.1
7.9

6.6
8.4

6.0
8.9

6.6
8.4

7.4
9.0

6.7
9.3

7.4
9.0

7.5
9.5

7.1
10.1

7.5
9.5

-
-

2.4
2.8

2.4
2.0

Ranking Revenue2)

2007
18
10
4
22
27
26
6
19
5
24
21
2
13
16
3
23
1
11
25
20
8
7
14
9
12
17
15

2007

12 123
937
6 162
8 191
33 060
261
6 393
5 867
50 065
56 173
49 660
1 079
572
734
1 977
2 786
367
20 125
7 066
8 509
6 029
3 814
1 161
1 609
6 970
13 202
65 596

32 165

1.1
1.2
2.9
0.8
-0.5
2.3
-1.0
-4.0
3.6
0.5
1.9
-4.0
3.6
6.4
-3.0
1.3
9.1
-1.8
1.2
0.5
-1.2
0.7
5.7
2.3
-3.5
1.0
-0.2

5.1

0.7
1.0

0.8
0.3

0.7
1.0

76.7
16.3

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

63.1
15.7

56.8
16.2

61.5
16.8

63.8
18.7

61.7
18.3

66.7
18.6

74.6
19.0

67.9
17.3

48.3
12.9

43.6
12.6

38.9
11.5

45.2
16.0

-31.5
-0.4

-16.5
-2.3

Taxation trends in the European Union                 269

report2009.book  Page 270  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_A.2.3_G.pdf

Table A.2.3_G: Direct Taxes as % of GDP: Other

Difference1)
1995 to 2007 2000 to 2007

Ranking Revenue2)

2007
5
15
25
6
14
27
2
11
10
3
17
12
23
26
13
24
8
4
7
18
22
21
20
16
9
19
1

2007

4 363
206
173
2 227
18 110
0
4 033
1 878
9 230
27 773
9 702
128
78
10
281
338
53
7 556
2 647
1 845
606
487
141
347
1 627
1 513
63 710

2 839

0.2
0.5
-0.1
-0.6
0.2
0.0
0.9
0.0
0.1
0.1
-1.0
-0.4
0.2
0.0
-0.1
0.0
0.2
-0.3
0.0
0.3
-0.1
-0.3
-0.2
-0.8
-0.1
-0.6
0.3

0.1

-0.1
-0.1

-0.1
0.0

-0.1
-0.1

4.3
0.3

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1.3
1.1
0.7
0.2
0.1
0.2
1.0
0.7
0.7
0.6
0.0
0.0
2.1
1.2
0.8
1.0
0.9
0.8
1.5
1.4
0.6
1.1
0.8
1.1
0.4
0.2
0.0
0.0
0.8
0.9
0.3
0.3
1.0
0.8
1.3
1.3
1.0
1.0
0.6
0.3
0.4
0.5
0.4
0.6
0.4
0.6
0.6
1.4
0.9
1.0
0.5
1.0
3.1
2.8

1.5
0.4
0.1
3.1
0.6
0.0
1.7
0.8
0.8
1.4
0.7
1.7
0.2
0.0
0.8
0.4
1.3
1.5
1.0
0.6
0.4
0.3
0.4
0.6
1.0
0.7
2.9

1.3
0.6
0.1
1.5
0.7
0.0
2.2
0.8
0.9
1.4
0.7
0.7
0.2
0.0
0.7
0.4
0.8
1.3
1.0
0.5
0.4
0.4
0.4
0.7
1.0
0.7
3.0

1.2
0.2
0.2
0.7
0.5
0.0
0.8
0.9
0.7
1.3
1.0
0.9
0.2
0.0
1.0
0.3
1.4
1.4
1.0
0.6
0.5
0.5
0.6
1.3
1.0
0.9
2.8

1.1
0.2
0.3
1.6
0.6
0.0
1.2
0.8
0.8
1.3
1.6
1.2
0.2
0.1
0.9
0.3
0.7
1.6
0.9
0.3
0.5
0.7
0.6
1.5
1.0
1.1
2.8

1.1
0.2
0.2
2.1
0.6
0.0
1.0
0.8
0.8
1.6
1.0
1.0
0.0
0.1
1.1
0.4
0.8
1.6
0.9
0.4
0.5
0.5
0.7
1.6
0.9
1.0
2.8

1.3
0.3
0.2
1.1
0.5
0.0
1.5
0.7
0.8
1.3
2.1
0.9
0.2
0.0
0.9
0.3
1.2
1.4
1.0
0.6
0.4
0.4
0.5
1.2
1.0
0.9
2.7

1.5
0.4
0.1
2.3
0.6
0.0
1.4
0.7
0.8
1.4
1.3
1.5
0.2
0.0
0.8
0.4
0.9
1.4
1.0
0.5
0.4
0.3
0.6
0.8
1.1
0.8
2.9

1.0
-
0.2
1.6
0.6
0.0
0.8
1.1
0.7
1.5
1.0
1.1
0.0
0.1
1.0
0.4
0.8
1.6
0.9
0.6
0.5
0.2
0.9
1.4
0.9
1.0
2.6

1.0
-
0.3
2.2
0.8
0.0
0.7
0.9
0.7
1.5
0.9
0.9
0.0
0.1
1.0
0.3
0.6
1.7
0.8
0.7
0.6
-
0.5
1.4
1.0
0.9
2.4

0.8
-
0.2
2.3
0.7
0.0
0.6
1.0
0.7
1.4
1.2
0.9
0.0
0.1
0.8
0.3
0.7
1.6
0.8
0.7
0.6
-
0.6
1.2
0.9
0.8
2.4

1.0
-
0.2
2.0
0.6
0.0
0.7
1.0
0.7
1.6
1.3
1.0
0.0
0.1
1.0
0.4
0.7
1.6
0.8
0.7
0.5
-
0.5
1.2
0.9
0.9
2.4

0.5
-
-0.1
-1.3
0.0
0.0
1.5
-0.1
0.2
0.1
-0.6
0.0
0.4
-0.1
-0.1
0.0
0.3
-0.2
0.1
-0.1
-0.2
-
-0.2
-0.6
0.0
-0.4
0.7

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1.0

1.1

1.0

1.0

1.0

0.9

0.9

1.0

1.0

1.0

1.0

0.9

1.0

-0.1

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

1.0
0.9

1.2
0.8

-
-

1.0
0.9

1.2
0.9

-
-

1.0
0.9

1.2
0.9

-
-

1.0
1.0

1.2
0.9

1.3
0.9

1.0
1.0

1.3
0.9

1.3
0.9

1.1
1.0

1.4
0.9

1.2
0.8

1.0
1.0

1.2
0.8

1.2
0.8

0.9
1.0

1.2
0.9

1.3
0.9

1.1
1.0

1.4
0.9

1.3
0.9

1.0
1.0

1.3
0.9

1.3
0.9

1.0
1.0

1.3
1.0

1.3
0.8

1.0
0.9

1.3
0.9

1.3
0.8

1.0
0.9

1.3
0.8

-
-

0.0
0.1

0.1
0.0

50.7
2.4

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

47.2
2.4

50.5
2.4

47.4
2.6

50.2
2.8

46.1
2.8

45.9
2.8

46.7
2.8

45.9
2.7

50.3
2.9

59.4
3.1

51.6
3.0

50.3
3.1

-0.4
0.7

270

Taxation trends in the European Union

report2009.book  Page 271  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_A.2.3_T.pdf

Table A.2.3_T: Direct Taxes as % of Total Taxation: Other

Difference1)
1995 to 2007 2000 to 2007

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
3.0
2.4
2.1
0.6
0.4
0.6
2.0
1.5
1.9
1.5
0.0
0.1
6.8
3.9
2.6
2.9
2.4
2.2
3.4
3.1
1.5
2.6
2.0
3.6
1.2
0.6
0.1
0.1
2.1
2.3
0.8
0.8
2.8
2.6
3.4
3.5
2.3
2.3
1.7
1.0
1.0
1.4
1.3
2.1
1.1
1.7
2.1
4.1
2.1
2.2
0.9
2.0
8.6
7.7

2.7
0.7
0.5
1.6
1.4
0.1
3.0
2.6
2.2
3.1
2.5
2.9
0.7
0.2
2.5
0.8
4.4
3.7
2.3
1.8
1.5
1.7
1.5
3.8
2.3
1.8
8.0

2.8
0.9
0.5
2.3
1.3
0.0
5.0
2.3
2.2
3.1
5.0
2.7
0.8
0.1
2.4
0.9
3.8
3.7
2.3
1.8
1.2
1.3
1.4
3.5
2.2
1.8
7.9

2.9
1.7
0.4
2.9
1.7
0.0
6.9
2.4
2.5
3.3
1.6
2.0
0.6
0.1
2.0
1.0
2.5
3.3
2.3
1.5
1.0
1.4
1.1
2.2
2.2
1.4
8.2

2.4
0.7
0.6
4.2
1.4
0.1
3.2
2.4
2.3
3.5
2.4
3.6
0.0
0.2
2.8
0.9
2.9
4.0
2.0
1.0
1.4
1.7
1.9
4.6
2.1
2.0
7.7

3.3
1.1
0.3
4.7
1.5
0.0
4.7
2.3
2.2
3.2
3.3
4.5
0.7
0.1
2.0
1.0
2.6
3.8
2.3
1.7
1.1
1.3
1.5
2.7
2.4
1.7
8.1

3.3
1.3
0.4
6.1
1.6
0.0
5.4
2.5
2.3
3.3
1.7
4.7
0.7
0.1
2.2
1.1
3.7
3.9
2.3
1.7
1.1
1.2
1.1
2.0
2.4
1.5
8.1

2.4
0.6
0.8
3.3
1.4
0.1
3.9
2.4
2.4
3.0
3.8
4.1
0.6
0.2
2.4
0.8
2.6
4.1
2.2
1.1
1.4
2.3
1.7
4.3
2.2
2.1
7.7

2.3
-
0.7
3.2
1.5
0.1
2.5
3.3
2.3
3.4
2.4
4.1
0.0
0.2
2.5
0.9
3.0
4.1
2.0
1.7
1.4
0.8
2.3
3.9
1.9
2.0
7.3

2.2
-
0.6
4.0
1.4
0.1
2.3
3.2
2.1
3.5
3.0
4.0
0.0
0.2
2.4
0.9
2.5
4.0
1.9
1.9
1.6
-
1.4
3.3
1.9
1.9
6.9

1.9
-
0.6
4.8
1.8
0.0
1.9
3.3
2.1
3.3
3.1
3.2
0.0
0.3
2.2
0.7
2.5
3.9
2.0
1.8
1.8
-
1.4
2.9
2.0
1.7
6.9

2.2
-
0.7
4.5
1.9
0.1
2.2
3.2
2.1
3.4
2.1
3.6
0.0
0.3
2.6
0.8
2.4
4.2
1.9
1.8
1.7
-
1.4
3.6
2.0
1.9
7.1

1.0
-
-0.2
-2.8
0.1
0.0
4.9
-0.7
0.3
0.1
-1.6
-1.3
1.2
-0.2
-0.1
0.2
0.3
-0.5
0.3
-0.1
-0.8
-
-0.4
-0.8
0.1
-0.8
1.7

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

2.5

2.5

2.4

2.4

2.3

2.1

2.2

2.3

2.3

2.3

2.2

2.1

2.3

-0.2

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

2.5
2.5

3.0
2.2

-
-

2.5
2.5

3.0
2.3

-
-

2.5
2.6

3.1
2.3

-
-

2.4
2.7

3.1
2.4

3.2
2.3

2.4
2.7

3.2
2.4

3.3
2.4

2.6
2.8

3.3
2.4

3.1
2.2

2.4
2.6

3.1
2.3

3.1
2.2

2.3
2.7

3.1
2.3

3.4
2.3

2.8
2.8

3.5
2.4

3.4
2.4

2.6
2.7

3.4
2.5

3.3
2.4

2.4
2.7

3.3
2.5

3.2
2.2

2.4
2.5

3.2
2.2

3.2
2.2

2.4
2.5

3.3
2.2

50.7
6.9

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

52.1
7.1

50.0
6.9

51.2
7.3

52.5
7.7

49.0
7.6

50.1
7.6

51.2
8.0

49.7
7.9

51.0
8.1

57.7
8.1

55.7
8.2

56.4
8.6

-
-

-0.1
0.1

0.2
0.0

5.6
1.7

0.5
1.5
-0.5
-1.3
0.5
-0.1
2.9
0.1
0.0
0.4
-2.4
-2.2
0.6
-0.1
-0.2
0.1
0.2
-0.7
0.1
0.7
-0.4
-1.0
-0.6
-2.2
0.0
-1.2
0.9

0.1

-0.1
-0.2

-0.1
-0.1

-0.1
-0.2

7.4
1.0

Tables

Annex A

Ranking Revenue2)

2007
5
13
25
14
16
27
2
7
8
4
18
15
20
26
12
24
6
3
9
17
22
19
21
10
11
23
1

2007

4 363
206
173
2 227
18 110
0
4 033
1 878
9 230
27 773
9 702
128
78
10
281
338
53
7 556
2 647
1 845
606
487
141
347
1 627
1 513
63 710

2 839

Taxation trends in the European Union                 271

report2009.book  Page 272  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_A.3_G.pdf

Table A.3_G: Social Contributions as % of GDP: Total

Difference1)
1995 to 2007 2000 to 2007

Ranking Revenue2)

2007
6
21
1
27
3
17
26
16
11
2
9
23
20
22
18
7
25
8
4
12
15
19
5
14
13
10
24

2007

45 478
2 500
20 724
2 256
368 460
1 683
9 433
26 588
128 069
307 622
200 278
1 200
1 837
2 448
3 700
13 696
322
76 753
38 457
37 171
19 053
12 253
4 734
6 420
21 396
40 359
137 047

25 737

-0.3
-2.4
2.1
-0.8
-1.7
0.0
0.5
1.2
0.2
0.2
1.0
1.1
-1.2
-0.8
0.1
0.7
-0.5
-1.9
-0.6
-0.9
1.4
-1.3
-0.5
-2.4
0.0
-1.0
0.5

0.1

-0.3
-0.3

-0.5
0.0

-0.3
-0.1

0.2
0.2

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
13.6
14.2
14.3
8.7
10.0
-
16.3
14.2
14.3
1.0
1.7
1.1
15.2
16.7
16.8
11.0
10.7
12.3
4.9
4.5
5.0
11.7
10.6
9.3
12.2
12.2
11.8
16.3
16.1
18.6
13.0
12.0
12.6
7.7
6.8
6.5
8.7
9.2
12.0
8.6
8.9
7.4
10.2
10.9
9.8
13.5
12.8
14.9
5.9
6.9
6.1
13.5
13.7
15.9
14.2
14.9
14.9
12.0
13.4
11.3
11.7
10.5
9.7
9.9
11.1
-
13.7
14.5
16.8
11.7
14.3
15.0
11.9
12.0
14.1
12.2
13.7
12.3
6.7
6.2
6.1

14.4
9.5
14.9
1.2
16.7
11.0
4.4
11.6
12.1
16.2
12.1
6.7
9.3
8.6
10.9
12.8
6.5
13.3
14.7
12.9
10.8
10.7
14.3
14.6
11.9
13.5
5.9

14.2
10.0
14.0
1.6
17.2
11.1
4.3
10.2
11.9
16.3
12.1
6.6
10.7
9.2
10.1
13.2
6.2
15.5
15.1
13.7
10.1
11.1
14.1
14.0
12.6
11.5
6.1

13.9
11.0
14.2
1.8
16.9
11.0
4.4
10.5
12.0
16.1
12.1
6.5
9.9
9.4
10.1
12.8
6.4
15.4
14.8
12.9
10.3
11.2
14.3
14.1
11.9
13.2
6.2

14.3
10.6
15.0
1.2
16.9
10.6
4.5
11.8
12.2
16.4
12.3
7.0
8.9
8.5
10.8
12.5
6.5
13.8
14.7
12.8
11.1
9.5
14.2
13.8
11.8
13.1
6.3

13.7
10.3
16.1
1.1
16.3
10.3
4.7
11.1
12.1
16.3
12.6
8.3
8.4
8.1
10.5
12.5
6.4
12.9
14.6
12.3
11.4
9.7
14.3
12.6
12.0
12.8
6.7

14.0
10.5
16.0
1.2
16.5
10.4
4.6
11.1
12.2
16.2
12.3
7.7
8.7
8.4
10.7
12.3
6.5
13.9
14.7
12.3
11.1
9.2
14.2
13.1
11.7
12.8
6.6

14.2
-
14.0
1.0
17.4
11.2
4.1
10.3
11.9
16.1
12.2
6.9
10.8
9.0
10.2
14.1
6.1
15.0
15.1
11.6
10.0
9.1
14.4
14.9
12.6
13.0
6.0

14.2
-
14.6
1.0
17.7
11.4
4.3
9.9
12.0
18.1
14.6
7.0
10.6
8.5
10.0
14.3
6.8
15.1
15.1
11.7
10.0
-
14.3
15.0
12.8
13.0
6.1

14.3
-
14.2
1.1
17.4
11.7
4.6
9.6
12.0
18.6
14.3
6.9
10.8
7.9
9.8
14.1
6.3
15.2
15.0
11.6
9.7
-
15.0
15.9
13.6
13.3
5.9

13.5
8.7
16.3
1.0
15.9
10.3
4.8
11.0
12.1
16.4
12.5
7.8
8.8
8.4
9.9
12.5
6.2
14.1
14.4
12.2
11.4
9.8
14.0
11.7
12.1
12.1
6.8

-0.8
-
2.0
-0.1
-1.6
-1.3
0.0
2.3
0.4
-2.3
0.4
1.1
-3.3
1.2
0.4
-1.4
-0.2
-2.3
-0.7
0.7
2.0
-
-3.1
-3.3
-2.2
-0.1
0.6

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

9.8

9.6

9.6

10.3

10.1

8.9

9.2

9.9

9.8

9.4

8.9

8.7

9.1

-0.8

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

12.9
11.2

12.7
11.2

12.7
11.2

12.6
11.2

12.8
11.1

12.7
11.1

12.6
11.0

12.5
10.9

12.4
11.0

EA-16 averages
weighted
arithmetic

15.5
12.3

15.8
12.4

15.8
12.3

14.8
11.9

14.8
11.9

14.6
11.9

14.4
11.9

14.4
11.9

14.5
12.0

14.3
11.9

14.2
11.9

14.2
11.7

14.0
11.7

EU-25 averages
weighted
arithmetic

13.8
11.6

14.1
11.6

13.8
11.5

13.0
11.3

12.9
11.3

12.7
11.2

12.7
11.3

12.6
11.2

12.8
11.2

12.7
11.2

12.6
11.1

12.5
11.1

12.4
11.1

31.3
17.5

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

30.4
17.6

30.2
17.1

30.2
16.4

28.9
15.6

28.6
15.1

28.5
15.0

29.6
15.5

28.9
15.7

28.7
15.3

28.4
15.2

28.8
15.3

28.8
15.3

-
-

-1.5
-0.4

-1.4
-0.5

-2.5
-2.2

272

Taxation trends in the European Union

report2009.book  Page 273  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_A.3_T.pdf

Table A.3_T: Social Contributions as % of Total Taxation: Total

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
30.9
31.3
32.7
25.3
32.5
-
44.2
41.8
39.6
2.0
3.6
2.2
38.5
41.8
42.3
33.3
35.3
33.9
15.9
15.2
15.0
36.3
31.9
32.1
32.9
36.3
36.0
37.6
36.8
43.5
30.1
28.8
31.5
18.4
21.9
24.4
28.6
32.3
36.1
28.8
31.2
26.0
27.8
27.5
26.5
34.1
33.5
35.9
17.1
22.9
22.8
34.8
35.7
39.5
33.8
32.9
36.0
34.6
41.6
30.5
31.8
30.9
30.2
33.6
38.3
-
36.0
38.5
43.0
39.8
43.1
37.3
27.7
26.9
30.8
25.3
27.5
25.6
18.4
16.9
17.5

30.8
33.8
41.9
3.6
40.4
35.3
14.0
30.3
35.5
36.5
28.9
21.8
33.5
31.1
25.7
33.4
22.6
38.6
34.2
39.7
30.1
36.7
38.1
41.5
25.2
25.5
16.8

30.4
26.3
44.3
2.1
40.5
32.9
14.9
35.2
33.2
37.3
29.8
21.4
28.8
28.6
27.7
33.6
18.3
36.0
34.6
36.1
31.7
34.2
36.6
39.9
27.9
24.7
18.3

31.1
31.8
42.9
2.4
42.6
33.9
15.3
35.7
35.2
37.5
30.4
23.0
30.5
29.7
28.7
32.6
19.9
37.1
33.9
39.2
32.6
33.8
37.2
41.3
26.8
26.4
18.7

31.8
32.0
42.7
2.5
42.3
35.4
15.5
34.4
35.8
37.5
29.7
21.5
32.8
30.4
27.7
33.8
20.7
35.2
33.4
39.6
31.0
38.2
37.6
44.0
26.6
28.1
16.9

31.9
32.8
42.1
2.5
42.5
34.4
15.3
36.5
36.0
38.1
29.8
21.2
31.1
30.3
28.2
33.2
20.7
36.9
33.7
39.7
31.7
34.2
37.2
41.7
26.7
27.1
18.1

31.3
-
42.1
2.1
42.6
32.9
13.0
31.6
36.0
36.5
28.7
24.8
31.9
28.3
25.8
36.1
23.9
38.0
34.0
32.9
30.1
31.8
38.0
40.5
27.3
25.3
16.8

31.3
32.6
41.2
3.3
41.2
34.0
13.5
30.5
35.5
36.3
28.6
23.7
33.3
29.0
26.3
33.9
22.5
38.5
34.2
39.3
29.6
35.5
37.0
39.6
27.5
22.1
16.9

30.5
30.3
43.4
2.2
42.0
33.5
15.3
35.2
34.0
37.3
31.1
23.2
28.9
28.6
27.9
33.5
18.9
34.5
34.5
37.6
32.4
34.7
36.8
40.2
27.3
25.7
18.7

32.2
-
41.0
2.2
42.8
33.9
13.8
32.8
36.2
42.4
34.1
26.0
35.2
28.2
26.2
34.7
24.9
37.9
34.9
31.2
29.6
-
39.5
40.4
28.9
26.3
17.3

31.6
-
41.6
2.1
43.5
33.1
13.3
32.5
36.0
41.1
33.3
27.0
33.2
27.3
25.5
36.6
24.6
38.0
34.1
32.1
30.3
-
38.6
40.2
27.6
25.6
17.5

Difference1)
1995 to 2007 2000 to 2007

-1.8
-
4.6
-0.1
-3.8
-0.5
0.9
4.2
-3.2
-5.9
-1.4
-6.0
-7.5
2.8
1.3
-1.8
-5.8
-4.7
-2.2
4.1
1.5
-
-7.0
2.5
-3.1
-0.3
0.9

0.1
-8.5
2.3
-1.6
-1.9
-1.9
1.9
6.0
-2.6
1.1
1.3
-3.4
-5.0
-2.3
2.0
0.7
-5.6
-3.9
-0.5
-5.2
1.7
-3.1
-2.1
-1.7
2.5
-0.3
1.6

23.4

22.6

22.7

24.4

23.9

20.9

21.5

22.9

23.1

21.7

20.4

19.8

20.8

-2.6

-0.2

Ranking Revenue2)

2007
15
21
1
27
3
12
26
5
13
4
16
23
18
17
19
9
25
7
10
8
14
11
6
2
20
22
24

2007

45 478
2 500
20 724
2 256
368 460
1 683
9 433
26 588
128 069
307 622
200 278
1 200
1 837
2 448
3 700
13 696
322
76 753
38 457
37 171
19 053
12 253
4 734
6 420
21 396
40 359
137 047

25 737

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

31.7
30.3

31.4
30.6

31.9
31.0

32.2
31.0

32.7
30.9

32.5
30.7

32.1
30.3

31.5
29.8

31.2
29.5

EA-16 averages
weighted
arithmetic

38.9
32.7

38.8
32.7

38.4
32.3

36.1
31.4

35.6
31.0

35.3
30.9

35.7
31.4

36.1
31.5

36.4
31.8

36.3
31.8

35.9
31.3

35.2
31.0

34.6
30.6

EU-25 averages
weighted
arithmetic

35.0
30.8

34.9
30.9

34.2
30.7

32.2
30.0

31.7
29.9

31.4
30.2

31.8
30.6

32.2
30.7

32.7
30.7

32.5
30.6

32.1
30.1

31.5
29.8

31.2
29.5

27.2
41.3

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

26.8
40.6

27.5
41.4

28.2
40.5

28.1
38.0

28.8
38.3

28.3
39.6

28.7
41.5

27.7
40.0

27.5
40.5

27.6
41.2

28.5
42.2

28.7
42.2

-
-

-4.3
-2.5

-3.8
-1.3

1.5
0.9

-0.2
-1.1

-0.7
-0.2

-0.2
-0.7

0.0
3.8

Taxation trends in the European Union                 273

report2009.book  Page 274  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_A.3.1_G.pdf

Table A.3.1_G: Social Contributions as % of GDP:Employers

Difference1)
1995 to 2007 2000 to 2007

Ranking Revenue2)

2007
9
18
3
27
13
2
25
17
7
1
6
20
14
10
23
4
26
22
12
21
11
16
19
15
8
5
24

2007

27 702
1 556
13 101
31
158 960
1 635
5 765
12 324
93 369
208 743
138 044
815
1 329
2 180
1 581
9 721
144
25 755
18 060
14 945
12 447
7 744
1 852
3 452
15 721
30 715
75 363

15 712

-0.1
-2.8
0.4
0.0
-0.9
-0.1
0.3
0.5
0.2
0.0
0.6
0.8
-1.1
-0.8
0.0
-0.7
-0.2
0.1
-0.4
-0.8
1.0
-1.9
-0.1
-2.9
0.0
-0.9
0.2

0.2

-0.1
-0.4

-0.1
0.1

-0.1
-0.2

-1.3
0.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
8.3
8.5
5.4
7.3
10.3
9.9
0.0
0.0
6.6
7.4
10.7
10.6
3.0
2.8
5.4
4.9
8.9
8.8
11.0
11.0
9.0
8.3
5.2
4.5
6.3
6.8
7.7
8.0
4.4
4.8
9.6
10.1
2.6
3.1
4.5
4.3
6.7
7.0
4.8
5.7
7.6
6.7
6.3
7.2
5.4
5.5
6.3
8.9
8.8
8.9
9.3
10.7
3.7
3.5

8.7
6.6
10.4
0.0
7.3
10.6
2.7
5.5
8.8
11.0
8.4
4.5
6.9
7.8
4.8
10.1
2.9
4.3
6.9
5.4
6.9
6.5
5.4
8.9
8.9
10.4
3.3

8.2
5.4
10.3
0.0
6.8
10.0
2.9
5.0
8.8
11.1
8.7
5.5
6.3
7.5
4.3
9.5
2.8
4.6
6.8
4.8
7.4
6.3
5.5
6.3
8.9
9.2
3.7

8.5
7.4
10.3
0.0
7.2
10.0
2.7
5.1
8.8
11.0
8.6
5.3
6.3
7.5
4.7
9.4
2.9
4.3
6.9
4.9
7.1
5.9
5.4
7.6
8.8
9.9
3.6

8.7
7.4
10.5
0.0
7.4
10.2
2.7
5.4
8.9
11.1
8.7
4.7
6.4
7.7
4.7
9.8
2.9
4.3
6.9
5.2
6.9
6.2
5.4
8.4
8.9
10.1
3.5

8.3
6.8
10.3
0.0
7.0
9.9
2.7
5.0
8.8
11.0
8.8
5.9
6.1
7.3
4.6
9.7
2.9
4.0
6.8
4.9
7.3
6.4
5.6
7.0
9.0
9.8
3.7

8.6
-
10.0
0.0
7.6
11.5
2.6
4.5
8.4
11.3
10.0
4.6
9.9
7.6
4.5
11.6
3.1
2.0
7.4
5.9
6.2
-
6.3
9.9
9.6
11.0
3.3

8.4
8.1
9.9
0.0
7.5
10.8
2.7
4.9
8.7
11.1
8.4
4.4
7.4
8.4
4.4
10.3
2.8
4.5
7.1
5.7
6.7
8.1
5.5
9.1
8.8
10.2
3.5

8.6
-
10.2
0.0
7.6
11.2
2.6
4.6
8.4
11.3
10.3
4.7
8.0
8.1
4.5
11.8
3.3
1.8
7.4
6.1
6.4
-
5.5
9.8
9.1
10.4
3.3

8.7
-
9.9
0.0
7.6
11.1
2.6
4.8
8.4
11.1
8.6
4.6
8.2
8.7
4.6
11.7
3.0
4.5
7.3
6.1
6.5
6.9
5.5
9.7
9.2
10.0
3.3

8.7
8.6
9.8
0.0
7.5
11.0
2.6
4.6
8.5
11.3
8.5
4.5
8.1
8.8
4.4
10.6
2.9
4.5
7.3
5.9
6.5
7.9
5.4
8.9
9.2
8.5
3.4

8.6
-
9.9
0.0
7.5
12.1
2.9
4.3
8.2
11.4
8.4
4.3
11.6
7.1
4.5
12.2
3.0
2.0
7.3
5.9
6.1
-
8.0
9.6
9.9
10.4
3.3

-0.4
-
0.4
0.0
-0.9
-1.4
0.1
1.1
0.7
-0.4
0.6
0.9
-5.3
0.5
-0.2
-2.6
-0.4
2.5
-0.7
-1.0
1.5
-
-2.6
-3.3
-1.1
-1.1
0.4

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

5.8

5.7

5.7

6.1

6.1

5.3

5.6

5.9

5.9

5.7

5.4

5.3

5.5

-0.3

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

8.2
6.6

7.5
7.1

-
-

8.5
6.7

7.7
7.1

-
-

8.5
6.6

7.6
7.0

-
-

8.3
6.7

7.4
7.0

7.3
7.0

8.3
6.6

7.3
6.8

7.3
6.9

8.2
6.5

7.3
6.8

7.2
6.9

8.2
6.6

7.2
6.8

7.2
6.8

8.2
6.6

7.2
6.8

7.3
6.8

8.3
6.6

7.3
6.8

7.2
6.7

8.2
6.6

7.3
6.7

7.2
6.7

8.1
6.5

7.2
6.7

7.2
6.5

8.1
6.5

7.2
6.6

7.2
6.6

8.1
6.5

7.2
6.6

45.8
12.2

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

43.3
11.6

43.1
11.8

40.3
11.7

38.8
11.3

38.8
11.0

37.9
11.0

38.4
11.0

37.2
11.1

36.5
11.0

36.8
11.0

36.5
11.1

37.4
11.0

-
-

-0.1
0.1

-0.3
-0.5

-8.4
-1.2

274

Taxation trends in the European Union

report2009.book  Page 275  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_A.3.1_T.pdf

Table A.3.1_T: Social Contributions as % of Total Taxation:Employers

Tables

Annex A

Difference1)
1995 to 2007 2000 to 2007

Ranking Revenue2)

2007
14
18
2
27
16
1
25
15
6
4
9
21
11
3
22
5
26
23
17
20
10
8
19
7
12
13
24

2007

27 702
1 556
13 101
31
158 960
1 635
5 765
12 324
93 369
208 743
138 044
815
1 329
2 180
1 581
9 721
144
25 755
18 060
14 945
12 447
7 744
1 852
3 452
15 721
30 715
75 363

15 712

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
18.8
18.8
19.7
15.7
23.5
-
27.9
29.2
27.3
0.0
0.0
0.0
16.6
18.5
18.8
32.4
34.8
33.3
9.7
9.6
8.7
16.8
14.7
14.6
24.0
26.4
25.1
25.5
25.2
26.7
20.8
20.1
21.0
12.5
14.7
16.0
20.7
23.9
35.1
25.6
28.0
25.0
11.9
12.0
12.2
24.2
26.5
29.3
7.6
10.3
11.2
11.7
11.3
5.0
15.9
15.5
17.7
13.9
17.8
15.8
20.8
19.8
19.1
21.3
24.9
-
14.1
14.5
20.4
21.4
26.7
23.7
20.4
20.1
21.6
19.2
21.3
21.7
10.1
9.6
9.5

18.6
25.1
29.3
0.0
17.8
34.7
8.5
14.1
25.6
25.1
20.1
14.7
25.1
28.1
11.2
26.8
10.0
11.2
16.4
17.4
19.5
26.7
14.6
26.8
18.5
19.6
9.5

19.3
23.1
29.4
0.1
18.6
33.1
9.2
16.8
26.1
25.9
20.9
14.3
22.5
27.3
12.4
25.9
9.3
11.6
15.9
16.1
19.9
22.3
14.2
25.4
20.1
20.8
10.1

18.8
22.3
27.5
0.1
18.5
32.5
8.9
16.4
25.4
25.5
21.3
15.8
22.1
26.7
12.6
25.1
8.9
11.5
15.8
15.7
20.9
21.7
14.1
24.1
20.3
20.3
10.3

19.2
22.2
29.8
0.0
18.5
34.0
9.5
16.3
26.0
25.6
20.6
14.4
24.3
27.4
12.2
26.5
9.3
11.5
15.7
16.4
20.0
23.0
14.3
26.7
20.0
21.7
9.5

19.0
-
29.6
0.0
18.5
32.4
8.0
14.6
25.6
25.3
20.2
16.6
24.3
27.2
11.8
30.0
11.7
11.5
16.4
17.4
19.6
24.1
14.5
26.3
19.9
19.4
9.1

18.5
16.3
28.1
0.1
17.3
32.0
9.1
16.0
24.2
25.3
20.6
15.1
20.8
25.6
12.0
25.4
8.2
11.7
16.2
14.3
20.6
22.0
14.3
21.4
20.4
18.8
10.0

19.1
28.1
28.9
0.0
18.0
33.5
8.1
13.9
25.5
25.1
19.9
15.9
25.2
27.7
11.4
27.1
10.6
11.0
16.5
17.0
19.1
25.2
14.2
25.2
20.2
16.3
9.3

18.5
20.0
27.9
0.1
18.0
32.2
8.9
16.0
24.7
25.2
21.7
16.5
20.9
25.6
12.1
26.0
8.5
10.7
16.2
15.0
20.9
22.9
14.3
22.2
20.4
19.8
10.3

19.4
-
28.7
0.0
18.6
33.4
8.0
15.2
25.4
25.7
23.9
17.3
32.2
27.1
12.0
28.7
12.2
4.9
17.2
16.0
18.9
-
16.5
25.1
20.5
21.8
9.5

19.2
-
29.2
0.0
18.8
32.6
7.9
15.1
25.4
25.6
23.6
18.1
25.0
26.2
11.5
30.4
12.0
4.5
16.7
16.8
19.4
-
14.8
26.2
19.7
20.4
9.4

-0.9
-
0.6
0.0
-2.2
-0.9
1.0
2.2
-1.1
-1.2
-0.2
-3.5
-14.4
0.6
-0.4
-5.1
-3.6
6.7
-1.9
-1.9
1.6
-
-6.3
-2.3
-1.2
-2.4
0.6

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

13.9

13.4

13.5

14.6

14.3

12.5

13.0

13.8

13.9

13.1

12.4

12.1

12.7

-1.2

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

17.9
19.0

17.9
19.1

18.3
19.2

18.5
19.1

18.8
18.9

18.6
18.6

18.4
18.3

18.0
17.9

18.0
17.8

EA-16 averages
weighted
arithmetic

20.5
17.6

20.8
17.5

20.7
17.4

20.3
17.5

20.0
17.1

19.9
17.0

20.3
17.4

20.6
17.5

20.8
17.5

20.7
17.4

20.4
17.2

20.1
16.9

20.0
16.8

EU-25 averages
weighted
arithmetic

18.9
19.2

19.1
19.1

18.8
18.7

18.3
18.8

17.9
18.3

17.9
18.5

18.2
18.8

18.5
18.8

18.8
18.6

18.6
18.4

18.4
18.1

18.0
17.9

18.0
17.7

44.8
35.1

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

44.1
33.4

43.5
32.6

41.9
32.4

43.4
33.5

43.9
34.6

41.9
34.8

41.0
33.9

39.1
33.0

37.8
32.5

38.1
32.1

38.3
31.9

38.7
32.3

-
-

-0.6
-0.7

-0.9
-1.5

-6.1
-2.7

0.3
-9.3
-1.4
0.0
-1.2
-2.3
1.2
2.7
-1.6
0.4
0.7
-2.2
-4.5
-2.4
0.6
-2.7
-2.3
0.5
-0.6
-3.5
1.3
-5.5
-0.6
-5.4
1.8
-0.4
0.6

0.1

0.1
-1.3

0.1
0.1

0.1
-0.8

-5.2
-2.3

Taxation trends in the European Union                 275

report2009.book  Page 276  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_A.3.2_G.pdf

Table A.3.2_G: Social Contributions as % of GDP: Employees

Difference1)
1995 to 2007 2000 to 2007

Ranking Revenue2)

2007
8
20
10
25
3
27
24
7
23
9
19
22
18
26
6
13
17
2
4
5
11
12
1
15
21
16
14

2007

13 802
656
4 598
2 225
148 720
27
3 247
10 270
20 368
76 286
35 429
330
496
233
1 683
3 322
144
35 349
15 595
14 851
5 696
4 149
2 490
1 513
4 056
8 775
57 282

10 026

-0.2
0.6
0.1
-0.8
-0.6
0.2
0.2
0.4
0.0
0.0
0.0
0.3
-0.1
0.0
0.2
1.3
-0.2
-1.7
-0.3
-0.7
0.3
0.3
-0.6
-0.1
0.0
-0.2
0.3

0.0

-0.3
0.0

-0.4
-0.1

-0.3
-0.1

-4.0
-0.8

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
4.1
4.5
2.3
1.5
3.6
3.5
1.0
1.7
6.1
6.7
0.2
0.0
1.7
1.5
4.5
4.2
1.9
1.9
4.0
4.0
2.3
2.3
2.1
1.9
2.4
2.4
0.8
0.8
4.6
4.9
3.3
2.1
2.6
3.1
6.2
6.7
5.8
6.1
4.8
5.5
3.5
3.4
3.4
3.8
7.2
7.7
2.8
3.0
2.3
2.2
2.7
2.8
2.8
2.5

4.4
-
3.7
1.1
6.7
0.0
1.9
3.8
1.9
5.8
2.4
1.8
0.3
0.2
3.9
2.3
2.5
10.2
6.3
4.7
3.1
-
8.1
2.8
2.6
1.6
2.5

4.2
2.2
3.6
1.1
6.4
0.3
1.7
4.4
1.9
4.1
2.2
2.1
2.3
0.7
4.6
2.3
2.9
6.4
5.9
4.8
3.5
3.0
7.5
3.0
2.2
2.7
2.8

4.3
1.6
3.5
1.8
6.8
0.0
1.5
4.1
1.9
4.0
2.3
1.8
2.5
0.8
4.5
2.0
2.8
7.9
6.0
5.5
3.2
3.0
7.8
2.9
2.2
2.8
2.5

4.1
2.2
3.6
1.0
6.3
0.2
1.7
4.4
1.9
4.1
2.3
2.0
2.4
0.8
4.4
2.4
2.8
6.5
5.9
4.9
3.4
3.4
7.4
2.8
2.3
2.7
2.8

4.5
1.8
3.6
1.2
6.6
0.3
1.5
4.5
1.9
4.0
2.3
1.9
2.4
0.7
4.8
2.2
2.9
6.4
6.0
5.1
3.4
4.2
7.6
3.0
2.1
2.8
2.4

4.3
0.7
3.5
1.6
6.8
0.0
1.5
4.0
1.9
4.0
2.3
1.8
2.6
0.3
4.4
2.2
2.6
8.0
6.1
6.3
3.1
3.0
7.7
2.8
2.3
2.8
2.5

4.4
1.9
3.7
1.2
6.7
0.3
1.6
4.7
1.9
4.1
2.3
1.9
2.4
0.7
4.7
2.2
2.9
6.7
6.1
5.2
3.6
3.1
7.5
2.8
2.1
2.8
2.5

4.3
1.9
3.6
1.1
6.5
0.3
1.7
4.4
1.9
4.0
2.2
2.1
2.4
0.8
4.7
2.3
2.9
6.9
6.0
5.0
3.5
3.0
7.5
2.9
2.1
2.7
2.7

4.3
-
3.5
1.0
6.9
0.0
1.4
4.0
1.9
3.9
2.4
1.9
2.5
0.3
4.3
2.1
2.5
7.6
6.1
4.9
3.0
2.2
7.8
2.9
2.3
2.8
2.6

4.4
-
3.6
1.1
6.9
0.0
1.7
3.9
1.9
5.8
2.6
1.9
0.9
0.2
4.0
2.1
2.6
9.8
6.3
4.7
3.0
-
7.9
3.2
2.6
2.0
2.4

4.3
-
3.6
1.0
7.0
0.0
1.5
4.0
1.9
5.4
2.6
1.9
2.6
0.3
4.2
2.2
2.7
9.8
6.3
4.9
3.1
-
7.8
3.1
2.4
2.4
2.6

-0.3
-
-0.1
-0.1
-0.6
0.2
-0.2
0.7
0.0
-1.8
-0.1
0.3
2.0
0.6
0.7
1.0
0.1
-3.9
-0.6
0.1
0.4
-
-0.9
-0.1
-0.4
1.0
0.3

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

4.0

3.9

3.9

4.1

4.0

3.6

3.7

3.9

3.9

3.7

3.5

3.4

3.5

-0.5

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

5.3
4.3

4.7
3.4

-
-

5.3
4.3

4.7
3.4

-
-

5.2
4.2

4.6
3.5

-
-

4.7
3.9

4.2
3.3

4.2
3.3

4.6
4.0

4.2
3.4

4.1
3.3

4.6
4.0

4.1
3.4

4.0
3.4

4.5
4.0

4.0
3.4

3.9
3.3

4.4
4.0

3.9
3.4

4.0
3.3

4.4
4.0

4.0
3.4

3.9
3.3

4.3
4.0

3.9
3.4

3.9
3.3

4.3
3.9

3.9
3.3

3.9
3.3

4.2
3.9

3.9
3.3

3.8
3.3

4.2
3.9

3.8
3.3

52.5
10.2

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

50.8
9.8

51.1
9.8

49.1
7.8

50.8
8.0

49.2
7.9

48.0
7.7

47.6
7.3

47.1
7.2

47.0
7.2

46.0
7.2

45.9
7.2

45.2
7.0

-
-

-1.1
-0.4

-0.9
-0.1

-7.3
-3.1

276

Taxation trends in the European Union

report2009.book  Page 277  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_A.3.2_T.pdf

Table A.3.2_T: Social Contributions as % of Total Taxation: Employees

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
9.4
9.9
10.1
6.6
4.9
-
9.8
10.3
10.3
2.0
3.5
2.2
15.5
16.8
16.9
0.5
0.0
0.0
5.5
5.1
5.6
14.0
12.6
13.2
5.2
5.8
5.8
9.3
9.1
13.6
5.3
5.6
6.1
5.1
6.1
6.8
7.7
8.2
0.9
2.7
2.7
0.8
12.6
12.2
10.6
8.3
5.4
5.6
7.6
10.3
9.3
16.0
17.6
25.3
13.7
13.5
15.2
13.8
17.2
12.6
9.5
9.9
9.7
11.4
13.2
-
18.9
20.5
20.6
9.4
9.0
7.1
5.3
4.9
5.8
5.5
5.7
3.3
7.7
6.8
7.3

9.6
5.0
10.4
3.6
16.2
0.0
4.9
11.9
5.7
9.0
5.5
6.0
8.4
2.7
11.4
5.1
9.9
19.8
14.0
16.9
9.3
10.0
20.9
8.5
4.7
5.4
6.7

9.6
5.7
9.6
2.3
16.7
0.9
5.6
14.0
5.5
9.4
5.5
6.1
8.3
2.7
12.6
6.1
8.9
18.3
13.8
15.8
10.1
10.9
19.5
9.1
4.8
5.6
7.8

9.8
6.0
10.3
2.4
16.8
0.9
5.5
14.5
5.7
9.5
5.5
5.9
8.4
2.6
12.4
5.8
9.3
17.9
13.8
16.1
10.3
11.1
19.6
8.5
4.8
5.8
7.4

9.9
6.1
10.5
2.4
16.8
0.9
5.3
13.3
5.7
9.4
5.7
6.0
8.4
2.6
12.3
5.8
9.3
17.0
13.7
15.6
9.8
14.9
20.0
8.9
4.7
5.9
6.7

9.2
6.7
9.9
2.0
16.2
0.5
5.1
13.9
5.3
9.3
5.3
5.5
7.8
2.7
12.4
6.5
8.2
16.7
14.0
14.4
9.6
11.9
19.2
9.4
5.4
5.4
7.7

9.4
6.5
9.8
2.1
16.5
0.9
5.6
14.0
5.4
9.3
5.5
5.8
7.8
2.6
12.3
6.0
8.5
17.1
14.0
14.8
9.9
10.8
19.3
9.5
5.0
5.5
7.8

9.5
-
10.5
2.1
17.0
0.0
4.3
12.3
5.7
8.9
5.7
6.7
7.5
0.9
10.8
5.3
9.7
19.2
13.8
13.8
9.0
7.7
20.5
8.0
5.0
5.5
7.1

9.5
2.4
10.3
3.3
16.4
0.0
4.7
12.1
5.6
8.9
5.5
6.5
8.1
0.9
11.6
5.5
9.5
19.9
13.9
18.1
9.1
9.5
20.2
8.0
5.1
5.4
7.0

9.9
-
10.3
2.2
16.9
0.0
5.3
13.3
5.9
13.3
6.1
7.1
2.9
0.9
10.7
5.2
10.1
24.3
14.6
12.7
9.1
-
20.6
8.0
5.5
4.0
7.1

9.6
-
10.4
2.1
17.2
0.0
4.7
13.2
5.7
12.3
6.0
7.3
8.0
0.9
10.6
5.6
9.9
24.6
14.1
13.4
9.2
-
21.0
8.3
5.2
4.7
7.5

Difference1)
1995 to 2007 2000 to 2007

-0.7
-
-0.5
-0.2
-1.4
0.5
-0.2
0.8
-0.6
-4.2
-0.7
-1.8
6.8
1.9
2.0
2.7
-1.7
-9.3
-1.6
1.2
-0.2
-
-1.7
2.3
-0.5
2.2
0.4

-0.2
1.6
-0.6
-1.6
-0.7
0.5
0.6
2.1
-0.4
0.3
-0.2
-1.0
-0.6
0.0
1.2
3.1
-2.3
-3.8
-0.3
-3.1
0.2
1.4
-2.0
0.9
0.6
0.1
0.9

9.5

9.2

9.1

9.8

9.5

8.4

8.6

9.1

9.2

8.6

8.1

7.7

8.1

-1.4

-0.3

Ranking Revenue2)

2007
12
18
9
26
3
27
20
4
23
13
21
24
15
25
7
14
17
2
6
5
10
8
1
11
22
19
16

2007

13 802
656
4 598
2 225
148 720
27
3 247
10 270
20 368
76 286
35 429
330
496
233
1 683
3 322
144
35 349
15 595
14 851
5 696
4 149
2 490
1 513
4 056
8 775
57 282

10 026

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

10.2
8.8

10.1
8.9

10.2
9.1

10.1
9.2

10.2
9.1

10.1
9.1

10.0
9.0

9.8
8.9

9.6
8.8

EA-16 averages
weighted
arithmetic

13.3
11.4

12.9
11.3

12.6
11.2

11.4
10.4

11.2
10.4

11.1
10.5

11.1
10.6

11.1
10.5

11.2
10.6

11.0
10.6

10.8
10.4

10.5
10.3

10.3
10.1

EU-25 averages
weighted
arithmetic

12.0
9.0

11.6
9.0

11.3
9.3

10.3
8.8

10.3
9.0

10.1
9.1

10.1
9.1

10.1
9.1

10.2
9.2

10.1
9.1

10.0
9.0

9.8
8.9

9.6
8.8

51.5
25.3

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

51.0
24.3

51.5
24.6

49.6
20.5

52.2
20.2

50.8
20.9

49.6
20.5

48.5
19.0

47.8
18.7

48.0
18.6

47.3
18.4

48.0
18.6

47.1
18.4

-
-

-3.0
-1.5

-2.4
-0.2

-4.4
-6.9

-0.5
-0.1

-0.8
-0.4

-0.5
-0.2

-3.7
-2.5

Taxation trends in the European Union                 277

report2009.book  Page 278  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_A.3.3_G.pdf

Table A.3.3_G: Social Contributions as % of GDP: Self-employed

Ranking Revenue2)

2007
12
14
5
27
3
24
22
7
9
11
8
19
26
25
10
16
17
1
6
4
18
20
13
2
15
21
23

2007

3 974
289
3 025
0
60 780
21
421
3 994
14 332
22 593
26 805
56
12
35
436
654
34
15 649
4 801
7 375
910
359
392
1 455
1 619
870
4 403

-

Difference1)
1995 to 2007 2000 to 2007

-0.1
-
1.6
0.0
-0.1
-0.1
0.0
0.5
-0.3
-0.2
0.0
-0.1
0.0
0.1
-0.2
0.2
0.0
-0.9
0.5
1.6
0.1
-
0.4
0.0
-0.7
0.0
0.0

-

-
-

-0.2
-0.1

-0.2
0.1

5.2
-0.9

0.0
-0.2
1.6
0.0
-0.2
-0.1
0.0
0.3
-0.1
0.2
0.4
0.0
0.0
0.0
0.0
0.1
-0.1
-0.3
0.1
0.6
0.1
0.3
0.2
0.5
-0.1
0.0
0.0

-

0.0
0.1

0.0
0.0

0.0
0.1

3.5
-0.3

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1.2
1.2
1.0
1.2
2.4
0.8
0.0
0.0
2.5
2.6
0.1
0.1
0.2
0.2
1.8
1.5
1.4
1.4
1.2
1.1
1.7
1.3
0.4
0.3
0.1
0.0
0.1
0.2
1.2
1.3
0.6
0.6
0.6
0.7
2.8
2.6
1.8
1.7
2.4
2.1
0.6
0.4
0.3
0.0
1.1
1.3
2.7
2.5
0.9
0.9
0.3
0.3
0.2
0.2

1.2
1.2
0.7
0.0
2.7
0.2
0.2
1.5
1.4
1.0
1.4
0.3
0.0
0.1
1.2
0.5
0.8
3.1
1.6
1.8
0.5
0.0
1.0
2.1
1.0
0.2
0.2

1.2
1.3
2.1
0.0
2.9
0.1
0.2
1.7
1.4
1.2
1.6
0.3
0.1
0.1
1.3
0.5
0.7
2.5
1.8
2.5
0.5
0.3
1.2
2.6
0.8
0.2
0.2

1.2
1.1
2.3
0.0
2.8
0.1
0.2
1.6
1.4
1.2
1.6
0.3
0.1
0.1
1.2
0.6
0.6
3.0
1.8
2.5
0.5
0.1
1.2
2.7
0.9
0.2
0.2

1.2
1.1
0.8
0.0
2.8
0.2
0.2
1.6
1.4
1.1
1.4
0.3
0.0
0.1
1.3
0.6
0.7
2.5
1.7
2.5
0.4
0.1
1.3
2.8
0.8
0.2
0.2

1.2
0.6
0.7
0.0
2.8
0.2
0.2
1.5
1.5
1.0
1.3
0.4
0.0
0.1
1.3
0.5
0.7
3.0
1.7
1.5
0.5
0.3
1.0
2.3
1.0
0.2
0.2

1.2
1.2
0.9
0.0
2.8
0.1
0.2
1.7
1.4
1.1
1.4
0.3
0.0
0.1
1.3
0.6
0.7
2.8
1.8
2.4
0.6
0.2
1.3
2.6
0.8
0.2
0.2

1.2
1.2
2.1
0.0
2.8
0.1
0.2
1.6
1.5
1.2
1.5
0.3
0.1
0.1
1.3
0.5
0.7
2.7
1.9
2.4
0.5
0.3
1.4
2.6
0.8
0.2
0.2

1.2
-
0.7
0.0
2.9
0.2
0.2
1.5
1.6
1.0
1.2
0.4
0.0
0.1
1.3
0.3
0.6
2.9
1.7
0.6
0.5
0.0
1.1
2.3
1.1
0.2
0.2

1.3
-
0.7
0.0
3.0
0.2
0.2
1.2
1.6
1.5
1.7
0.4
0.0
0.1
1.3
0.3
0.7
3.5
1.3
0.9
0.5
-
0.9
2.9
1.4
0.3
0.2

1.3
-
0.7
0.0
3.0
0.2
0.2
1.3
1.6
1.4
1.6
0.4
0.0
0.1
1.3
0.2
0.7
3.6
1.4
0.7
0.6
-
1.0
2.1
1.3
0.2
0.2

1.3
-
0.7
0.0
2.6
0.2
0.2
1.3
1.7
1.4
1.8
0.4
0.0
0.1
1.4
0.4
0.6
3.7
1.3
0.8
0.4
-
0.8
2.6
1.6
0.3
0.2

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

2.0
1.4

1.6
1.0

-

-
-

2.1
1.5

1.7
1.0

-

-
-

2.1
1.4

1.6
1.0

-

-
-

1.8
1.3

1.4
0.9

-

-

-

-

-

-

-

-

-

1.4
0.9

1.8
1.3

1.4
1.0

1.4
1.0

1.8
1.3

1.4
1.0

1.4
1.0

1.7
1.3

1.4
1.0

1.4
1.0

1.8
1.3

1.4
1.0

1.4
1.0

1.8
1.4

1.5
1.1

1.5
1.1

1.8
1.4

1.5
1.1

1.5
1.1

1.8
1.4

1.5
1.1

1.5
1.1

1.8
1.4

1.5
1.1

1.4
1.1

1.8
1.4

1.4
1.1

56.9
3.7

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

55.5
3.6

55.5
3.5

58.4
2.9

56.9
3.0

58.7
3.1

59.2
2.6

61.4
2.8

60.0
2.8

60.7
2.8

60.2
2.9

63.1
3.0

62.1
2.8

278

Taxation trends in the European Union

report2009.book  Page 279  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_A.3.3_T.pdf

Table A.3.3_T: Social Contributions as % of Total Taxation: Self-employed

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
2.7
2.6
2.9
4.0
6.5
2.2
0.0
0.0
6.4
6.6
0.4
0.5
0.7
0.5
5.5
4.6
3.7
4.2
2.8
2.5
4.0
3.2
0.9
1.1
0.2
0.1
0.4
0.5
3.3
3.2
1.6
1.6
1.8
2.3
7.1
6.8
4.2
3.8
6.9
6.7
1.5
1.2
1.0
0.1
3.0
3.5
9.0
7.4
2.1
2.0
0.5
0.5
0.6
0.6

2.7
3.7
2.4
0.0
7.1
0.5
0.7
4.8
4.2
2.5
3.4
1.1
0.1
0.4
3.2
1.5
2.1
6.6
3.9
7.5
1.2
0.3
3.3
8.3
1.9
0.5
0.6

2.7
3.7
2.4
0.0
7.1
0.4
0.7
5.1
4.2
2.6
3.3
1.0
0.1
0.4
3.4
1.5
2.1
7.4
4.0
7.6
1.6
0.8
3.5
7.9
1.8
0.5
0.7

2.7
3.4
6.3
0.0
7.0
0.4
0.7
5.2
3.8
2.7
3.8
0.9
0.2
0.4
3.3
1.7
1.9
7.6
4.4
7.3
1.5
0.2
3.1
9.1
2.1
0.5
0.6

2.7
2.1
2.0
0.0
6.8
0.5
0.7
4.5
4.4
2.3
3.1
1.3
0.1
0.4
3.4
1.3
2.5
7.5
3.8
4.2
1.4
0.8
2.6
6.4
2.2
0.4
0.6

2.7
3.8
5.7
0.0
7.3
0.4
0.8
5.3
4.2
2.7
3.7
1.0
0.2
0.3
3.5
1.4
2.0
7.3
4.3
7.7
1.6
1.2
3.7
8.2
1.8
0.5
0.6

2.7
3.8
5.8
0.0
7.5
0.4
0.8
5.3
4.0
2.8
3.9
0.9
0.2
0.4
3.4
1.5
1.9
6.7
4.3
7.8
1.6
1.0
3.2
8.4
1.9
0.5
0.6

2.6
3.8
2.2
0.0
6.4
0.6
0.6
4.3
4.3
2.3
3.3
1.1
0.1
0.4
3.1
1.4
2.7
7.7
3.8
5.4
1.3
0.0
2.6
6.2
2.0
0.5
0.6

2.7
-
2.0
0.0
7.2
0.5
0.7
4.7
4.7
2.3
2.8
1.4
0.1
0.2
3.2
0.8
2.5
7.3
3.8
1.7
1.5
0.0
3.0
6.2
2.3
0.4
0.5

2.8
-
2.0
0.0
7.4
0.5
0.7
4.3
5.0
3.2
3.7
1.5
0.1
0.2
3.4
0.6
2.7
8.9
3.3
1.9
1.7
-
2.7
5.7
2.7
0.5
0.6

2.9
-
2.0
0.0
6.6
0.6
0.6
4.3
5.1
3.2
4.4
1.6
0.1
0.2
3.7
1.0
2.3
9.2
3.0
2.0
1.4
-
2.0
6.5
3.4
0.6
0.6

2.9
-
2.0
0.0
7.3
0.5
0.6
4.2
5.0
3.4
4.1
1.6
0.1
0.2
3.4
0.8
2.6
8.7
3.1
2.5
1.6
-
2.3
7.3
2.9
0.5
0.7

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

5.0
3.8

4.2
2.7

-

-
-

5.1
3.8

4.3
2.7

-

-
-

5.0
3.7

4.1
2.7

-

-
-

4.5
3.5

3.6
2.5

-

-

-

-

-

-

-

-

-

3.5
2.5

4.4
3.5

3.5
2.6

3.4
2.6

4.3
3.4

3.4
2.6

3.5
2.7

4.3
3.5

3.5
2.7

3.6
2.8

4.4
3.6

3.6
2.8

3.7
2.8

4.5
3.7

3.7
2.9

3.8
3.0

4.6
3.7

3.8
3.1

3.8
3.0

4.6
3.7

3.8
3.0

3.7
3.0

4.5
3.7

3.7
3.1

3.6
2.9

4.4
3.7

3.6
3.0

56.2
9.2

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

55.4
8.7

56.3
8.9

60.1
7.3

58.6
7.5

62.0
7.7

64.7
7.4

66.7
8.3

65.2
7.9

66.7
8.2

66.6
8.4

71.1
9.1

70.0
9.0

Ranking Revenue2)

2007
14
12
4
27
5
24
21
6
9
13
8
20
26
25
10
17
16
2
7
3
18
19
11
1
15
23
22

2007

3 974
289
3 025
0
60 780
21
421
3 994
14 332
22 593
26 805
56
12
35
436
654
34
15 649
4 801
7 375
910
359
392
1 455
1 619
870
4 403

-

Difference1)
1995 to 2007 2000 to 2007

-0.2
-
4.4
0.0
-0.2
-0.2
0.1
1.2
-1.5
-0.4
-0.4
-0.7
0.1
0.2
-0.4
0.7
-0.5
-2.1
1.2
4.8
0.1
-
1.0
2.6
-1.3
0.0
0.0

-

-
-

-0.7
-0.3

-0.6
0.3

13.8
-0.2

0.1
-0.9
4.3
0.0
0.0
-0.2
0.1
1.2
-0.6
0.4
0.7
-0.3
0.1
0.0
0.2
0.2
-0.9
-0.6
0.4
1.4
0.2
1.0
0.4
2.8
0.1
0.1
0.0

-

0.1
0.4

0.1
0.1

0.2
0.4

8.0
1.3

Taxation trends in the European Union                 279

report2009.book  Page 280  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_B.1_G.pdf

Table B.1_G: Taxes received by administrative level as % of GDP: Central Government

Difference1)
1995 to 2007 2000 to 2007

Ranking Revenue2)

2007
25
9
7
1
26
11
6
18
24
20
12
4
21
22
8
13
3
10
15
19
16
27
17
23
14
5
2

2007

44 429
7 146
32 621
80 990
286 990
3 572
49 920
45 823
149 451
305 624
357 136
5 201
3 375
4 510
9 044
22 815
1 864
133 642
60 513
56 239
36 201
14 533
7 174
7 926
40 461
88 806
703 538

82 655

-3.4
6.0
0.0
4.8
0.0
0.8
-0.6
-3.3
-2.3
-2.4
0.0
10.2
1.4
3.2
-1.6
-0.4
6.1
1.2
0.0
1.4
1.2
-4.2
0.2
-4.4
-3.1
-3.9
-0.3

1.8

-0.7
0.2

-0.7
0.1

-0.7
0.2

6.7
1.3

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
13.3
15.7
15.5
24.7
18.7
-
25.7
26.2
27.7
35.8
29.7
32.2
11.8
11.3
11.1
23.4
22.1
26.2
26.2
24.9
26.9
20.1
21.9
19.0
14.2
16.2
16.3
16.2
18.1
17.7
23.3
22.8
24.0
33.2
23.7
19.7
16.0
14.4
14.7
15.9
12.2
14.0
24.9
26.4
24.2
22.6
22.5
25.1
34.2
30.4
26.8
23.6
22.6
21.9
22.3
24.2
20.3
18.2
16.1
21.3
22.2
20.6
19.5
11.7
12.9
-
20.8
20.6
20.3
14.4
17.7
24.1
22.5
23.2
21.9
26.8
28.1
28.7
34.3
34.4
32.4

15.7
17.5
26.3
29.5
11.3
22.5
23.9
21.5
13.1
17.5
22.1
24.1
14.1
15.2
26.0
22.3
31.5
22.5
23.6
16.9
21.1
12.2
21.0
17.3
23.9
26.1
33.0

16.0
17.8
25.8
32.1
11.7
23.4
27.0
22.5
16.3
19.3
24.6
20.9
16.3
14.0
25.7
23.2
27.3
22.6
22.7
18.2
21.0
17.3
21.5
20.3
23.7
31.8
34.2

14.3
23.8
25.9
32.8
11.1
21.9
25.9
20.1
12.9
17.6
21.2
26.6
15.4
15.3
25.5
21.4
33.3
22.6
22.5
16.4
20.8
12.3
21.5
15.4
23.6
27.9
34.0

16.6
18.7
25.7
31.0
11.9
22.6
26.8
23.4
16.5
18.6
23.2
23.0
14.6
12.7
26.5
22.9
28.2
22.3
22.3
16.9
21.0
15.9
20.7
18.9
25.6
30.7
34.6

16.2
-
25.4
32.0
10.9
24.8
26.7
21.8
15.9
18.8
24.1
20.3
17.5
14.6
26.4
22.7
25.6
22.2
22.8
19.7
20.4
17.8
21.2
20.9
23.9
31.1
33.8

14.0
24.6
25.5
31.8
11.3
22.3
27.2
19.9
13.5
16.8
22.8
27.9
16.1
16.0
24.3
21.2
33.3
23.2
22.1
17.4
21.6
11.5
21.3
14.2
22.8
27.5
34.9

15.0
22.0
26.9
29.6
11.4
22.3
24.4
20.0
12.5
17.1
22.1
25.5
14.6
15.2
25.1
21.9
31.4
21.6
23.7
16.7
21.0
12.5
21.2
18.0
23.7
26.3
32.6

14.7
23.0
27.1
30.9
10.9
21.8
25.5
19.7
12.3
18.2
21.6
25.1
14.5
15.0
24.8
21.7
32.5
21.6
23.4
15.2
20.2
12.4
21.2
17.1
23.5
26.8
33.2

15.7
-
26.5
32.4
10.8
29.1
27.5
19.0
16.5
18.6
23.5
19.1
13.7
13.0
24.8
24.8
25.4
22.7
21.4
21.3
20.3
-
20.8
22.3
23.1
29.8
32.2

15.7
-
26.6
32.1
10.7
25.1
27.3
20.1
16.0
18.8
25.2
18.4
16.2
15.7
26.4
22.9
27.5
22.2
22.6
20.5
20.2
-
20.4
21.1
23.8
30.5
32.9

-2.3
-
-2.1
3.6
0.8
-2.8
-0.7
1.1
-2.1
-1.5
-0.8
13.5
1.3
1.9
0.8
-2.5
7.5
1.7
2.1
-3.1
2.7
-
0.5
-9.7
0.7
-1.8
2.0

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

24.0

25.0

24.8

24.6

24.9

27.3

26.6

27.6

26.3

28.0

28.8

29.7

29.1

5.1

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

21.5
22.1

21.5
21.9

20.9
21.4

20.3
21.2

19.9
21.3

20.1
21.3

20.3
21.6

20.6
21.7

20.7
22.2

EA-16 averages
weighted
arithmetic

16.8
20.6

17.1
20.7

17.6
21.0

17.5
21.1

18.1
21.5

17.9
21.6

17.5
21.3

16.9
21.0

16.7
20.9

16.7
20.8

16.7
20.9

17.0
21.0

17.2
21.5

EU-25 averages
weighted
arithmetic

19.6
22.1

20.0
22.2

20.7
22.4

20.9
22.4

21.5
22.5

21.5
22.3

21.0
21.8

20.3
21.7

20.0
21.6

20.1
21.5

20.3
21.8

20.7
22.0

20.8
22.5

28.3
21.3

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

28.7
21.6

26.4
22.1

25.5
22.9

25.5
22.5

26.3
22.7

27.7
23.2

28.1
21.7

28.5
21.3

30.0
22.4

31.1
23.0

30.9
23.6

33.1
24.0

-
-

0.4
1.6

1.3
0.4

4.8
2.7

280

Taxation trends in the European Union

report2009.book  Page 281  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_B.1_T.pdf

Table B.1_T: Taxes received by administrative level as % of Total Taxation: Central Government

Tables

Annex A

Difference1)
1995 to 2007 2000 to 2007

Ranking Revenue2)

2007
26
6
8
5
27
7
3
10
24
25
16
4
19
18
9
13
1
11
17
21
12
23
15
22
20
14
2

2007

44 429
7 146
32 621
80 990
286 990
3 572
49 920
45 823
149 451
305 624
357 136
5 201
3 375
4 510
9 044
22 815
1 864
133 642
60 513
56 239
36 201
14 533
7 174
7 926
40 461
88 806
703 538

82 655

35.0
-
76.0
65.5
26.4
72.9
84.1
65.8
48.1
42.6
57.7
71.3
50.6
50.8
67.1
58.8

35.3
-
76.5
66.0
26.6
84.7
83.0
64.4
49.9
42.4
56.3
72.3
44.3
46.7
66.0
61.2

35.7
-
76.1
64.9
26.7
72.6
84.2
67.0
48.3
42.6
56.7
73.4
52.0
45.8
67.0
58.2

36.8
57.5
75.9
62.7
28.4
72.2
84.8
67.6
48.7
42.1
55.6
76.8
49.5
42.2
67.7
59.6

34.7
59.2
75.5
61.8
28.5
72.2
83.9
63.9
38.7
40.6
54.0
77.2
50.0
53.5
66.1
58.6

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
30.2
34.8
35.4
72.3
60.5
-
69.6
77.1
76.6
73.5
61.2
65.9
30.0
28.2
27.8
70.8
72.6
72.1
83.9
83.6
81.3
62.6
65.8
65.1
38.3
48.3
49.8
37.3
41.4
41.4
53.8
55.1
59.9
79.8
76.6
74.0
52.5
50.5
44.4
53.1
42.6
49.0
67.9
66.5
65.2
56.7
58.9
60.3
98.7
60.5
53.1
52.3
60.4
39.9
54.5
49.1
52.4
55.6
94.5

33.5
35.2
68.3
58.2
75.4
75.9
61.7
64.0
28.6
28.0
72.2
71.6
84.1
84.7
62.1
67.7
36.9
48.7
39.9
43.1
53.5
57.9
77.5
74.7
51.1
51.0
54.0
43.9
65.8
67.2
58.1
59.3
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
57.8
56.1
54.1
51.6
51.8
52.1
60.3
61.6
45.0
55.2
55.6
56.3
54.5
57.3
53.8
51.9
54.4
61.3
94.1
94.4

31.4
74.0
69.5
64.1
28.9
71.2
84.7
63.5
37.0
38.3
54.2
76.6
52.8
54.3
68.0
57.0
98.8
59.4
52.9
51.6
60.1
40.1
55.6
48.4
52.5
56.2
94.5

32.7
69.6
72.4
63.1
28.0
71.2
84.4
63.2
35.6
42.2
53.2
75.0
50.8
53.2
66.5
57.6
99.1
57.6
54.0
48.5
59.2
45.4
55.3
54.0
54.0
55.1
94.3

31.9
70.0
69.7
64.5
28.5
71.0
84.4
63.8
36.2
40.4
52.5
74.9
52.9
53.8
67.8
57.0
98.6
60.2
53.3
50.1
59.3
44.2
55.6
49.0
53.6
56.2
94.4

55.9
51.7
51.8
61.2
52.3
55.1
55.3
54.2
59.3
94.3

58.9
53.5
50.0
60.8
44.6
54.6
53.3
52.1
56.3
94.5

59.7
53.7
51.6
60.9
43.5
55.4
52.2
53.6
54.6
94.3

56.2
51.4
55.8
61.3
61.9
56.0
56.8
52.0
60.3
94.2

56.0
51.0
56.2
61.2
-
55.2
56.6
51.4
59.9
94.3

56.3
50.0
57.1
61.8
-
54.5
56.5
49.1
59.1
93.7

54.5
48.9
57.4
60.7
-
51.8
59.9
47.8
59.8
93.4

-5.2
-
-7.0
7.5
2.2
-1.3
2.6
-2.5
-11.4
-4.1
-6.2
5.7
8.1
4.0
2.7
-3.5
-1.3
6.0
4.2
-5.1
-0.3
-
2.7
-10.7
4.6
-4.2
1.0

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

57.1

58.8

58.7

58.6

58.8

64.0

62.1

64.1

62.2

64.6

66.2

67.5

66.7

9.6

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

52.6
60.3

52.9
60.0

52.7
59.4

51.9
59.2

51.1
59.4

51.7
59.1

51.7
59.0

51.9
59.1

52.1
59.4

EA-16 averages
weighted
arithmetic

42.1
57.7

42.1
57.8

42.7
58.1

42.8
58.5

43.6
58.9

43.4
58.9

43.4
58.4

42.5
57.7

42.1
57.4

42.3
57.1

42.2
56.9

42.2
56.9

42.4
57.0

EU-25 averages
weighted
arithmetic

49.5
60.1

49.6
60.5

51.3
60.6

51.7
60.6

52.6
60.6

52.9
60.4

52.8
59.9

51.9
59.8

51.1
59.6

51.7
59.2

51.8
59.2

51.9
59.2

52.2
59.6

33.8
72.2

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

32.4
73.6

35.0
73.4

31.6
73.3

30.7
72.0

30.9
71.6

31.6
71.8

32.2
71.5

33.0
71.4

32.4
71.0

32.5
70.1

33.2
69.9

33.4
68.7

-
-

0.3
0.0

2.7
-0.5

-0.3
-3.5

-6.6
14.7
-6.3
10.7
1.6
-1.5
-0.9
-5.0
-10.3
-4.7
-1.8
3.0
3.0
10.8
0.1
-2.8
-1.3
4.6
1.4
0.5
-0.8
-12.4
-0.6
-6.2
-1.8
-3.7
0.2

2.7

-0.8
-0.6

-1.0
-1.5

-0.7
-0.7

2.6
-2.9

Taxation trends in the European Union                 281

report2009.book  Page 282  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_B.2_G.pdf

Table B.2_G: Taxes received by administrative level as % of GDP: State Government

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
10.7
11.0
10.0
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
8.9
8.8
8.4
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
8.0
2.6
1.5
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.1
3.4
3.3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

10.3
n.a.
n.a.
n.a.
9.5
n.a.
n.a.
n.a.
2.7
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

10.6
n.a.
n.a.
n.a.
9.1
n.a.
n.a.
n.a.
2.5
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.5
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

10.8
n.a.
n.a.
n.a.
8.5
n.a.
n.a.
n.a.
6.9
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

10.4
n.a.
n.a.
n.a.
8.9
n.a.
n.a.
n.a.
2.4
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.4
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

10.8
n.a.
n.a.
n.a.
8.2
n.a.
n.a.
n.a.
7.9
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.0
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

10.5
n.a.
n.a.
n.a.
8.5
n.a.
n.a.
n.a.
6.3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.2
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

10.7
n.a.
n.a.
n.a.
8.6
n.a.
n.a.
n.a.
8.1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.0
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

10.2
n.a.
n.a.
n.a.
9.0
n.a.
n.a.
n.a.
1.5
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.4
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

10.8
n.a.
n.a.
n.a.
9.4
n.a.
n.a.
n.a.
2.7
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.4
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

10.6
n.a.
n.a.
n.a.
8.3
n.a.
n.a.
n.a.
7.5
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

7.1
5.8

7.1
5.8

-
-

7.4
6.0

7.4
6.0

-
-

7.5
6.3

7.5
6.3

-
-

7.6
6.4

7.6
6.4

-
-

7.8
6.5

7.8
6.5

-
-

7.8
6.4

7.8
6.4

-
-

7.3
6.4

7.3
6.4

-
-

7.8
7.1

7.8
7.1

-
-

7.9
7.3

7.9
7.3

-
-

8.0
7.4

8.0
7.4

-
-

8.0
7.5

8.0
7.5

-
-

8.3
7.6

8.3
7.6

-
-

8.5
7.7

8.5
7.7

Ranking Revenue2)

2007
1
n.a.
n.a.
n.a.
2
n.a.
n.a.
n.a.
3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

2007

35 924
n.a.
n.a.
n.a.
216 540
n.a.
n.a.
n.a.
84 331
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
8 295
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

n.a.

Difference1)
1995 to 2007 2000 to 2007

0.7
-
-
-
0.5
-
-
-
6.5
-
-
-
-
-
-
-
-
-
-0.2
-
-
-
-
-
-
-
-

-

-
-

1.4
1.9

1.4
1.9

0.4
-
-
-
-0.6
-
-
-
5.4
-
-
-
-
-
-
-
-
-
-0.2
-
-
-
-
-
-
-
-

-

-
-

0.7
1.2

0.7
1.2

57.1
8.4

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

53.1
8.0

56.8
8.7

52.6
8.0

52.8
8.1

51.6
7.7

56.0
8.4

39.6
7.2

40.7
7.7

39.4
7.5

40.9
7.8

39.6
7.7

38.8
7.7

-18.3
-0.8

-12.8
0.0

282

Taxation trends in the European Union

report2009.book  Page 283  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_B.2_T.pdf

Table B.2_T: Taxes received by administrative level as % of Total Taxation: State Government

Tables

Annex A

Ranking Revenue2)

2007
1
n.a.
n.a.
n.a.
2
n.a.
n.a.
n.a.
3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

2007

35 924
n.a.
n.a.
n.a.
216 540
n.a.
n.a.
n.a.
84 331
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
8 295
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

n.a.

Difference1)
1995 to 2007 2000 to 2007

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
24.4
24.2
22.8
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
22.6
21.9
21.2
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
21.6
7.7
4.7
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
7.3
7.4
7.8
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

23.1
n.a.
n.a.
n.a.
21.6
n.a.
n.a.
n.a.
18.5
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
7.3
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

23.7
n.a.
n.a.
n.a.
22.5
n.a.
n.a.
n.a.
7.9
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
7.7
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

22.8
n.a.
n.a.
n.a.
22.7
n.a.
n.a.
n.a.
7.8
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
7.7
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

23.3
n.a.
n.a.
n.a.
22.1
n.a.
n.a.
n.a.
7.7
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
7.8
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

23.0
n.a.
n.a.
n.a.
22.2
n.a.
n.a.
n.a.
4.6
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
7.9
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

24.0
n.a.
n.a.
n.a.
21.3
n.a.
n.a.
n.a.
20.4
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
7.0
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

23.2
n.a.
n.a.
n.a.
21.8
n.a.
n.a.
n.a.
7.2
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
7.7
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

24.1
n.a.
n.a.
n.a.
21.2
n.a.
n.a.
n.a.
22.1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
7.1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

23.5
n.a.
n.a.
n.a.
21.5
n.a.
n.a.
n.a.
21.7
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
7.1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

24.1
n.a.
n.a.
n.a.
21.9
n.a.
n.a.
n.a.
22.2
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
7.1
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

-
-

-
-

-
-

-
-

-
-

-
-

-
-

-
-

-
-

EA-16 averages
weighted
arithmetic

18.2
14.1

18.7
14.4

18.7
15.0

19.0
15.2

19.2
15.4

19.2
15.2

18.5
15.3

20.1
17.6

20.4
18.2

20.7
18.5

20.7
18.6

21.1
18.8

21.5
19.0

EU-25 averages
weighted
arithmetic

18.2
14.1

18.7
14.4

18.7
15.0

19.0
15.2

19.2
15.4

19.2
15.2

18.5
15.3

20.1
17.6

20.4
18.2

20.7
18.5

20.7
18.6

21.1
18.8

21.5
19.0

1.6
-
-
-
1.4
-
-
-
16.9
-
-
-
-
-
-
-
-
-
-0.6
-
-
-
-
-
-
-
-

-

-
-

3.3
4.9

3.3
4.9

50.6
18.1

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

50.9
18.4

46.6
16.1

45.4
15.6

45.9
16.0

45.2
15.2

48.6
16.8

35.4
15.7

37.3
17.0

36.8
16.4

37.7
17.0

37.2
16.9

36.7
17.1

-13.8
-0.9

1.6
-
-
-
-0.1
-
-
-
13.8
-
-
-
-
-
-
-
-
-
-0.4
-
-
-
-
-
-
-
-

-

-
-

2.3
3.7

2.3
3.7

-8.5
2.0

Taxation trends in the European Union                 283

report2009.book  Page 284  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_B.3_G.pdf

Table B.3_G: Taxes received by administrative level as % of GDP: Local Government

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
2.3
2.1
0.9
3.4
5.2
3.8
11.8
17.0
3.2
2.7
4.4
4.1
0.7
0.6
0.2
0.3
3.1
3.0
4.9
4.1
6.7
6.2
0.5
0.5
5.4
4.9
3.0
5.7
1.6
2.2
4.4
4.0
n.a.
n.a.
1.3
1.4
4.7
5.2
4.7
3.1
2.2
2.0
7.6
5.5
3.4
2.8
3.2
1.5
9.2
9.9
15.7
15.5
1.7
1.5

1.9
3.2
4.1
16.5
2.9
4.3
0.6
0.3
3.1
4.3
6.0
0.4
5.0
6.1
2.2
3.8
n.a.
1.4
5.1
3.0
2.1
3.4
2.7
1.4
10.2
14.9
1.5

2.2
3.3
4.3
17.1
2.6
4.0
0.6
0.3
2.9
4.1
6.3
0.4
4.9
2.8
2.4
4.0
n.a.
1.4
4.9
3.3
2.1
5.5
2.8
1.6
9.6
15.6
1.6

2.1
-
4.0
16.2
2.9
4.9
0.7
0.3
3.1
4.7
5.7
0.5
5.4
6.0
2.4
3.5
n.a.
1.4
5.2
4.2
1.8
2.0
2.5
1.5
10.1
15.2
1.4

2.2
3.6
4.2
16.3
2.9
4.9
0.7
0.3
3.1
4.6
5.3
0.5
5.0
6.5
2.2
3.8
n.a.
1.4
5.2
3.2
2.1
3.0
2.7
1.5
9.9
15.2
1.4

2.1
-
4.4
15.6
2.5
4.8
0.9
0.3
2.8
4.5
3.1
0.4
6.5
5.2
2.4
2.7
n.a.
1.3
5.0
4.7
1.7
-
2.5
1.6
10.2
14.2
1.3

2.3
0.5
4.5
17.2
2.6
4.0
0.7
0.3
2.8
4.2
6.6
0.4
5.1
2.6
2.3
4.3
n.a.
1.5
4.7
3.1
2.0
5.9
2.9
1.5
9.3
16.0
1.6

2.2
-
4.2
15.8
2.7
4.7
0.8
0.3
3.0
4.7
3.5
0.4
5.2
4.5
2.4
3.2
n.a.
1.4
5.3
4.5
1.7
-
2.5
1.6
10.1
15.2
1.3

2.2
0.6
5.4
16.9
2.9
4.0
0.7
0.2
3.1
4.8
6.4
0.4
4.9
2.8
1.7
4.3
n.a.
1.5
4.6
4.1
2.2
6.0
2.8
3.5
9.1
15.9
1.7

2.2
0.8
5.2
16.7
3.1
4.1
0.7
0.2
3.2
4.8
6.5
0.5
5.2
2.9
1.6
4.3
n.a.
1.3
4.6
4.3
2.2
7.5
2.9
3.3
9.2
15.7
1.7

2.2
-
4.1
15.7
2.6
0.5
0.8
0.3
2.8
4.7
3.4
0.4
6.3
5.2
2.4
3.0
n.a.
1.4
5.2
4.5
1.7
-
2.5
1.7
10.7
15.4
1.3

2.3
0.5
4.7
16.9
2.8
4.0
0.7
0.3
3.0
4.5
6.4
0.5
5.1
2.8
1.8
4.5
n.a.
1.5
4.7
4.0
2.1
5.8
2.9
1.5
9.1
16.0
1.7

Difference1)
1995 to 2007 2000 to 2007

0.2
-
0.8
-3.7
0.6
-0.3
-0.2
0.0
0.3
0.4
3.6
0.1
-1.0
-2.2
-0.7
1.7
-
0.0
-0.3
0.1
0.6
-
0.9
1.6
-1.0
1.5
0.4

0.4
-2.3
1.1
-4.7
0.2
0.1
0.1
-0.1
0.0
0.7
0.7
0.1
0.4
-3.1
-0.6
0.7
-
-0.1
-0.4
1.8
0.1
4.2
0.7
1.8
-1.0
0.8
0.2

8.2

7.9

7.8

7.1

7.4

6.4

7.0

5.6

6.2

5.9

5.8

5.6

5.5

-2.7

-1.0

Ranking Revenue2)

2007
18
23
7
2
15
11
24
26
16
8
5
25
6
17
21
12
n.a.
22
10
9
19
4
13
14
3
1
20

2007

7 726
268
6 612
26 825
76 970
676
1 306
532
32 686
93 223
102 842
84
1 146
862
592
4 454
n.a.
7 425
12 658
14 525
3 609
9 391
1 180
1 753
16 478
52 015
34 490

15 518

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

3.1
2.8

3.5
4.2

-
-

3.3
2.9

3.7
4.1

-
-

3.3
2.8

3.6
4.2

-
-

3.8
3.0

3.9
4.4

3.9
4.3

3.7
3.0

3.9
4.4

3.9
4.2

3.7
3.0

3.9
4.3

3.8
4.3

3.7
3.0

3.8
4.3

3.9
4.3

3.6
3.0

3.9
4.2

3.9
4.2

3.7
2.9

3.9
4.3

4.0
4.2

3.8
2.9

4.0
4.3

4.1
4.3

3.9
3.1

4.1
4.4

4.2
4.4

3.9
3.1

4.1
4.4

4.1
4.3

4.0
3.2

4.1
4.3

-
-

0.9
0.3

0.6
0.1

0.2
0.1

0.3
0.1

0.2
0.0

Convergence indicators
St.dev/mean 113.7 114.9 112.5 103.4 102.6 102.8 106.2 106.1 106.9 102.9 100.3
Max-min
16.7
16.1
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

16.2

16.8

15.4

15.9

16.7

16.9

15.3

15.5

16.6

98.4
16.5

86.9
15.5

-26.8
0.2

-15.9
-0.8

284

Taxation trends in the European Union

report2009.book  Page 285  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_B.3_T.pdf

Table B.3_T: Taxes received by administrative level as % of Total Taxation: Local Government

Tables

Annex A

Difference1)
1995 to 2007 2000 to 2007

Ranking Revenue2)

2007
19
23
7
3
17
9
24
26
16
10
6
25
5
14
21
12
n.a.
22
11
8
18
2
15
13
4
1
20

2007

7 726
268
6 612
26 825
76 970
676
1 306
532
32 686
93 223
102 842
84
1 146
862
592
4 454
n.a.
7 425
12 658
14 525
3 609
9 391
1 180
1 753
16 478
52 015
34 490

15 518

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
5.2
4.6
2.7
11.2
14.1
11.2
24.3
35.1
8.0
6.8
13.4
13.5
2.2
2.1
0.7
0.9
8.4
8.9
11.4
9.4
15.5
14.9
1.3
1.5
17.8
17.3
10.1
20.0
4.4
5.6
11.1
10.3
n.a.
n.a.
3.4
3.6
11.1
11.5
13.5
9.5
6.0
5.8
25.8
18.9
9.0
7.4
10.9
4.4
21.3
22.1
32.6
31.0
4.6
4.1

4.2
10.0
12.0
33.5
7.0
13.9
2.0
0.8
9.1
9.7
14.4
1.4
17.0
20.2
5.7
9.8
n.a.
3.4
11.7
9.1
6.0
11.1
7.3
4.1
21.6
28.8
4.0

5.2
1.5
12.5
35.7
6.6
13.0
2.3
0.8
8.4
9.8
16.0
1.3
17.8
9.4
5.9
11.4
n.a.
3.9
10.8
9.5
5.7
21.2
7.6
4.6
21.1
33.2
4.7

4.9
11.0
12.4
35.7
6.7
12.9
2.3
0.8
8.7
9.5
15.5
1.3
17.3
9.8
6.1
10.5
n.a.
3.7
11.2
9.9
6.0
19.7
7.4
4.7
21.5
32.6
4.4

5.0
1.6
12.5
34.4
7.1
13.2
2.3
0.8
8.8
10.5
15.8
1.4
17.9
9.9
4.9
12.0
n.a.
4.0
10.9
12.8
6.2
21.2
7.6
4.9
20.8
32.8
4.8

5.1
2.3
14.2
33.7
7.9
13.2
2.3
0.7
8.9
11.0
15.4
1.4
17.2
9.7
4.4
11.7
n.a.
3.3
11.0
12.7
6.2
26.3
7.6
11.3
21.1
32.0
4.6

5.0
1.7
14.6
33.2
7.4
13.0
2.3
0.8
8.8
10.9
15.8
1.2
16.9
9.7
4.5
11.6
n.a.
4.1
10.9
12.6
6.2
21.7
7.4
11.2
20.7
32.1
4.7

4.8
11.7
12.4
32.6
7.0
14.9
2.1
0.8
9.4
10.3
12.5
1.6
15.6
20.5
5.7
9.6
n.a.
3.4
11.7
9.1
6.0
9.5
7.1
4.1
21.7
29.3
3.9

4.7
-
12.0
32.9
7.0
14.4
2.2
0.9
9.4
10.6
13.3
1.8
16.1
18.8
6.1
9.0
n.a.
3.6
11.8
11.9
5.6
7.0
6.5
4.1
21.8
29.5
3.8

5.0
-
12.1
32.3
6.6
13.6
2.4
1.0
8.9
10.6
7.9
1.7
16.2
14.4
6.1
8.2
n.a.
3.5
11.9
12.2
5.2
-
6.8
4.2
21.7
29.8
3.8

5.0
-
11.7
31.9
6.5
1.4
2.5
1.0
8.5
10.7
8.2
1.6
20.5
18.5
6.5
7.3
n.a.
3.4
12.2
12.1
5.2
-
6.6
4.2
22.8
30.6
3.7

4.9
-
12.1
31.9
6.4
13.1
2.6
0.9
8.7
10.6
7.8
1.6
19.5
18.3
6.4
6.6
n.a.
3.2
12.0
12.5
5.2
-
6.3
4.0
22.3
29.6
3.7

0.4
-
2.0
-7.6
1.7
0.3
-0.4
-0.2
-0.3
0.8
7.7
-0.3
-1.7
-8.2
-1.9
4.5
-
0.1
-0.9
1.0
0.9
-
2.6
6.9
-0.9
3.0
1.0

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

19.5

18.6

18.6

17.0

17.4

15.1

16.4

13.0

14.8

13.7

13.4

12.6

12.5

-7.0

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

9.5
10.7

9.6
10.7

9.7
11.2

9.9
11.0

10.1
10.8

10.3
10.9

10.5
11.1

10.5
11.3

10.4
11.1

EA-16 averages
weighted
arithmetic

7.9
6.9

8.1
7.0

8.0
6.9

9.2
7.3

8.9
7.2

9.1
7.2

9.1
7.3

9.1
7.3

9.2
7.3

9.6
7.4

9.7
7.8

9.8
7.8

9.9
7.9

EU-25 averages
weighted
arithmetic

8.8
10.4

9.1
10.1

8.9
10.3

9.8
10.7

9.5
10.7

9.6
10.7

9.7
10.9

9.8
10.7

10.1
10.7

10.3
10.9

10.4
11.1

10.4
11.1

10.3
10.8

-
-

2.0
0.7

1.5
0.4

95.4
31.0

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

91.5
31.4

96.2
30.9

84.0
32.1

84.4
31.8

84.6
32.7

89.1
34.3

87.5
34.9

88.9
35.0

84.7
33.6

81.3
32.5

84.1
33.0

77.5
31.8

-18.0
0.8

1.0
-7.3
2.1
-9.2
1.0
-0.5
0.2
-0.1
-0.7
1.7
1.1
-0.1
0.9
-10.1
-1.3
1.3
-
-0.1
-0.6
4.4
0.0
14.7
1.7
6.8
-0.3
3.7
0.7

-2.6

0.8
0.4

0.8
0.2

0.7
0.2

-7.2
-0.8

Taxation trends in the European Union                 285

report2009.book  Page 286  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_B.4_G.pdf

Table B.4_G: Taxes received by administrative level as % of GDP: Social security funds

Difference1)
1995 to 2007 2000 to 2007

Ranking Revenue2)

2007
2
19
21
25
3
23
24
13
10
1
6
20
18
15
16
7
n.a.
5
11
9
8
17
4
12
14
22
n.a.

2007

56 888
2 500
7 214
2 233
368 460
741
7 755
26 215
124 974
419 261
200 188
1 200
1 837
3 019
3 615
12 596
n.a.
76 753
31 823
37 171
19 682
12 082
4 685
6 335
19 825
18 273
n.a.

25 737

1.5
-2.4
1.6
-0.8
-1.7
0.5
0.5
1.1
0.2
1.2
1.0
1.1
-1.2
-1.0
0.1
0.6
-
-1.9
-0.2
-0.9
1.4
-1.4
-0.5
-2.3
0.1
-0.1
-

0.1

-0.4
-0.1

-0.3
0.3

-0.3
0.0

0.3
2.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
17.0
15.6
15.2
8.7
10.0
-
5.7
4.0
4.1
1.0
1.7
1.1
15.2
16.7
16.8
4.9
4.2
5.4
4.1
3.7
4.2
11.5
10.5
9.1
11.9
11.8
11.4
22.2
21.3
20.0
13.0
11.9
12.3
7.7
6.8
6.5
8.7
9.2
12.0
10.6
11.0
9.3
10.0
10.7
9.7
12.5
11.8
13.8
n.a.
n.a.
n.a.
13.5
13.7
15.9
11.7
12.0
12.2
12.0
13.4
11.3
12.1
10.8
10.0
9.8
10.5
-
13.6
14.4
16.5
11.5
14.0
14.6
11.0
11.1
13.0
5.5
5.9
4.4
n.a.
n.a.
n.a.

16.2
9.5
4.2
1.2
16.7
4.6
3.7
11.5
11.8
21.2
12.1
6.7
9.3
10.6
10.6
11.7
n.a.
13.3
11.9
12.9
11.1
10.4
14.1
14.3
10.9
5.8
n.a.

15.5
11.0
4.1
1.8
16.9
4.3
3.6
10.4
11.7
21.0
12.1
6.5
9.9
11.6
9.8
11.8
n.a.
15.4
12.0
12.9
10.7
11.1
14.1
13.8
11.0
5.6
n.a.

15.7
10.0
4.0
1.6
17.2
4.4
3.5
9.9
11.6
20.6
12.1
6.6
10.7
11.6
9.8
12.2
n.a.
15.5
12.2
13.7
10.4
11.1
14.0
13.7
11.6
4.4
n.a.

16.0
10.6
4.3
1.2
16.9
4.6
3.6
11.6
11.9
21.4
12.3
7.0
8.9
10.4
10.5
11.5
n.a.
13.8
11.9
12.8
11.5
9.4
14.1
13.5
10.8
5.7
n.a.

16.8
10.5
5.4
1.2
16.5
4.6
3.8
10.9
11.8
20.4
12.3
7.7
8.7
10.3
10.4
11.3
n.a.
13.9
11.9
12.3
11.5
9.1
14.1
12.9
10.7
5.6
n.a.

16.9
10.3
5.5
1.1
16.3
4.6
3.8
10.9
11.8
21.1
12.6
8.3
8.4
10.1
10.2
11.5
n.a.
12.9
11.9
12.3
11.8
9.5
14.1
12.2
11.1
5.5
n.a.

15.7
-
4.0
1.0
17.4
4.5
3.5
9.8
11.5
20.3
12.2
6.9
10.8
11.3
9.9
12.8
n.a.
15.0
12.2
11.6
10.4
8.9
14.2
14.4
11.6
4.6
n.a.

15.6
-
4.1
1.0
17.7
4.7
3.6
9.5
11.6
20.2
14.6
7.0
10.6
10.8
9.8
12.9
n.a.
15.1
12.3
11.7
10.4
-
14.1
14.6
11.8
4.6
n.a.

16.9
8.7
5.7
1.0
15.9
4.5
3.9
10.9
11.8
22.2
12.5
7.8
8.8
10.3
9.7
11.4
n.a.
14.1
11.8
12.2
11.8
9.6
13.9
11.6
11.2
5.5
n.a.

15.4
-
4.1
1.1
17.4
4.8
3.9
9.5
11.6
20.2
14.3
6.9
10.8
9.7
9.6
12.8
n.a.
15.2
12.1
11.6
10.2
-
14.8
15.5
12.6
4.6
n.a.

1.8
-
1.6
-0.1
-1.6
-0.5
-0.1
2.3
0.5
2.2
0.8
1.1
-3.3
1.3
0.3
-1.3
-
-2.3
-0.4
0.7
2.0
-
-2.9
-3.0
-2.0
1.1
-

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

9.8

9.6

9.6

10.3

10.1

8.9

9.2

9.9

9.8

9.4

8.9

8.7

9.1

-0.8

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

14.7
10.7

14.6
10.7

14.5
10.7

14.5
10.7

14.6
10.6

14.3
10.6

14.3
10.6

14.4
10.6

14.2
10.6

EA-16 averages
weighted
arithmetic

15.6
12.5

16.1
12.6

16.1
12.5

15.6
12.3

15.6
12.3

15.5
12.3

15.4
12.3

15.4
12.4

15.5
12.5

15.2
12.4

15.2
12.4

15.4
12.4

15.2
12.4

EU-25 averages
weighted
arithmetic

14.8
10.8

15.1
10.8

15.2
10.8

14.7
10.7

14.7
10.7

14.6
10.7

14.6
10.7

14.5
10.7

14.6
10.7

14.3
10.7

14.3
10.6

14.4
10.7

14.3
10.7

32.7
18.9

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

32.0
19.1

31.8
19.2

31.9
19.2

31.2
19.0

30.6
19.2

30.7
19.5

31.0
20.1

30.8
20.2

30.2
19.2

30.4
20.0

31.0
21.1

31.0
21.2

-
-

-0.4
0.1

-0.4
-0.1

-1.7
2.3

286

Taxation trends in the European Union

report2009.book  Page 287  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_B.4_T.pdf

Table B.4_T: Taxes received by administrative level as % of Total Taxation: Social security funds

Tables

Annex A

Difference1)
1995 to 2007 2000 to 2007

Ranking Revenue2)

2007
3
19
21
25
4
22
23
5
12
1
14
20
15
7
17
13
n.a.
8
16
9
11
10
6
2
18
24
n.a.

2007

56 888
2 500
7 214
2 233
368 460
741
7 755
26 215
124 974
419 261
200 188
1 200
1 837
3 019
3 615
12 596
n.a.
76 753
31 823
37 171
19 682
12 082
4 685
6 335
19 825
18 273
n.a.

25 737

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
38.6
34.6
34.6
25.3
32.5
-
15.4
11.7
11.3
2.0
3.6
2.2
38.5
41.8
42.3
14.7
13.9
14.8
13.0
12.5
12.6
35.8
31.6
31.4
32.1
35.3
34.8
51.2
48.5
46.8
30.1
28.8
30.7
18.4
21.9
24.4
28.6
32.3
36.1
35.5
38.5
32.7
27.1
26.8
26.1
31.3
30.7
33.1
n.a.
n.a.
n.a.
34.8
35.7
39.5
27.9
26.5
29.3
34.6
41.6
30.5
32.8
31.9
31.3
33.2
0.0
-
35.6
38.1
42.0
39.3
42.3
36.2
25.7
24.8
28.4
11.4
11.8
9.2
n.a.
n.a.
n.a.

37.4
31.8
14.5
2.4
42.6
14.9
12.5
35.1
34.3
47.1
30.4
23.0
30.5
36.5
28.0
29.9
n.a.
37.1
27.5
39.2
33.7
33.4
36.8
40.6
24.7
11.5
n.a.

35.7
32.8
12.1
2.5
42.5
14.9
12.6
36.1
35.0
49.9
29.8
21.2
31.1
36.9
27.6
30.5
n.a.
36.9
27.3
39.7
33.0
33.8
36.8
40.9
24.5
11.8
n.a.

37.6
30.3
14.7
2.2
42.0
14.9
12.5
34.5
33.1
48.3
31.0
23.2
28.9
35.3
27.2
30.6
n.a.
34.5
28.2
37.6
33.7
34.1
36.5
38.9
25.2
11.1
n.a.

38.0
26.3
15.4
2.1
40.5
14.4
12.2
34.9
32.4
50.5
29.7
21.4
28.8
35.1
27.0
30.6
n.a.
36.0
28.3
36.1
33.0
33.7
36.2
39.3
25.8
11.2
n.a.

34.3
33.8
12.1
3.6
40.4
13.9
11.3
30.0
34.5
47.5
28.9
21.8
33.5
38.5
25.1
30.7
n.a.
38.6
27.7
39.7
31.1
36.6
37.7
40.6
23.2
10.9
n.a.

34.4
-
12.0
2.1
42.6
13.0
10.9
30.2
34.9
46.1
28.7
24.8
31.9
35.4
25.2
32.8
n.a.
38.0
27.5
32.9
31.2
31.1
37.6
39.1
25.1
9.0
n.a.

34.6
32.6
11.8
3.3
41.2
13.5
10.9
29.9
34.4
45.9
28.5
23.7
33.3
36.5
25.7
31.1
n.a.
38.5
27.7
39.3
30.6
35.4
36.6
38.6
25.4
8.5
n.a.

35.9
32.0
12.2
2.5
42.3
14.9
12.9
34.2
34.8
49.2
29.6
21.5
32.8
37.3
27.1
30.8
n.a.
35.2
27.0
39.6
32.1
0.0
37.2
43.1
24.4
12.1
n.a.

34.7
-
11.8
2.2
42.8
13.9
11.7
32.2
35.1
45.9
34.1
26.0
35.2
34.8
25.7
31.5
n.a.
37.9
28.3
31.2
30.9
-
39.0
39.3
26.8
9.1
n.a.

34.8
-
11.9
2.1
43.5
13.6
11.2
31.2
34.9
45.8
33.3
27.0
33.2
34.9
24.9
33.0
n.a.
38.0
27.7
32.1
31.5
-
38.2
39.2
25.6
9.0
n.a.

4.0
-
4.1
-0.2
-3.8
-0.1
0.4
4.4
-2.7
4.4
-0.5
-6.0
-7.5
2.8
1.0
-1.8
-
-4.7
-1.4
4.1
1.5
-
-6.4
3.1
-2.7
2.2
-

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

23.4

22.6

22.7

24.4

23.9

20.9

21.5

22.9

23.1

21.7

20.4

19.8

20.8

-2.6

EU-27 averages
weighted
arithmetic

-
-

-
-

-
-

-
-

35.2
28.7

35.3
29.0

36.0
29.4

36.3
29.5

36.5
29.4

36.0
29.4

35.8
29.0

35.6
28.8

35.2
28.5

EA-16 averages
weighted
arithmetic

39.2
32.7

39.4
32.7

39.2
32.4

38.1
31.7

37.6
31.5

37.6
31.5

38.2
32.1

38.6
32.4

38.9
32.6

38.4
32.7

38.3
32.4

38.2
32.4

37.7
32.1

EU-25 averages
weighted
arithmetic

36.7
28.7

36.7
28.7

36.6
28.5

35.6
28.1

35.2
28.2

35.3
28.5

36.0
28.9

36.3
29.1

36.5
29.1

36.0
29.1

35.8
28.8

35.7
28.7

35.3
28.5

31.3
44.6

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

31.3
43.7

31.6
43.7

31.7
44.0

31.6
42.6

31.9
43.9

31.5
45.0

31.3
46.8

31.1
47.4

30.4
44.8

30.1
46.1

30.6
48.5

30.9
49.2

-
-

-1.6
-0.9

-1.4
-0.3

-0.4
4.6

4.3
-8.5
3.3
-1.6
-1.9
0.8
1.7
5.9
-2.4
3.7
1.3
-3.4
-5.0
-3.0
2.0
0.6
-
-3.9
0.2
-5.2
1.7
-3.4
-2.1
-1.3
2.5
0.6
-

-0.2

-0.1
-0.5

0.0
0.7

-0.1
-0.1

-1.0
5.3

Taxation trends in the European Union                 287

report2009.book  Page 288  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_B.5_G.pdf

Table B.5_G: Taxes received by administrative level as % of GDP: EU Institutions

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
0.7
0.8
0.4
n.a.
0.3
n.a.
0.2
0.2
0.3
0.5
0.4
n.a.
0.3
0.5
0.3
0.6
0.3
0.5
0.3
0.6
0.3
0.5
0.2
n.a.
0.4
n.a.
0.4
n.a.
0.2
0.4
0.3
n.a.
0.5
n.a.
0.5
0.7
0.3
0.5
0.3
n.a.
0.3
0.5
0.3
n.a.
0.4
n.a.
0.4
n.a.
0.3
0.4
0.2
0.5
0.3
0.6

0.6
n.a.
n.a.
0.2
0.4
n.a.
0.3
0.4
0.4
0.5
0.4
n.a.
n.a.
n.a.
0.3
n.a.
n.a.
0.5
0.4
n.a.
0.4
n.a.
n.a.
n.a.
0.3
0.4
0.4

0.7
n.a.
n.a.
0.2
0.4
n.a.
0.3
0.3
0.4
0.3
0.3
n.a.
n.a.
n.a.
0.3
n.a.
n.a.
0.5
0.4
n.a.
0.3
n.a.
n.a.
n.a.
0.3
0.4
0.4

0.8
n.a.
n.a.
0.2
0.6
n.a.
0.6
0.6
0.6
0.6
0.5
n.a.
n.a.
n.a.
0.5
n.a.
n.a.
0.8
0.6
n.a.
0.6
n.a.
n.a.
n.a.
0.5
0.5
0.6

0.8
n.a.
n.a.
0.2
0.6
n.a.
0.7
0.6
0.6
0.6
0.5
n.a.
n.a.
n.a.
0.5
n.a.
n.a.
0.8
0.6
n.a.
0.6
n.a.
n.a.
n.a.
0.5
0.5
0.6

0.6
n.a.
0.2
0.2
0.3
0.2
0.2
0.3
0.3
0.2
0.3
0.2
0.2
0.2
0.2
0.2
0.3
0.5
0.3
0.2
0.3
n.a.
0.2
0.2
0.2
0.3
0.3

0.6
n.a.
0.3
0.2
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.2
0.4
0.4
0.2
0.3
0.5
0.5
0.3
0.3
0.3
n.a.
0.3
0.3
0.2
0.3
0.3

0.7
n.a.
0.3
0.2
0.3
0.4
0.3
0.3
0.3
0.3
0.3
0.2
0.4
0.3
0.2
0.3
0.4
0.5
0.3
0.3
0.3
n.a.
0.3
0.3
0.3
0.3
0.3

0.9
n.a.
n.a.
0.2
0.6
n.a.
0.9
0.6
0.6
0.6
0.5
n.a.
n.a.
n.a.
0.6
n.a.
n.a.
0.9
0.7
n.a.
0.6
n.a.
n.a.
n.a.
0.5
0.6
0.7

0.9
n.a.
n.a.
0.2
0.8
n.a.
0.9
0.7
0.7
0.7
0.6
n.a.
n.a.
n.a.
0.7
n.a.
n.a.
0.9
0.7
n.a.
0.7
n.a.
n.a.
n.a.
0.6
0.6
0.9

1.0
n.a.
n.a.
0.2
0.9
n.a.
1.2
0.7
0.7
0.8
0.6
n.a.
n.a.
n.a.
0.9
n.a.
n.a.
1.1
0.8
n.a.
0.9
n.a.
n.a.
n.a.
0.7
0.7
1.0

0.9
n.a.
n.a.
0.2
0.7
n.a.
0.7
0.6
0.7
0.7
0.5
n.a.
n.a.
n.a.
0.7
n.a.
n.a.
1.0
0.8
n.a.
0.7
n.a.
n.a.
n.a.
0.6
0.7
0.7

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

0.8
0.9

0.8
0.8

-
-

0.7
0.7

0.7
0.7

-
-

0.7
0.7

0.7
0.7

-
-

0.6
0.7

0.6
0.6

-
-

0.6
0.6

0.6
0.6

-
-

0.6
0.6

0.6
0.6

-
-

0.5
0.5

0.5
0.5

-
-

0.4
0.4

0.4
0.4

-
-

0.4
0.4

0.4
0.4

-
-

0.3
0.3

0.3
0.3

-
-

0.3
0.3

0.3
0.3

-
-

0.3
0.3

0.3
0.3

0.3
0.3

0.3
0.3

0.3
0.3

27.2
0.9

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

25.5
0.8

24.5
0.7

26.1
0.7

25.1
0.6

23.8
0.6

24.7
0.6

28.4
0.5

32.4
0.5

34.1
0.5

30.4
0.4

29.7
0.4

31.8
0.5

Ranking Revenue2)

2007
1
8
10
24
15
6
20
21
12
22
18
25
9
4
26
11
3
2
16
19
17
13
5
7
23
27
14

2007

2 259
107
440
538
7 820
59
518
619
3 565
4 918
4 261
36
74
118
75
348
25
3 017
827
850
469
420
139
206
461
668
6 913

n.a.

Difference1)
1995 to 2007 2000 to 2007

-0.3
-
-
0.0
-0.6
-
-0.9
-0.5
-0.4
-0.6
-0.4
-
-
-
-0.7
-
-
-0.6
-0.5
-
-0.6
-
-
-
-0.4
-0.5
-0.7

-

-
-

-0.5
-0.5

-0.5
-0.5

4.6
-0.5

-0.2
-
-
0.0
-0.3
-
-0.3
-0.3
-0.2
-0.3
-0.2
-
-
-
-0.3
-
-
-0.3
-0.3
-
-0.3
-
-
-
-0.2
-0.3
-0.3

-

-
-

-0.3
-0.3

-0.3
-0.2

8.0
-0.2

288

Taxation trends in the European Union

report2009.book  Page 289  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_B.5_T.pdf

Table B.5_T: Taxes received by administrative level as % of Total Taxation: EU Institutions

Tables

Annex A

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1.5
1.7
1.1
n.a.
0.9
n.a.
0.5
0.4
0.8
1.3
1.2
n.a.
0.9
1.8
0.8
1.7
0.9
1.5
0.6
1.4
0.6
1.3
0.5
n.a.
1.2
n.a.
1.4
n.a.
0.6
1.1
0.9
n.a.
1.3
n.a.
1.4
1.8
0.7
1.2
0.8
n.a.
0.8
1.4
1.2
n.a.
1.1
n.a.
1.3
n.a.
0.6
0.9
0.4
0.9
0.9
1.5

1.5
n.a.
n.a.
0.3
0.9
n.a.
1.0
1.1
1.1
0.7
0.7
n.a.
n.a.
n.a.
0.7
n.a.
n.a.
1.4
0.9
n.a.
0.9
n.a.
n.a.
n.a.
0.7
0.7
1.2

1.4
n.a.
n.a.
0.3
0.9
n.a.
1.0
1.2
1.1
1.1
0.9
n.a.
n.a.
n.a.
0.8
n.a.
n.a.
1.4
1.0
n.a.
1.0
n.a.
n.a.
n.a.
0.6
0.7
1.3

1.4
n.a.
0.6
0.4
0.7
0.7
0.7
0.9
0.9
0.5
0.7
0.6
0.7
0.7
0.5
0.5
0.9
1.3
0.6
0.7
0.8
n.a.
0.4
0.5
0.5
0.6
0.9

1.7
n.a.
n.a.
0.4
1.3
n.a.
2.2
1.8
1.7
1.3
1.1
n.a.
n.a.
n.a.
1.4
n.a.
n.a.
2.1
1.3
n.a.
1.8
n.a.
n.a.
n.a.
1.1
1.0
1.8

1.9
n.a.
n.a.
0.4
1.5
n.a.
1.9
1.7
1.7
1.4
1.2
n.a.
n.a.
n.a.
1.4
n.a.
n.a.
2.0
1.4
n.a.
1.7
n.a.
n.a.
n.a.
1.0
1.0
1.8

2.0
n.a.
n.a.
0.4
1.5
n.a.
2.7
1.9
1.9
1.4
1.3
n.a.
n.a.
n.a.
1.6
n.a.
n.a.
2.3
1.5
n.a.
1.9
n.a.
n.a.
n.a.
1.1
1.2
2.0

2.0
n.a.
n.a.
0.5
1.8
n.a.
2.3
2.0
2.0
1.6
1.1
n.a.
n.a.
n.a.
1.8
n.a.
n.a.
2.5
1.8
n.a.
2.1
n.a.
n.a.
n.a.
1.3
1.3
2.0

1.4
n.a.
0.9
0.4
0.8
1.1
0.9
0.9
1.0
0.6
0.7
0.6
1.2
1.3
0.5
0.8
1.4
1.3
0.7
0.8
0.7
n.a.
0.7
0.9
0.5
0.6
0.9

1.5
n.a.
0.9
0.4
0.8
1.1
0.8
0.9
0.9
0.6
0.6
0.6
1.2
1.2
0.6
0.8
1.3
1.3
0.7
0.7
0.8
n.a.
0.8
1.0
0.6
0.6
0.9

2.0
n.a.
n.a.
0.4
1.9
n.a.
2.8
2.4
2.0
1.6
1.5
n.a.
n.a.
n.a.
1.8
n.a.
n.a.
2.3
1.7
n.a.
2.1
n.a.
n.a.
n.a.
1.3
1.2
2.5

2.3
n.a.
n.a.
0.5
2.2
n.a.
3.5
2.6
2.2
1.9
1.6
n.a.
n.a.
n.a.
2.3
n.a.
n.a.
2.8
1.9
n.a.
2.9
n.a.
n.a.
n.a.
1.5
1.4
2.9

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-
-

2.1
2.3

2.1
2.2

-
-

1.8
1.9

1.8
1.8

-
-

1.7
1.9

1.7
1.7

-
-

1.5
1.8

1.6
1.6

-
-

1.4
1.6

1.4
1.5

-
-

1.5
1.6

1.5
1.5

-
-

1.4
1.4

1.4
1.3

-
-

1.0
1.0

1.0
1.0

-
-

0.9
1.0

0.9
0.9

-
-

0.7
0.7

0.7
0.7

-
-

0.8
0.8

0.8
0.9

-
-

0.8
0.9

0.8
0.9

0.8
0.9

0.8
0.9

0.8
0.9

35.1
3.0

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

33.0
2.4

31.1
2.0

34.6
2.3

33.2
1.8

28.9
1.6

29.2
1.4

28.7
1.1

32.5
1.2

31.6
1.0

34.7
1.0

33.0
1.0

37.5
1.1

Ranking Revenue2)

2007
1
9
11
26
17
6
14
16
13
22
21
25
7
2
24
15
4
3
20
18
19
8
10
5
23
27
12

2007

2 259
107
440
538
7 820
59
518
619
3 565
4 918
4 261
36
74
118
75
348
25
3 017
827
850
469
420
139
206
461
668
6 913

n.a.

Difference1)
1995 to 2007 2000 to 2007

-0.8
-
-
0.0
-1.4
-
-2.6
-1.7
-1.2
-1.3
-0.9
-
-
-
-1.7
-
-
-1.4
-1.2
-
-2.1
-
-
-
-0.9
-1.0
-2.0

-

-
-

-1.3
-1.4

-1.3
-1.3

2.4
-1.9

-0.3
-
-
0.1
-0.6
-
-1.0
-0.8
-0.8
-0.8
-0.5
-
-
-
-0.8
-
-
-0.6
-0.7
-
-0.9
-
-
-
-0.4
-0.6
-0.8

-

-
-

-0.7
-0.7

-0.7
-0.5

8.6
-0.5

Taxation trends in the European Union                 289

report2009.book  Page 290  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.1_G.pdf

Table C.1_G: Taxes on Consumption as % of GDP: Total

Ranking Revenue2)

2007
20
1
23
3
24
6
19
17
27
21
25
2
14
16
26
4
5
12
15
9
7
13
8
18
10
11
22

2007

36 898
5 308
13 579
36 771
258 310
2 084
21 284
26 040
99 419
206 707
157 052
2 566
2 510
3 253
3 660
14 678
759
69 325
31 698
40 084
21 742
14 730
4 578
6 203
23 017
41 918
222 252

34 122

Difference1)
1995 to 2007 2000 to 2007

0.2
-
-0.7
0.8
0.3
1.1
-1.8
-0.6
0.5
-1.1
-0.2
6.0
-0.3
-0.2
0.1
-2.8
2.4
1.0
0.1
0.3
0.7
-
-1.8
-2.8
-1.0
-0.7
-1.2

-

-
-

-0.1
0.3

-0.2
-0.1

2.2
0.5

-0.4
4.0
0.1
0.5
0.1
1.9
-0.9
-1.0
-0.4
-0.6
-0.7
5.8
0.5
-0.3
-0.7
-0.8
1.8
0.5
-0.6
1.6
0.9
0.3
-0.6
-0.8
-0.8
0.2
-1.0

-

-0.3
0.3

-0.3
0.2

-0.3
0.2

6.5
3.1

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
11.0
11.0
10.8
18.4
14.0
-
10.7
10.2
11.4
16.2
15.7
15.4
10.7
10.5
10.3
13.6
11.8
12.6
11.2
10.9
13.0
11.4
12.7
12.0
9.5
9.5
8.9
10.9
11.3
12.1
10.2
10.4
10.4
16.4
11.8
10.4
11.9
10.6
12.2
11.4
11.5
11.6
10.1
10.6
10.0
14.5
14.5
17.4
13.9
12.7
11.6
12.2
11.9
11.3
11.7
12.4
11.6
13.0
11.1
12.7
13.3
12.4
12.6
11.9
10.7
-
13.3
13.4
15.1
11.3
11.0
14.1
12.8
13.1
13.8
12.7
12.6
13.4
10.8
11.6
12.0

11.0
13.7
10.1
15.8
10.4
11.9
11.0
12.4
9.4
11.3
10.2
12.4
10.6
11.7
10.8
14.1
13.4
11.7
12.5
11.8
12.7
10.9
13.7
11.2
13.4
12.7
11.5

11.4
14.4
10.6
15.7
10.5
11.8
12.1
12.4
9.9
11.6
10.9
10.6
11.3
11.8
10.8
15.3
12.1
11.7
12.4
11.3
12.4
11.6
13.9
12.2
13.6
12.4
11.8

11.2
18.7
10.7
16.3
10.1
13.3
11.5
11.4
9.8
11.2
10.4
15.4
12.7
10.9
10.1
13.9
14.0
12.2
11.7
12.4
13.8
12.0
13.2
11.3
13.4
12.6
11.0

11.1
-
10.2
16.3
10.1
11.9
12.3
12.3
9.6
12.1
10.7
9.3
13.1
13.0
10.6
15.1
11.0
11.6
12.5
11.8
12.8
10.8
14.4
12.5
14.0
13.0
11.9

11.2
18.0
11.3
16.2
10.1
12.9
11.4
11.0
9.8
11.2
10.0
15.2
12.2
10.8
10.9
14.5
14.4
11.9
12.1
12.2
13.5
12.3
13.4
12.5
13.7
12.9
11.2

11.5
13.0
10.8
16.4
10.5
11.1
12.1
12.5
10.0
12.1
10.9
9.1
11.9
12.8
10.5
15.5
12.0
11.9
12.6
12.3
12.9
11.7
14.9
12.0
14.1
12.9
12.1

11.2
16.8
11.2
15.8
10.2
11.7
11.2
11.2
9.7
11.2
10.0
15.2
11.3
10.6
11.2
15.0
13.2
12.0
12.4
11.8
12.7
11.1
13.6
12.1
13.6
12.6
11.5

11.0
15.1
10.4
15.6
10.5
11.6
10.9
11.5
9.6
11.1
9.9
14.7
11.4
11.1
10.6
14.6
12.4
11.8
12.4
11.9
12.7
11.5
13.8
11.8
13.9
12.7
11.6

11.2
-
10.8
15.9
10.0
13.1
12.6
12.2
9.2
12.3
10.3
9.2
12.1
12.8
10.6
14.9
11.8
11.5
12.6
12.4
12.5
-
13.8
12.7
14.4
12.9
12.0

11.2
-
11.3
15.8
10.1
12.8
12.9
12.1
9.1
12.4
10.1
10.1
11.7
10.9
9.9
16.5
11.1
11.5
12.1
13.0
12.8
-
14.8
13.2
13.9
13.0
12.1

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

-

-
-

-

-
-

-

-
-

-

-
-

-

-

-

12.8

12.4

12.2

11.7

11.7

12.0

11.6
12.2

11.4
12.1

11.1
11.9

11.1
11.9

11.1
12.1

11.1
12.2

11.1
12.5

11.1
12.4

11.1
12.4

10.9
11.8

10.9
11.7

10.9
11.7

11.0
11.7

11.3
11.9

11.1
11.8

10.9
11.6

10.8
11.7

10.7
11.8

10.7
11.9

10.7
12.0

10.8
11.9

10.8
11.9

EU-25 averages
weighted
arithmetic

11.3
12.3

11.3
12.2

11.3
12.2

11.3
12.1

11.6
12.2

11.4
12.0

11.1
11.8

11.1
11.9

11.1
12.0

11.1
12.1

11.0
12.3

11.0
12.2

11.0
12.2

16.7
8.4

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

14.4
6.7

16.1
7.4

14.8
7.0

13.9
7.2

12.4
5.8

12.8
6.2

13.0
6.3

14.5
6.0

16.1
7.1

17.5
8.3

18.5
9.0

18.9
8.9

290

Taxation trends in the European Union

report2009.book  Page 291  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.1_T.pdf

Table C.1_T: Taxes on Consumption as % of Total Taxation: Total

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
25.1
24.3
24.6
53.7
45.2
-
29.0
30.1
31.6
33.4
32.3
31.6
27.0
26.2
25.9
41.3
38.9
34.6
35.8
36.7
39.2
35.6
38.1
41.3
25.5
28.4
27.3
25.2
25.7
28.2
23.6
25.1
25.9
39.4
38.2
38.9
39.0
37.2
36.8
38.3
40.2
40.7
27.5
26.7
27.1
36.5
37.9
41.7
40.2
41.9
43.2
31.4
31.1
28.0
27.8
27.4
28.1
37.3
34.5
34.2
36.3
36.5
39.3
40.4
37.1
-
34.8
35.6
38.5
38.4
33.2
35.0
29.8
29.4
30.3
26.2
25.2
27.9
29.8
31.9
34.7

25.2
44.2
31.3
31.8
25.2
37.7
38.4
36.0
29.2
26.2
26.2
35.5
38.4
39.1
27.5
39.7
43.1
29.3
28.6
34.8
36.3
38.1
37.0
35.6
28.8
24.0
32.2

24.5
46.9
29.1
32.5
26.4
37.6
37.4
35.7
28.2
26.0
23.9
44.5
39.9
39.4
27.8
38.7
39.4
31.5
28.4
37.0
36.4
41.6
36.1
35.7
31.7
26.4
33.3

24.8
50.7
30.0
32.3
26.2
38.2
37.0
36.0
28.0
26.0
24.7
45.4
39.6
37.4
30.2
39.8
40.4
31.9
28.5
37.4
37.4
40.8
35.4
38.3
31.3
25.9
32.6

24.3
46.2
29.1
33.0
26.2
38.4
38.6
36.7
27.9
26.1
24.9
39.6
37.5
41.3
27.5
37.2
42.4
30.9
28.5
36.2
36.6
38.9
36.2
33.7
29.9
26.6
33.0

25.3
56.5
29.2
32.9
25.9
42.3
35.7
36.3
26.7
25.4
24.7
42.2
41.8
36.9
28.2
37.4
41.5
31.3
28.1
36.8
38.5
42.0
34.4
38.5
30.9
25.7
29.7

24.4
-
30.6
33.1
24.7
34.9
38.7
37.9
29.1
27.5
25.3
33.6
38.9
40.7
27.0
38.7
42.9
29.4
28.2
33.3
38.6
37.5
38.1
34.0
30.5
25.2
33.1

25.3
42.5
31.7
32.7
25.2
34.0
37.9
37.5
29.8
27.0
25.8
32.7
37.1
40.3
27.5
39.8
43.8
29.5
28.7
35.2
37.9
37.3
39.0
34.0
30.8
24.8
33.3

25.0
53.0
30.4
31.8
26.1
41.8
37.2
35.0
27.5
25.8
24.7
42.8
42.1
37.9
29.1
38.7
42.6
31.8
28.7
37.2
38.4
44.1
34.7
39.7
31.1
26.0
31.0

25.0
-
30.8
32.4
24.6
38.1
38.8
39.8
27.7
27.8
23.6
35.8
37.9
41.2
26.9
38.3
43.1
29.0
28.4
34.1
37.9
-
37.4
33.9
31.2
25.3
34.5

25.2
-
32.5
32.2
25.0
37.2
38.9
41.3
27.4
28.3
24.1
38.1
37.8
39.1
26.4
40.6
43.5
28.6
28.1
34.9
39.0
-
39.0
33.5
29.6
25.8
35.0

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

-

-
-

-

-
-

-

-
-

-

-
-

-

-

-

29.7

29.4

28.2

27.0

26.7

27.5

28.4
33.4

28.1
33.3

28.1
33.1

28.4
33.6

28.4
33.9

28.5
34.3

28.2
34.6

27.9
34.2

27.8
33.6

27.3
32.6

26.8
32.2

26.5
31.9

26.9
31.9

27.2
32.0

26.9
31.7

26.9
31.5

27.1
31.9

27.0
32.1

27.2
32.6

27.1
32.5

26.8
32.1

26.7
31.5

EU-25 averages
weighted
arithmetic

28.5
33.4

28.0
33.2

27.9
32.9

28.1
32.7

28.3
32.8

28.0
32.7

28.0
32.5

28.4
32.9

28.3
33.1

28.4
33.4

28.1
33.5

27.7
33.0

27.7
32.6

20.5
18.7

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

21.4
19.4

20.7
19.4

19.6
18.5

19.6
18.9

20.5
20.2

20.7
20.9

21.0
21.9

22.0
23.0

23.0
26.0

25.5
28.4

26.8
31.8

24.7
30.0

Ranking Revenue2)

2007
26
1
19
15
22
2
12
13
24
25
27
5
6
8
21
10
4
16
20
9
11
3
14
7
18
23
17

2007

36 898
5 308
13 579
36 771
258 310
2 084
21 284
26 040
99 419
206 707
157 052
2 566
2 510
3 253
3 660
14 678
759
69 325
31 698
40 084
21 742
14 730
4 578
6 203
23 017
41 918
222 252

34 122

Difference1)
1995 to 2007 2000 to 2007

0.5
-
-2.6
1.7
1.1
6.7
-3.5
-5.7
-1.8
-3.0
-2.3
0.4
2.2
-2.4
0.4
-5.2
-3.1
3.4
-0.2
3.1
-3.0
-
-3.8
3.4
-0.5
-1.6
-4.8

-

-
-

-0.7
-1.4

-0.8
-0.8

4.2
11.4

-0.1
9.5
-2.3
1.6
1.8
3.6
-2.6
-0.4
-3.7
-1.0
-2.5
3.9
0.6
-0.8
0.0
-3.2
-2.9
2.1
-0.7
2.4
0.0
2.4
-2.2
2.8
1.0
2.3
-2.4

-

-0.2
0.3

-0.3
-0.5

-0.3
-0.1

4.2
9.9

Taxation trends in the European Union                 291

report2009.book  Page 292  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.1.1_G.pdf

Table C.1.1_G: Taxes on Consumption as % of GDP: Tobacco and Alcohol

Ranking Revenue2)

2007
21
1
5
26
22
2
13
9
19
24
20
7
15
8
6
10
12
27
25
3
18
11
16
4
17
23
14

2007

2 428
779
1 870
1 356
17 491
287
2 323
2 970
8 516
12 733
11 296
212
237
371
515
1 313
69
2 471
1 772
5 691
1 394
1 593
372
940
1 638
2 277
23 528

2 140

Difference1)
1995 to 2007 2000 to 2007

0.0
-
0.1
-0.5
0.0
-0.1
-1.3
-0.1
0.1
-0.1
0.1
0.6
0.1
0.1
-0.1
0.0
0.3
-0.1
-0.2
-0.5
-0.3
1.3
-0.4
0.3
-0.9
-0.4
-0.6

-

-
-

-4.8
-0.2

-0.1
-0.2

-
-0.2

0.0
1.3
0.4
-0.3
0.0
0.3
-0.5
-0.2
-0.1
-0.1
0.0
0.5
-0.3
0.1
-0.7
0.1
0.2
0.0
-0.2
0.1
-0.2
1.3
0.2
0.6
-0.5
-0.1
-0.3

0.8

-0.1
0.1

-4.5
-0.1

-0.1
0.0

9.7
0.2

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
0.7
0.7
2.7
1.4
1.5
1.0
0.6
0.9
0.7
0.7
1.9
1.5
1.2
1.7
1.3
1.5
0.8
0.8
0.7
0.8
0.7
0.7
1.4
0.8
1.1
1.2
1.3
1.3
1.4
1.7
1.3
1.1
1.3
1.3
0.4
0.5
0.7
0.7
1.8
1.9
0.9
1.1
1.3
0.9
1.1
0.9
1.7
1.0
0.9
1.4
0.7
0.8
1.1
1.4

0.8
1.7
1.0
0.9
0.8
1.6
1.6
1.5
0.9
0.8
0.7
0.9
1.2
1.2
2.0
1.1
1.3
0.5
0.7
1.9
1.0
1.0
0.9
1.1
1.4
0.8
1.4

0.7
2.0
1.2
0.7
0.8
1.8
1.3
1.3
0.8
0.7
0.7
1.4
1.3
1.2
1.6
1.2
1.5
0.5
0.7
2.0
1.0
1.2
1.1
1.5
1.0
0.7
1.3

0.7
2.4
1.3
0.7
0.8
1.6
1.2
1.3
0.8
0.7
0.8
1.4
1.3
1.3
1.5
1.3
1.5
0.5
0.7
1.9
1.2
1.2
1.1
0.9
1.0
0.7
1.2

0.8
1.4
1.1
0.9
0.7
1.6
1.8
1.5
0.9
0.8
0.7
0.8
1.4
1.2
2.1
1.2
1.1
0.5
0.8
1.7
1.1
0.0
0.9
1.1
1.4
0.8
1.5

0.8
1.3
1.2
1.0
0.8
1.7
1.9
1.5
0.9
0.7
0.7
0.8
1.5
1.4
2.1
1.2
1.2
0.5
0.9
2.0
1.1
0.0
1.0
1.3
1.5
0.9
1.5

0.8
1.7
1.1
0.8
0.8
1.6
1.5
1.5
0.9
0.7
0.7
1.0
1.2
1.2
1.9
1.2
1.4
0.4
0.7
1.9
1.1
1.2
1.0
1.0
1.3
0.8
1.4

0.8
2.0
1.1
0.7
0.8
1.8
1.4
1.4
0.8
0.7
0.7
1.4
1.3
1.2
1.9
1.2
1.6
0.5
0.7
1.9
1.0
1.2
1.1
1.1
1.1
0.7
1.3

0.7
-
1.2
1.0
0.8
1.9
2.0
1.5
0.9
0.8
0.6
0.7
1.4
1.8
1.8
1.2
1.4
0.5
0.9
2.0
1.1
0.0
1.2
1.2
1.5
0.9
1.5

0.7
-
1.3
1.1
0.8
2.0
2.3
1.4
0.7
0.8
0.6
0.7
1.1
1.4
1.5
1.3
1.0
0.6
0.9
2.3
1.1
0.0
1.5
1.4
1.7
1.0
1.7

0.7
-
1.4
1.1
0.8
2.0
2.5
1.4
0.7
0.8
0.7
0.8
1.0
1.2
1.5
1.3
1.0
0.6
0.9
2.3
1.1
0.0
1.5
1.4
1.8
1.0
1.7

0.7
-
1.2
1.0
0.8
2.0
2.2
1.4
0.8
0.8
0.6
0.7
1.3
1.6
1.8
1.2
1.2
0.5
0.9
2.2
1.1
0.0
1.3
1.2
1.6
0.9
1.6

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

0.8
1.1

1.0
1.2

-

-
-

0.8
1.1

1.0
1.2

-

-
-

0.8
1.1

1.0
1.2

-

-
-

0.8
1.1

0.9
1.2

-

-

-

1.0

1.0

0.9

0.8

0.8

0.8

1.0
1.2

0.8
1.1

1.0
1.2

0.9
1.1

0.8
1.0

0.9
1.1

0.9
1.1

0.8
1.0

0.9
1.1

0.9
1.1

0.8
1.0

0.9
1.1

0.9
1.1

0.8
1.0

0.9
1.1

0.9
1.2

0.8
1.1

0.9
1.1

0.9
1.2

0.8
1.0

0.9
1.1

0.9
1.1

0.8
1.0

0.9
1.1

0.9
1.2

0.7
1.0

0.9
1.1

54.3
1.9

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

49.6
1.6

51.5
1.8

52.9
2.0

49.5
2.1

47.6
2.1

39.1
1.4

40.8
1.5

40.3
1.5

46.8
1.6

46.4
1.6

48.9
2.0

57.3
2.3

292

Taxation trends in the European Union

report2009.book  Page 293  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.1.1_T.pdf

Table C.1.1_T: Taxes on Consumption as % of Total Taxation: Tobacco and Alcohol

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1.6
1.6
7.9
4.4
4.0
2.9
1.2
1.8
1.8
1.8
5.7
5.1
3.9
5.6
4.1
4.7
2.2
2.5
1.6
1.7
1.7
1.6
3.3
2.7
3.7
4.4
4.4
4.4
3.9
4.2
3.3
2.9
3.7
4.2
1.1
1.3
1.6
1.6
5.3
5.8
2.3
3.1
4.4
3.1
2.8
2.3
5.8
3.0
2.1
3.0
1.4
1.6
3.2
3.9

1.7
5.6
3.0
1.8
2.0
5.2
5.7
4.5
2.5
1.8
1.7
2.8
4.1
4.4
5.0
2.9
4.2
1.2
1.7
5.7
2.9
3.5
2.5
3.2
3.0
1.7
4.0

1.8
5.2
3.1
1.8
2.1
5.0
5.3
4.5
2.5
1.7
1.6
3.1
4.0
4.4
4.9
3.2
4.4
1.2
1.7
5.9
3.1
4.4
2.7
3.0
3.0
1.6
4.0

1.7
7.3
3.6
1.3
2.0
5.2
3.8
4.1
2.2
1.6
1.8
3.9
4.2
4.5
4.1
3.5
4.4
1.2
1.6
5.6
3.2
4.3
2.9
3.1
2.2
1.4
3.3

1.7
4.3
3.6
2.0
1.8
5.2
5.9
4.5
2.6
1.7
1.6
2.7
4.5
4.5
5.4
3.1
4.5
1.2
2.1
5.6
3.2
0.0
2.7
3.6
3.3
1.7
4.2

1.7
6.1
3.0
1.5
2.0
6.0
4.6
4.4
2.5
1.7
1.7
4.0
4.4
4.3
5.2
3.3
4.8
1.3
1.6
6.1
2.9
4.4
2.8
3.4
2.5
1.4
3.8

1.7
5.9
3.3
1.3
2.0
5.7
4.3
4.2
2.3
1.6
1.8
3.9
4.5
4.3
4.3
3.1
4.5
1.2
1.6
6.1
2.8
4.4
2.8
4.9
2.3
1.4
3.5

1.7
4.2
3.3
1.9
1.7
5.1
5.6
4.3
2.6
1.7
1.7
2.7
4.7
4.1
5.3
3.2
4.0
1.2
1.9
5.3
3.1
0.0
2.3
3.3
2.9
1.6
4.0

1.6
-
3.6
2.1
1.8
5.5
6.2
4.5
2.7
1.7
1.5
2.6
4.2
5.7
4.6
3.0
5.3
1.2
2.1
5.6
3.3
0.0
3.2
3.4
3.3
1.7
4.3

1.6
-
3.6
2.1
1.9
5.7
6.6
4.7
2.4
1.7
1.4
2.8
4.2
5.1
4.6
3.0
4.2
1.3
2.0
5.9
3.3
-
3.6
3.2
3.5
1.8
4.7

1.6
-
3.7
2.2
1.9
5.4
7.5
4.7
2.1
1.8
1.6
2.8
3.1
4.4
4.1
3.2
3.8
1.4
2.1
6.3
3.5
-
3.8
3.5
3.9
2.2
5.0

1.6
-
3.7
2.2
1.9
5.8
7.1
4.7
2.2
1.7
1.5
2.8
3.5
5.0
3.9
3.1
3.8
1.4
2.0
6.1
3.4
-
3.8
3.6
3.6
2.0
4.9

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

2.0
3.1

2.4
3.4

-

-
-

1.9
3.1

2.4
3.4

-

-
-

1.9
3.1

2.4
3.4

-

-
-

1.9
3.1

2.3
3.4

-

-

-

2.3

2.3

2.1

1.9

1.7

1.7

2.3
3.2

1.9
3.0

2.3
3.3

2.3
3.1

1.9
2.9

2.3
3.2

2.3
3.2

1.9
2.8

2.3
3.1

2.4
3.3

2.0
2.9

2.4
3.2

2.4
3.3

2.0
2.9

2.4
3.2

2.3
3.4

2.0
2.9

2.3
3.2

2.3
3.3

2.0
2.9

2.3
3.2

2.2
3.3

1.9
2.7

2.2
3.1

2.2
3.3

1.8
2.7

2.1
3.0

64.0
6.1

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

64.7
5.7

64.3
5.3

69.6
6.2

65.4
5.9

63.5
5.6

57.1
4.5

57.6
4.5

57.8
4.8

65.7
4.9

65.3
4.9

67.4
6.1

76.3
6.8

Ranking Revenue2)

2007
22
1
8
26
20
3
9
7
18
24
21
14
11
6
10
13
12
27
23
4
17
5
16
2
19
25
15

2007

2 428
779
1 870
1 356
17 491
287
2 323
2 970
8 516
12 733
11 296
212
237
371
515
1 313
69
2 471
1 772
5 691
1 394
1 593
372
940
1 638
2 277
23 528

2 140

Difference1)
1995 to 2007 2000 to 2007

0.1
-
0.2
-1.0
-0.1
0.2
-3.6
-0.6
0.1
-0.2
0.1
0.4
0.6
0.0
-0.3
0.1
-0.1
-0.3
-0.6
-1.0
-1.1
-
-0.9
2.3
-1.8
-0.8
-1.9

-

-
-

-0.2
-0.6

-0.3
-0.4

12.3
0.7

0.0
3.7
0.7
-0.7
0.1
0.5
-1.6
-0.2
-0.4
-0.2
0.0
0.6
-1.0
0.2
-1.5
0.1
-0.3
-0.1
-0.3
0.0
-0.8
4.4
0.6
2.5
-0.8
-0.2
-0.8

1.7

-0.1
0.2

-0.1
-0.3

-0.2
-0.1

12.7
1.2

Taxation trends in the European Union                 293

report2009.book  Page 294  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.2_G.pdf

Table C.2_G: Taxes on Labour as % of GDP: Total

Ranking Revenue2)

2007
4
25
12
2
7
14
26
21
13
5
8
24
18
17
16
9
27
11
3
20
15
22
10
23
6
1
19

2007

76 810
3 128
22 634
56 200
522 564
2 565
20 374
30 624
177 634
424 260
325 550
1 723
3 087
4 159
5 568
20 129
510
111 361
62 896
41 492
25 745
14 953
6 775
6 371
40 122
93 694
287 783

49 028

Difference1)
1995 to 2007 2000 to 2007

-1.4
-
0.4
-2.5
-2.3
-3.7
-2.9
2.9
0.5
-0.3
3.0
1.1
-2.6
1.3
-0.2
-1.0
0.3
-2.3
-0.5
-3.6
2.5
-
-2.4
-3.8
-3.8
-1.4
0.3

-

-
-

-1.0
-0.4

-1.3
-0.9

-1.1
-1.7

-1.4
-3.2
0.7
-1.8
-2.8
-0.8
-0.8
1.0
1.0
-0.6
1.3
1.6
-0.6
-1.7
0.1
1.0
-0.4
-0.8
-0.8
-0.8
1.7
-1.2
-1.0
-3.4
-1.4
-2.7
0.1

-

-1.0
-0.7

-1.0
-0.2

-0.9
-0.5

-0.8
-2.6

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
22.9
24.8
24.4
10.8
12.6
-
17.8
17.0
17.4
24.8
26.9
27.3
21.6
24.1
23.9
16.8
17.0
20.5
10.7
11.0
13.6
13.4
12.2
10.5
16.9
16.2
16.4
22.4
22.9
22.7
21.2
20.2
18.2
11.0
9.9
9.9
14.6
14.6
17.2
14.6
15.4
13.3
15.3
16.0
15.5
19.9
19.2
20.9
9.4
10.7
9.1
19.6
18.0
21.9
23.2
24.3
23.7
13.4
14.4
17.0
15.8
14.3
13.3
12.1
13.0
-
19.7
21.0
22.1
11.6
15.1
15.4
22.3
23.7
26.1
28.3
31.2
29.8
14.0
14.0
13.7

24.9
11.8
17.8
26.1
24.0
17.1
10.0
13.1
16.3
22.8
20.2
10.0
14.6
14.9
15.4
19.2
10.2
18.4
24.2
13.4
14.5
12.3
20.8
15.0
23.6
30.0
13.3

24.4
13.7
16.9
27.0
24.1
18.7
11.8
12.2
15.7
23.2
20.3
9.7
16.2
16.7
15.1
19.2
9.4
20.4
24.7
15.7
13.7
13.1
20.3
15.5
23.7
31.8
13.6

23.8
12.2
18.0
24.8
22.4
15.5
10.4
12.8
16.2
23.1
20.4
11.3
14.0
14.4
15.4
18.5
10.3
18.2
23.4
12.6
15.2
11.1
20.7
12.5
23.2
29.6
14.0

24.3
14.0
17.1
26.6
24.4
17.6
11.5
12.4
15.9
23.0
19.9
9.4
15.3
16.3
15.3
18.9
9.7
20.4
24.0
14.2
14.1
13.2
20.7
15.0
23.7
31.0
14.0

24.5
-
17.1
26.3
24.2
18.8
12.1
12.0
16.0
22.8
20.8
10.1
16.4
16.1
15.3
19.8
8.9
19.8
24.5
16.9
13.4
11.9
20.4
16.3
24.2
32.2
13.4

23.0
10.5
17.8
24.5
22.0
15.7
10.4
12.8
16.4
22.9
20.5
11.1
14.7
14.6
14.8
18.4
10.2
19.7
23.3
13.0
15.3
11.7
20.3
11.5
22.9
29.0
14.1

24.7
12.9
18.1
26.0
23.9
16.8
9.8
13.1
16.2
22.9
20.3
10.7
14.6
14.6
15.3
18.5
10.3
18.8
24.4
13.2
14.8
11.2
20.9
14.4
23.3
30.3
13.3

24.1
12.8
17.9
25.2
22.9
16.4
10.4
12.6
16.0
22.8
20.1
10.5
14.6
14.7
15.4
18.0
10.4
18.6
23.9
12.5
14.8
10.8
20.8
13.2
22.7
30.0
13.6

24.2
-
17.3
27.3
24.2
19.1
13.2
10.9
16.6
22.9
19.9
9.6
15.9
13.7
15.6
20.3
8.8
20.8
23.9
17.2
13.5
-
20.7
16.5
26.8
31.5
13.0

24.5
-
17.7
26.9
24.4
18.4
12.7
11.4
16.2
22.9
20.8
9.9
15.9
15.1
15.8
20.3
9.7
20.0
24.7
16.9
13.5
-
20.4
16.6
24.7
31.5
12.8

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

-

-
-

-

-
-

-

-
-

-

-
-

-

-

-

19.0

18.8

18.2

17.0

16.5

17.3

20.5
18.0

20.3
17.9

20.1
17.8

19.9
17.6

20.0
17.5

19.6
17.3

19.5
17.2

19.4
17.1

19.4
17.2

21.5
17.9

21.8
18.0

21.8
18.0

21.7
17.8

21.6
17.8

21.5
17.7

21.3
17.8

21.2
17.7

21.2
17.7

20.7
17.5

20.6
17.4

20.5
17.3

20.5
17.3

EU-25 averages
weighted
arithmetic

20.8
18.6

20.9
18.5

20.7
18.5

20.6
18.5

20.5
18.4

20.4
18.2

20.2
18.2

20.0
18.0

20.0
18.0

19.6
17.7

19.6
17.6

19.5
17.6

19.4
17.7

27.1
20.7

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

27.7
22.7

27.0
21.7

27.4
23.3

27.1
22.4

26.7
21.6

27.2
21.3

27.4
20.1

27.3
20.5

27.1
19.6

26.8
19.3

26.6
18.9

26.0
19.0

294

Taxation trends in the European Union

report2009.book  Page 295  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.2_T.pdf

Table C.2_T: Taxes on Labour as % of Total Taxation: Total

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
52.2
54.8
55.6
31.6
40.9
-
48.3
50.1
48.2
51.0
55.6
55.9
54.6
60.3
60.0
50.8
56.0
56.3
34.2
37.0
40.9
41.8
36.8
36.1
45.6
48.5
50.1
51.8
52.3
53.3
49.0
48.7
45.5
26.4
32.1
37.1
48.0
51.1
52.0
48.9
53.9
46.8
41.8
40.3
41.8
50.1
50.1
50.1
27.0
35.3
33.9
50.4
47.0
54.5
55.2
53.8
57.2
38.6
44.8
45.9
42.9
42.2
41.6
41.1
44.9
-
51.5
55.8
56.3
39.5
45.5
38.2
52.0
53.0
57.1
58.6
62.5
62.1
38.6
38.4
39.6

53.8
43.2
50.5
53.9
58.3
56.4
36.3
35.9
46.8
52.2
47.6
31.5
51.7
54.1
39.0
49.0
34.5
51.2
55.6
43.7
41.1
43.5
55.2
44.1
50.2
59.8
38.0

53.6
38.7
47.7
51.4
59.2
53.6
34.5
40.4
46.4
52.9
49.6
31.5
51.1
52.0
41.3
48.0
31.8
49.6
55.1
39.7
43.5
39.6
54.4
41.9
52.3
61.7
38.6

51.8
31.6
48.4
49.5
56.2
50.0
32.5
40.8
44.8
52.1
48.7
30.4
48.2
49.8
41.3
49.6
30.2
50.4
55.8
38.5
42.6
41.1
52.9
39.2
52.6
59.3
38.3

55.0
39.8
51.2
54.5
60.7
55.0
35.3
38.9
48.2
52.8
49.5
31.9
51.7
52.4
39.1
50.6
32.4
48.7
55.2
41.1
41.9
43.9
54.8
45.1
52.9
62.7
38.2

53.9
-
51.4
53.3
59.2
54.9
38.1
37.1
48.5
51.9
49.0
36.3
48.5
50.2
38.8
50.9
34.9
50.2
55.3
47.6
40.3
41.4
54.0
44.5
52.4
62.5
37.4

55.0
40.3
50.7
54.1
60.3
54.3
33.7
40.7
47.9
53.4
49.2
32.3
51.3
51.9
40.2
49.1
32.8
50.3
55.7
41.1
42.5
40.2
54.7
43.5
52.9
62.7
38.5

53.7
44.8
49.7
53.8
57.7
57.2
36.9
36.6
46.7
51.8
47.9
34.6
50.7
52.6
39.4
49.0
34.5
50.5
56.0
45.0
40.1
42.0
53.1
43.8
51.7
61.4
37.5

53.0
35.9
48.4
48.8
57.9
50.2
33.8
40.6
45.4
52.8
50.5
31.8
48.4
50.7
41.0
49.3
30.4
48.6
55.4
38.3
43.3
39.7
53.4
39.8
52.7
59.7
38.9

54.5
-
50.7
55.0
60.0
53.6
39.2
37.4
48.9
52.0
47.7
38.4
49.7
48.6
40.2
52.0
35.4
50.3
55.7
46.4
40.8
-
55.0
44.4
53.4
61.8
36.7

54.6
-
50.0
55.5
59.4
55.4
39.8
37.0
50.3
52.3
47.6
36.5
51.6
48.9
41.5
50.0
34.8
51.8
55.6
46.1
40.9
-
54.5
41.9
57.0
62.5
37.8

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

-

-
-

-

-
-

-

-
-

-

-
-

-

-

-

44.0

44.6

42.0

39.0

37.4

39.6

50.1
47.4

50.1
47.3

50.7
47.8

51.0
47.5

51.2
47.4

50.4
46.7

49.8
45.9

48.9
45.4

48.7
45.2

54.0
47.5

53.4
47.2

53.1
47.1

52.9
46.5

52.1
45.9

52.2
45.8

52.9
46.5

53.3
46.4

53.3
46.6

52.6
46.1

52.0
45.6

51.0
45.1

50.6
44.7

EU-25 averages
weighted
arithmetic

52.6
48.6

51.9
48.5

51.1
48.3

51.0
48.0

50.2
47.7

50.1
47.6

50.8
48.2

51.0
48.0

51.2
47.9

50.4
47.3

49.9
46.5

49.0
46.1

48.8
46.0

15.6
28.2

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

14.6
26.4

15.0
27.8

14.9
27.6

15.2
26.9

15.7
28.3

15.7
30.4

16.4
30.8

16.2
30.4

16.1
30.2

16.0
29.3

16.8
29.1

17.4
32.2

Ranking Revenue2)

2007
4
25
14
8
3
9
24
18
16
6
12
27
15
13
19
11
26
10
2
23
17
20
7
21
5
1
22

2007

76 810
3 128
22 634
56 200
522 564
2 565
20 374
30 624
177 634
424 260
325 550
1 723
3 087
4 159
5 568
20 129
510
111 361
62 896
41 492
25 745
14 953
6 775
6 371
40 122
93 694
287 783

49 028

Difference1)
1995 to 2007 2000 to 2007

-3.4
-
0.1
-4.9
-5.4
-5.5
-6.7
5.7
-4.6
-1.4
3.5
-10.7
-4.0
2.2
-0.1
0.0
-6.9
-4.1
-2.0
-7.3
1.4
-
-4.9
1.3
-5.1
-3.4
-0.9

-

-
-

-3.4
-3.0

-3.8
-2.7

1.7
4.0

-1.6
-11.5
-2.2
-2.9
-3.7
-5.6
-2.0
5.9
-1.2
-0.3
1.4
-5.1
-3.7
-5.2
2.8
1.0
-7.5
-0.7
-0.4
-5.1
1.9
-2.5
-3.7
-4.6
1.8
-1.2
0.6

-

-1.4
-2.1

-1.5
-0.8

-1.4
-1.7

1.6
3.9

Taxation trends in the European Union                 295

report2009.book  Page 296  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.2.1_G.pdf

Table C.2.1_G: Taxes on Labour as % of GDP: Employed

Ranking Revenue2)

2007
3
26
11
5
7
13
25
21
14
2
9
24
16
17
18
8
27
12
4
20
15
22
10
23
6
1
19

2007

71 099
2 986
22 599
46 220
461 479
2 508
20 247
28 033
157 056
412 344
290 288
1 711
3 075
4 089
5 068
19 209
468
95 992
56 376
38 520
24 052
14 696
6 480
6 175
35 330
82 435
284 008

46 307

Difference1)
1995 to 2007 2000 to 2007

-1.1
-
0.3
-0.7
-2.2
-3.8
-2.8
2.5
0.8
0.0
2.5
1.3
-2.7
1.1
0.2
-1.0
0.1
-0.8
-0.9
-2.2
1.9
-
-2.7
-4.1
-2.3
-0.3
0.3

-

-
-

-0.8
-0.2

-1.0
-0.7

-0.7
-0.4

-1.1
-3.2
0.7
-1.3
-2.7
-0.8
-0.8
0.8
0.7
-0.5
1.0
1.7
-0.6
-1.9
0.2
1.0
-0.4
-0.6
-0.9
-1.0
1.3
-1.4
-1.1
-3.6
-1.1
-2.4
0.1

-

-0.9
-0.7

-1.0
-0.2

-0.9
-0.5

-0.4
-2.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
21.2
22.7
22.3
10.3
12.1
-
17.8
17.0
17.4
20.4
22.1
21.1
19.0
21.5
21.3
16.4
16.8
20.2
10.6
10.9
13.4
12.3
11.3
9.8
14.9
14.5
14.2
21.8
22.2
21.8
18.9
18.0
16.4
10.9
9.7
9.6
14.6
14.5
17.2
14.4
15.3
13.3
14.0
14.6
13.8
19.0
18.4
20.0
8.6
10.0
8.5
16.9
15.6
17.7
20.8
21.9
21.7
12.5
13.6
14.7
14.7
13.6
12.8
11.9
12.9
-
18.8
20.1
21.5
11.3
14.8
15.4
19.7
21.0
21.9
24.9
27.6
25.2
13.9
13.8
13.6

22.8
11.3
17.8
21.2
21.3
16.7
10.0
12.2
14.5
22.1
18.1
9.9
14.6
14.7
14.0
18.8
9.5
15.9
21.7
12.7
13.8
12.3
19.9
14.6
20.9
26.5
13.2

22.4
13.4
16.9
21.8
21.3
18.3
11.7
11.2
14.0
22.5
18.3
9.5
16.1
16.7
13.6
18.4
8.8
17.4
22.2
14.9
13.1
13.0
19.5
15.3
20.8
27.7
13.4

22.0
11.6
17.9
20.0
19.5
15.1
10.3
11.8
14.4
22.3
18.3
11.2
13.9
14.3
14.0
18.0
9.4
15.7
21.0
11.9
14.2
11.0
19.8
12.2
20.4
25.9
13.9

22.3
13.5
17.1
21.7
21.8
17.3
11.4
11.5
14.2
22.3
17.9
9.2
15.2
16.3
13.8
18.0
9.0
17.5
21.7
13.5
13.5
13.2
19.9
14.8
20.8
27.3
13.8

22.4
-
17.1
21.0
21.4
18.6
12.0
11.1
14.2
22.1
18.6
9.8
16.3
16.0
13.8
19.2
8.4
16.9
22.2
15.0
12.9
11.9
19.7
16.2
21.0
28.1
13.3

21.3
10.0
17.7
20.0
19.3
15.2
10.4
11.7
14.5
22.2
18.3
11.0
14.6
14.4
13.4
18.0
9.3
17.0
20.9
12.2
14.3
11.7
19.4
11.2
20.1
25.3
14.0

22.6
12.4
18.1
20.9
21.2
16.4
9.7
12.3
14.5
22.2
18.2
10.6
14.5
14.4
13.9
18.1
9.5
16.2
21.8
12.5
13.9
11.1
19.9
14.0
20.5
26.3
13.2

22.3
12.2
17.8
20.3
20.2
15.9
10.4
11.7
14.3
22.1
18.0
10.5
14.5
14.5
13.9
17.7
9.6
16.1
21.4
11.8
13.9
10.7
19.8
12.7
20.0
26.0
13.4

22.2
-
17.3
21.2
21.3
18.8
13.0
10.2
14.4
22.0
18.0
9.4
15.9
13.6
13.9
19.6
8.3
17.0
21.8
14.9
12.9
-
20.1
16.3
22.6
27.1
12.8

22.3
-
17.7
21.4
21.4
18.2
12.6
10.6
14.2
22.0
18.8
9.7
15.9
15.0
14.0
19.7
9.1
16.4
22.5
15.0
12.9
-
19.7
16.4
21.1
27.2
12.6

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

-

-
-

-

-
-

-

-
-

-

-
-

-

-

-

17.9

17.8

17.2

16.0

15.6

16.3

18.7
16.7

18.7
16.6

18.5
16.5

18.3
16.3

18.3
16.3

17.9
16.0

17.9
15.9

17.8
15.8

17.8
15.9

19.5
16.4

19.6
16.5

19.7
16.5

19.7
16.4

19.6
16.3

19.6
16.3

19.4
16.4

19.3
16.3

19.3
16.3

18.8
16.1

18.7
16.0

18.6
15.9

18.6
15.9

EU-25 averages
weighted
arithmetic

18.8
17.0

18.9
17.0

18.8
17.1

18.8
17.1

18.8
17.0

18.7
16.9

18.6
16.9

18.3
16.7

18.3
16.6

18.0
16.4

17.9
16.3

17.9
16.2

17.8
16.3

24.3
16.7

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

24.8
18.8

24.4
18.1

24.8
19.7

24.3
19.0

24.0
18.3

24.6
17.9

24.9
17.1

24.5
16.8

24.4
16.4

24.3
16.5

24.1
16.0

23.6
16.3

296

Taxation trends in the European Union

report2009.book  Page 297  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.2.1_T.pdf

Table C.2.1_T: Taxes on Labour as % of Total Taxation: Employed

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
48.3
50.2
51.0
30.2
39.1
-
48.2
50.1
48.2
41.9
45.6
43.3
48.2
53.8
53.5
49.7
55.0
55.6
34.0
36.8
40.5
38.3
34.0
33.7
40.3
43.3
43.3
50.4
50.7
51.1
43.7
43.5
40.9
26.2
31.3
36.1
47.8
50.8
52.0
48.1
53.5
46.7
38.0
36.8
37.1
47.8
48.0
48.1
24.8
32.8
31.7
43.5
40.6
44.0
49.5
48.3
52.4
35.8
42.3
39.5
40.1
40.2
39.9
40.3
44.8
-
49.2
53.4
54.8
38.3
44.5
38.1
45.8
47.0
47.9
51.6
55.2
52.6
38.1
37.9
39.1

49.3
41.5
50.5
44.0
52.0
55.2
36.0
33.2
41.9
50.5
42.8
30.8
51.4
54.0
35.2
46.8
32.0
43.9
50.2
41.4
39.3
43.5
53.2
43.4
44.0
52.7
37.6

50.3
38.6
50.7
43.5
53.4
53.2
33.4
38.0
42.7
51.9
44.1
32.0
51.0
51.3
36.4
48.0
30.3
43.4
49.7
38.8
40.0
39.9
52.1
42.3
46.7
54.4
38.0

49.6
37.0
47.6
41.3
52.0
52.0
34.3
37.6
41.3
51.2
44.3
31.3
50.8
51.4
37.5
47.0
29.3
42.8
49.3
37.6
40.8
39.2
51.8
40.1
46.0
53.4
38.1

50.4
38.2
51.1
44.3
53.8
53.8
35.1
36.2
42.8
51.2
44.4
31.6
51.4
51.9
35.7
49.5
30.1
42.1
49.4
38.8
39.8
43.8
52.4
43.8
46.7
55.4
37.7

49.2
-
51.4
42.7
52.2
54.4
37.7
34.3
42.9
50.3
43.9
35.4
48.5
50.1
35.0
49.3
32.7
42.8
50.0
42.2
38.7
41.4
52.0
44.0
45.6
54.5
37.0

47.9
30.0
48.3
40.3
49.2
48.6
32.3
37.5
39.8
50.6
43.5
30.1
47.9
49.1
37.5
48.3
27.6
43.5
50.0
36.0
39.8
40.8
50.5
38.0
46.2
51.7
37.8

49.2
43.8
49.6
43.6
51.0
55.9
36.7
33.7
41.7
50.2
43.1
33.8
50.4
52.5
35.5
47.1
32.1
43.2
50.5
42.6
38.4
41.6
51.0
43.1
45.3
53.5
37.0

48.9
34.2
48.3
39.3
50.5
48.8
33.6
37.5
40.3
51.1
45.1
31.6
48.0
50.1
37.2
48.0
27.9
41.8
49.7
36.2
40.5
39.3
51.1
38.9
46.4
52.2
38.4

49.9
-
49.9
43.2
52.3
54.8
39.3
34.6
43.7
50.1
43.0
35.7
51.6
48.8
37.0
48.4
32.7
42.2
50.7
39.9
39.3
-
52.7
41.3
48.1
53.8
37.3

49.7
-
50.6
43.8
52.7
53.0
38.8
34.8
42.9
49.9
43.0
37.5
49.7
48.5
35.7
50.5
33.2
41.3
50.6
41.1
39.2
-
53.2
44.1
45.6
53.5
36.2

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

-

-
-

-

-
-

-

-
-

-

-
-

-

-

-

41.7

42.2

39.7

36.8

35.4

37.4

45.9
44.3

46.0
44.3

46.7
44.8

46.8
44.5

46.9
44.2

46.1
43.5

45.6
42.8

44.8
42.3

44.7
42.2

48.9
43.5

48.2
43.3

47.9
43.3

48.0
42.9

47.3
42.4

47.6
42.4

48.2
43.0

48.5
42.8

48.5
42.9

47.7
42.4

47.2
42.0

46.3
41.5

46.0
41.2

EU-25 averages
weighted
arithmetic

47.6
44.8

46.9
44.8

46.4
44.8

46.5
44.7

45.9
44.4

46.1
44.5

46.7
45.0

46.8
44.8

46.9
44.6

46.1
43.9

45.6
43.3

44.8
42.9

44.7
42.7

14.7
23.9

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

14.2
22.0

14.0
20.3

14.2
21.8

14.6
23.9

15.5
24.4

15.2
23.9

15.6
25.3

15.2
24.0

15.1
24.1

15.2
24.3

16.0
24.1

16.6
26.8

Ranking Revenue2)

2007
6
25
8
15
7
3
24
19
17
2
13
26
10
9
22
11
27
14
4
23
18
16
5
20
12
1
21

2007

71 099
2 986
22 599
46 220
461 479
2 508
20 247
28 033
157 056
412 344
290 288
1 711
3 075
4 089
5 068
19 209
468
95 992
56 376
38 520
24 052
14 696
6 480
6 175
35 330
82 435
284 008

46 307

Difference1)
1995 to 2007 2000 to 2007

-2.7
-
0.0
-1.4
-5.3
-6.0
-6.4
4.6
-3.0
-0.7
2.8
-9.8
-4.1
1.5
0.9
-0.4
-7.0
-0.5
-3.0
-3.7
0.2
-
-5.6
0.2
-2.2
-1.0
-1.0

-

-
-

-2.8
-2.5

-2.9
-2.1

1.9
2.9

-1.0
-11.3
-2.3
-2.1
-3.8
-5.5
-2.0
5.1
-1.6
-0.1
0.9
-4.5
-3.6
-5.9
2.8
0.9
-7.2
-0.4
-0.8
-5.6
0.9
-3.1
-4.0
-5.2
1.7
-1.1
0.5

-

-1.4
-2.2

-1.6
-0.9

-1.3
-1.7

1.1
2.4

Taxation trends in the European Union                 297

report2009.book  Page 298  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.2.1.1_G.pdf

Table C.2.1.1_G: Taxes on Labour as % of GDP: Employed paid by employers

Ranking Revenue2)

2007
10
19
5
27
13
4
25
20
8
2
3
18
15
11
23
6
26
22
7
21
12
17
14
16
9
1
24

2007

27 707
1 576
13 101
1 187
158 960
1 634
5 765
12 324
93 369
231 237
166 224
958
1 332
2 192
1 581
9 999
144
26 269
24 860
14 945
12 447
7 744
2 230
3 452
15 722
41 113
75 363

15 750

Difference1)
1995 to 2007 2000 to 2007

-0.4
-
0.4
0.1
-0.9
-1.4
0.1
1.1
0.7
-0.3
2.2
1.7
-5.3
0.6
-0.2
-2.4
-0.4
2.6
-0.8
-1.0
1.4
-
-1.6
-3.3
-1.1
0.5
0.4

-

-
-

0.2
0.3

-0.1
-0.3

-7.0
-0.2

-0.1
-3.0
0.4
0.1
-0.9
-0.1
0.3
0.5
0.2
0.1
0.8
1.6
-1.1
-0.7
0.0
-0.6
-0.2
0.1
-0.5
-0.8
1.0
-1.9
-0.5
-2.9
0.0
-0.4
0.2

-

-0.1
-0.3

-0.1
0.2

0.0
-0.1

-0.8
-0.5

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
8.3
8.5
5.5
7.5
10.3
9.9
0.5
0.6
6.6
7.4
10.7
10.6
3.0
2.8
5.4
4.9
8.9
8.8
12.2
12.1
10.8
10.1
6.1
4.7
6.3
6.8
7.7
8.0
4.4
4.8
9.9
10.3
2.6
3.1
4.6
4.5
9.2
9.7
4.8
5.7
7.6
6.7
6.3
7.2
6.5
7.1
6.3
8.9
8.8
8.9
12.4
13.4
3.7
3.5

8.7
6.8
10.4
0.5
7.3
10.6
2.7
5.5
8.8
12.1
10.2
4.7
6.9
7.8
4.8
10.2
2.9
4.5
9.5
5.4
6.9
6.5
7.1
8.9
8.9
13.2
3.3

8.7
8.9
9.8
0.6
7.5
11.0
2.6
4.6
8.5
12.4
10.0
4.6
8.1
8.8
4.4
10.7
2.9
4.5
9.9
5.9
6.5
7.9
6.7
8.9
9.2
12.7
3.4

8.7
7.7
10.5
0.5
7.4
10.2
2.7
5.4
8.9
12.2
10.4
5.5
6.5
7.7
4.7
9.9
2.9
4.4
9.6
5.2
6.9
6.2
7.1
8.4
8.9
13.0
3.5

8.5
7.6
10.3
0.5
7.2
10.0
2.7
5.1
8.8
12.1
10.3
6.2
6.3
7.6
4.7
9.6
2.9
4.4
9.4
4.9
7.1
5.9
7.1
7.6
8.8
12.7
3.6

8.3
7.0
10.3
0.5
7.0
9.9
2.7
5.0
8.8
12.2
10.5
6.7
6.1
7.3
4.6
9.9
2.9
4.1
9.3
4.9
7.3
6.4
7.3
7.0
9.0
12.6
3.7

8.2
5.6
10.3
0.5
6.8
10.0
2.9
5.0
8.8
12.3
10.5
6.4
6.4
7.6
4.3
9.7
2.8
4.7
9.3
4.8
7.4
6.3
6.9
6.3
8.9
12.4
3.7

8.7
-
9.9
0.7
7.6
11.1
2.6
4.6
8.4
12.2
10.6
4.8
8.2
8.7
4.6
11.8
3.0
4.5
9.9
6.1
6.6
6.9
6.6
9.7
9.2
12.9
3.3

8.4
8.4
9.9
0.5
7.5
10.8
2.7
4.9
8.7
12.1
10.0
4.6
7.4
8.4
4.4
10.5
2.8
4.5
9.7
5.7
6.7
8.1
6.9
9.1
8.8
12.9
3.5

8.6
-
10.0
0.5
7.6
11.5
2.6
4.5
8.4
12.5
10.2
4.7
9.9
7.6
4.5
11.7
3.1
2.0
10.0
5.9
6.3
-
6.8
9.9
9.6
12.9
3.3

8.6
-
10.2
0.5
7.6
11.2
2.6
4.5
8.4
12.5
10.8
4.8
8.0
8.1
4.5
12.0
3.3
1.8
10.1
6.1
6.5
-
6.5
9.8
9.1
12.5
3.3

8.6
-
9.9
0.5
7.5
12.1
2.9
4.3
8.2
12.5
8.7
4.4
11.6
7.1
4.5
12.3
3.0
2.0
10.0
5.9
6.3
-
8.0
9.6
9.9
12.0
3.3

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

8.5
6.9

7.8
7.4

-

-
-

8.8
7.0

8.0
7.4

-

-
-

9.0
7.0

8.0
7.3

-

-
-

9.0
7.1

8.0
7.4

-

-

-

6.0

5.9

5.7

5.4

5.4

5.5

7.9
7.4

8.9
7.0

7.9
7.3

7.8
7.3

8.8
7.0

7.8
7.3

7.8
7.3

8.8
7.1

7.8
7.3

7.8
7.2

8.8
7.1

7.8
7.3

7.9
7.2

8.9
7.1

7.9
7.2

7.8
7.1

8.8
7.1

7.8
7.1

7.8
7.1

8.7
7.0

7.8
7.1

7.7
7.0

8.7
7.0

7.8
7.1

7.7
7.0

8.7
7.0

7.7
7.1

45.6
12.1

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

43.7
12.4

43.4
12.0

40.5
12.2

39.5
12.1

39.3
12.4

38.7
12.8

39.2
12.7

38.0
12.5

37.6
12.2

37.9
12.1

37.8
11.9

38.6
11.9

298

Taxation trends in the European Union

report2009.book  Page 299  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.2.1.1_T.pdf

Table C.2.1.1_T: Taxes on Labour as % of Total Taxation: Employed paid by employers

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
18.8
18.8
19.7
15.9
24.4
-
27.9
29.2
27.3
1.1
1.2
1.0
16.6
18.5
18.8
32.4
34.8
33.3
9.7
9.6
8.7
16.8
14.7
14.6
24.0
26.4
25.1
28.2
27.5
29.3
25.0
24.4
21.6
14.7
15.2
16.6
20.7
23.9
35.1
25.8
28.0
25.0
11.9
12.0
12.2
24.9
26.8
29.5
7.6
10.3
11.2
11.9
11.6
5.0
21.8
21.4
24.2
13.9
17.8
15.8
20.8
19.8
19.5
21.3
24.9
-
16.9
18.8
20.5
21.4
26.7
23.7
20.4
20.1
21.6
25.7
26.8
24.9
10.1
9.6
9.5

18.6
25.9
29.3
0.9
17.8
34.7
8.5
14.1
25.6
27.5
24.0
15.2
25.1
28.1
11.2
27.1
10.0
11.4
22.5
17.4
19.5
26.7
18.5
26.8
18.5
24.8
9.5

19.3
23.9
29.4
1.0
18.6
33.1
9.2
16.8
26.1
28.5
25.2
16.7
22.8
27.4
12.4
26.2
9.3
11.8
21.9
16.1
19.9
22.3
18.7
25.4
20.1
26.9
10.1

18.8
23.1
27.5
1.0
18.5
32.5
8.9
16.4
25.4
28.1
25.4
18.5
22.3
26.8
12.6
25.6
8.9
11.7
21.7
15.7
20.9
21.7
18.6
24.1
20.3
26.1
10.3

19.2
23.1
29.8
1.1
18.5
34.0
9.5
16.3
26.0
28.1
25.0
14.9
24.3
27.5
12.2
26.9
9.3
11.8
21.7
16.4
20.0
23.0
18.6
26.7
20.0
27.5
9.5

19.0
-
29.6
1.3
18.5
32.4
8.0
14.2
25.6
27.8
24.9
17.3
24.3
27.2
11.8
30.3
11.7
11.5
22.4
17.4
19.7
24.1
17.6
26.3
19.9
24.9
9.1

18.5
16.8
28.1
1.0
17.3
32.0
9.1
16.0
24.2
27.9
25.0
17.5
20.9
25.7
12.0
26.0
8.2
12.0
22.2
14.3
20.6
22.0
18.0
21.4
20.4
25.3
10.0

19.1
29.2
28.9
1.1
18.0
33.5
8.1
13.9
25.5
27.6
23.5
16.5
25.2
27.7
11.4
27.4
10.6
11.2
22.5
17.0
19.1
25.2
17.5
25.2
20.2
24.5
9.3

18.5
20.6
27.9
1.0
18.0
32.2
8.9
16.0
24.7
27.9
26.0
18.8
21.0
25.7
12.1
26.5
8.5
11.0
22.2
15.0
20.9
22.9
18.9
22.2
20.4
25.4
10.3

19.4
-
28.7
0.9
18.6
33.4
8.0
15.2
25.4
28.4
24.4
18.0
32.2
27.1
12.0
28.9
12.2
4.9
23.4
16.0
19.3
-
17.9
25.1
20.5
25.6
9.5

19.2
-
29.2
1.1
18.8
32.6
7.9
14.8
25.4
28.3
24.8
18.8
25.0
26.2
11.5
30.7
12.0
4.5
22.8
16.8
19.7
-
17.7
26.2
19.7
24.6
9.4

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

-

-
-

-

-
-

-

-
-

-

-
-

-

-

-

13.8

13.9

13.2

12.4

12.2

12.7

19.3
20.0

19.2
20.0

19.6
20.1

19.9
20.0

20.2
20.0

20.1
19.7

19.8
19.4

19.5
19.0

19.4
18.7

21.5
18.3

21.7
18.3

21.8
18.3

21.9
18.5

21.4
18.1

21.4
18.1

21.8
18.5

22.1
18.6

22.4
18.7

22.3
18.7

22.1
18.4

21.7
18.1

21.6
17.9

EU-25 averages
weighted
arithmetic

19.8
19.8

19.9
19.8

19.7
19.5

19.8
19.7

19.3
19.4

19.2
19.5

19.6
19.7

19.9
19.8

20.2
19.7

20.1
19.5

19.8
19.2

19.5
19.0

19.4
18.8

43.5
34.1

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

42.7
32.5

41.9
31.5

39.2
31.1

40.4
32.4

41.3
33.7

39.3
33.6

38.7
32.9

36.9
32.0

35.9
31.5

36.4
31.2

36.6
31.0

37.0
31.3

Ranking Revenue2)

2007
15
19
3
27
18
1
25
17
8
2
6
20
13
4
23
7
26
22
9
21
12
11
16
10
14
5
24

2007

27 707
1 576
13 101
1 187
158 960
1 634
5 765
12 324
93 369
231 237
166 224
958
1 332
2 192
1 581
9 999
144
26 269
24 860
14 945
12 447
7 744
2 230
3 452
15 722
41 113
75 363

15 750

Difference1)
1995 to 2007 2000 to 2007

-0.9
-
0.6
0.1
-2.2
-0.9
1.0
2.2
-1.1
-1.1
3.4
-1.9
-14.4
0.7
-0.4
-4.6
-3.6
6.9
-2.4
-1.9
1.2
-
-3.6
-2.3
-1.2
0.8
0.6

-

-
-

0.1
-0.2

-0.3
-1.0

-6.5
-2.8

0.3
-10.0
-1.4
0.2
-1.2
-2.3
1.2
2.7
-1.6
0.7
1.1
-0.5
-4.4
-2.3
0.6
-2.3
-2.3
0.5
-0.7
-3.5
1.3
-5.5
-1.6
-5.4
1.8
0.9
0.6

-

0.2
-1.2

0.2
0.1

0.2
-0.7

-4.3
-2.4

Taxation trends in the European Union                 299

report2009.book  Page 300  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.2.1.2_G.pdf

Table C.2.1.2_G: Taxes on Labour as % of GDP: Employed paid by employees

Ranking Revenue2)

2007
2
26
17
1
3
23
16
19
21
11
14
27
13
20
10
12
22
6
7
15
18
24
5
25
8
4
9

2007

43 392
1 410
9 499
45 032
302 519
873
14 482
15 709
63 687
181 107
124 064
753
1 742
1 898
3 487
9 211
324
69 723
31 516
23 575
11 606
6 951
4 250
2 723
19 608
41 322
208 645

30 557

Difference1)
1995 to 2007 2000 to 2007

-0.8
-
-0.1
-0.8
-1.3
-2.4
-2.9
1.3
0.1
0.3
0.3
-0.4
2.7
0.5
0.4
1.3
0.5
-3.4
0.0
-1.1
0.6
-
-1.1
-0.8
-1.1
-0.8
-0.1

-

-
-

-1.0
-0.5

-0.9
-0.4

-1.3
-0.4

-0.9
-0.2
0.3
-1.4
-1.8
-0.7
-1.1
0.3
0.5
-0.6
0.2
0.1
0.5
-1.1
0.2
1.5
-0.3
-0.7
-0.4
-0.2
0.3
0.5
-0.7
-0.7
-1.1
-1.9
-0.1

-

-0.8
-0.3

-0.9
-0.4

-0.8
-0.4

-1.6
-1.5

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
13.0
14.2
13.7
4.9
4.6
-
7.5
7.1
7.5
19.9
21.5
20.7
12.5
14.1
13.8
5.7
6.2
8.1
7.6
8.1
10.5
6.9
6.4
5.6
6.1
5.7
6.0
9.6
10.1
9.3
8.1
7.9
7.7
4.8
5.0
5.2
8.3
7.7
5.6
6.7
7.3
6.2
9.6
9.8
9.2
9.1
8.1
7.8
5.9
6.8
5.5
12.3
11.1
15.7
11.6
12.2
11.7
7.6
7.9
8.8
7.1
6.9
6.5
5.6
5.8
-
12.3
13.0
13.4
5.0
5.9
5.8
10.9
12.0
12.0
12.5
14.2
13.3
10.2
10.3
10.3

13.7
4.6
7.6
19.5
12.6
5.1
7.6
6.8
5.6
10.1
7.7
4.5
7.8
6.9
9.4
8.1
6.6
11.6
11.6
6.9
6.9
4.6
12.5
5.2
11.4
13.3
10.2

13.1
4.4
7.4
19.5
12.5
5.2
7.4
6.7
5.7
9.9
7.8
4.6
8.2
6.9
9.2
8.3
6.5
12.3
11.6
7.3
6.9
5.4
12.5
4.9
11.2
12.9
10.2

13.9
5.1
7.2
21.3
14.3
6.4
8.7
6.6
5.5
10.1
7.9
4.7
7.8
7.8
9.4
7.6
6.2
13.0
12.0
7.8
6.8
5.1
13.0
5.7
12.0
14.4
10.3

13.7
4.5
7.1
21.3
13.8
7.3
9.1
6.6
5.5
10.1
8.3
4.8
8.1
7.9
9.2
7.7
5.9
12.9
12.3
8.9
6.6
5.1
12.8
6.3
11.5
15.0
10.0

13.7
-
7.3
20.4
13.8
7.5
9.4
6.5
5.7
9.9
8.1
5.0
8.2
7.3
9.2
7.4
5.4
12.3
12.2
8.8
6.3
5.0
13.0
6.5
11.8
15.2
10.0

14.1
4.5
7.4
20.7
14.0
6.2
7.3
6.7
5.7
10.0
7.9
5.2
7.7
6.9
9.2
8.6
6.6
11.4
12.2
7.3
6.9
5.8
12.8
5.7
11.9
13.4
9.8

13.6
-
7.4
20.8
13.7
7.4
10.4
5.7
6.1
9.5
7.8
4.7
6.0
6.1
9.4
7.9
5.2
15.0
11.7
8.9
6.6
-
13.3
6.4
13.0
14.2
9.6

13.9
4.7
7.6
20.4
13.8
6.2
7.0
6.8
5.6
10.0
7.8
5.1
8.0
6.7
9.2
8.2
6.6
11.8
12.2
7.3
7.0
4.9
12.7
5.6
11.7
13.3
9.7

13.7
-
7.5
20.9
13.8
7.0
10.0
6.1
5.8
9.5
8.0
4.8
7.9
6.9
9.5
7.7
5.8
14.6
12.3
8.8
6.4
-
13.1
6.7
12.0
14.7
9.4

13.9
4.6
7.5
19.8
13.0
6.0
7.7
6.6
5.5
10.0
7.7
4.3
8.1
7.0
9.2
8.1
6.7
11.7
11.9
6.9
6.8
4.8
12.7
5.1
11.2
13.3
9.8

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

-

-
-

-

-
-

-

-
-

-

-
-

-

-

-

12.0

11.9

11.5

10.6

10.2

10.8

10.8
9.3

10.9
9.3

10.7
9.3

10.5
9.1

10.4
9.0

10.1
8.9

10.1
8.8

10.1
8.8

10.0
8.9

10.9
9.5

10.8
9.5

10.8
9.5

10.7
9.3

10.8
9.3

10.8
9.4

10.6
9.3

10.5
9.2

10.4
9.2

10.0
9.0

9.9
9.0

9.9
8.9

9.9
9.0

EU-25 averages
weighted
arithmetic

11.0
9.6

10.9
9.6

10.8
9.7

10.8
9.6

10.9
9.7

10.9
9.6

10.8
9.6

10.5
9.4

10.4
9.4

10.2
9.2

10.1
9.2

10.1
9.2

10.1
9.2

35.4
15.5

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

36.2
16.1

35.4
16.1

34.4
15.4

35.4
16.8

35.7
16.6

35.7
17.0

35.1
16.2

35.3
15.7

35.6
15.5

35.2
15.0

34.8
15.1

34.1
15.1

300

Taxation trends in the European Union

report2009.book  Page 301  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.2.1.2_T.pdf

Table C.2.1.2_T: Taxes on Labour as % of Total Taxation: Employed paid by employees

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
29.5
31.4
31.3
14.3
14.7
-
20.3
20.9
20.8
40.8
44.5
42.3
31.6
35.3
34.7
17.3
20.2
22.3
24.3
27.2
31.8
21.5
19.3
19.1
16.3
17.0
18.2
22.1
23.1
21.8
18.7
19.2
19.3
11.6
16.1
19.5
27.1
26.9
16.9
22.3
25.5
21.6
26.2
24.8
24.9
22.9
21.1
18.7
17.2
22.5
20.5
31.6
29.0
39.0
27.7
27.0
28.2
21.9
24.6
23.7
19.4
20.4
20.4
19.1
19.9
-
32.3
34.6
34.3
16.9
17.8
14.4
25.4
27.0
26.3
25.9
28.4
27.7
28.0
28.3
29.6

30.7
15.6
21.2
43.1
34.2
20.5
27.5
19.0
16.3
23.0
18.8
15.6
26.3
25.9
24.0
19.7
22.0
32.5
27.8
24.0
19.8
16.8
34.7
16.6
25.5
27.8
28.1

31.0
14.7
21.3
42.5
34.7
20.1
24.2
21.1
16.6
23.4
18.9
15.4
28.2
23.9
24.0
21.8
21.0
31.6
27.9
22.7
20.1
17.6
33.4
17.0
26.6
27.5
27.9

30.8
13.9
20.1
40.3
33.5
19.4
25.3
21.2
15.9
23.1
18.9
12.8
28.5
24.6
24.9
21.4
20.4
31.1
27.6
21.9
19.9
17.5
33.2
16.1
25.8
27.2
27.8

29.4
13.2
20.2
39.3
31.9
16.6
23.1
21.4
15.6
22.6
18.5
12.7
26.9
23.4
25.6
22.3
19.4
31.5
27.8
21.7
19.2
18.8
32.5
16.6
25.8
26.4
27.8

31.2
15.0
21.3
43.2
35.3
19.9
25.5
19.9
16.8
23.1
19.4
16.7
27.1
24.4
23.5
22.6
20.8
30.3
27.7
22.5
19.8
20.7
33.8
17.1
26.8
27.9
28.2

30.2
-
21.8
41.4
33.7
22.0
29.7
20.0
17.3
22.5
19.0
18.1
24.2
23.0
23.2
19.0
21.0
31.2
27.6
24.9
19.0
17.3
34.4
17.6
25.6
29.6
27.9

30.0
14.6
20.8
42.4
33.0
22.4
28.6
19.8
16.2
22.6
19.5
17.3
25.2
24.8
24.1
19.7
21.5
32.0
28.0
25.6
19.3
16.4
33.5
17.9
25.1
29.0
27.7

30.5
13.6
20.5
38.3
32.5
16.6
24.7
21.5
15.7
23.2
19.1
12.7
26.9
24.3
25.1
21.5
19.4
30.8
27.5
21.1
19.6
16.4
32.2
16.7
25.9
26.8
28.2

30.6
-
21.4
42.7
33.9
20.4
30.9
20.0
17.5
21.6
18.2
18.7
24.7
22.2
24.2
19.8
21.2
36.8
27.8
24.2
19.5
-
35.5
17.8
25.9
28.9
26.8

30.6
-
21.2
42.3
33.7
21.4
31.4
19.3
18.3
21.7
18.6
17.7
19.5
21.7
25.0
19.6
20.6
37.3
27.3
23.9
20.0
-
34.9
16.3
27.6
28.2
27.8

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

-

-
-

-

-
-

-

-
-

-

-
-

-

-

-

27.8

28.2

26.5

24.4

23.2

24.7

26.6
24.3

26.8
24.3

27.0
24.7

26.9
24.5

26.6
24.3

26.0
23.8

25.7
23.4

25.3
23.3

25.2
23.4

27.4
25.2

26.5
25.0

26.2
25.0

26.1
24.4

25.9
24.3

26.2
24.3

26.4
24.5

26.4
24.2

26.1
24.2

25.5
23.8

25.1
23.6

24.6
23.4

24.5
23.3

EU-25 averages
weighted
arithmetic

27.9
25.1

27.0
25.0

26.6
25.3

26.7
25.0

26.6
25.0

26.9
25.0

27.1
25.3

27.0
25.0

26.7
24.9

26.1
24.5

25.8
24.1

25.4
23.9

25.3
23.9

25.9
28.0

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

25.4
26.0

25.2
25.2

23.2
24.1

24.2
27.8

25.2
27.5

24.6
29.8

24.0
28.2

24.6
27.8

25.1
27.5

24.6
25.6

25.1
26.6

25.7
29.3

Ranking Revenue2)

2007
5
26
18
1
3
22
12
17
25
15
21
27
8
14
9
13
23
4
7
16
19
20
2
24
11
10
6

2007

43 392
1 410
9 499
45 032
302 519
873
14 482
15 709
63 687
181 107
124 064
753
1 742
1 898
3 487
9 211
324
69 723
31 516
23 575
11 606
6 951
4 250
2 723
19 608
41 322
208 645

30 557

Difference1)
1995 to 2007 2000 to 2007

-1.8
-
-0.6
-1.5
-3.1
-5.0
-7.4
2.3
-1.9
0.4
-0.6
-8.0
10.2
0.7
1.3
4.2
-3.4
-7.5
-0.6
-1.7
-1.0
-
-2.0
2.5
-1.0
-1.8
-1.6

-

-
-

-2.9
-2.3

-2.6
-1.1

-0.2
1.3

-1.3
-1.3
-0.9
-2.2
-2.5
-3.2
-3.2
2.4
0.0
-0.8
-0.2
-4.0
0.8
-3.6
2.1
3.2
-4.9
-0.9
-0.1
-2.1
-0.4
2.3
-2.4
0.3
-0.1
-2.0
-0.1

-

-1.6
-0.9

-1.7
-1.1

-1.6
-1.0

0.5
1.8

Taxation trends in the European Union                 301

report2009.book  Page 302  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.2.2_G.pdf

Table C.2.2_G: Taxes on Labour as % of GDP: Non-employed

Ranking Revenue2)

2007
9
18
27
1
5
19
25
11
8
17
7
24
26
21
10
14
16
3
6
13
12
22
15
20
4
2
23

2007

5 711
142
35
9 981
61 086
57
127
2 591
20 578
11 916
35 262
12
12
70
501
919
42
15 369
6 520
2 971
1 692
257
294
196
4 792
11 259
3 775

2 720

Difference1)
1995 to 2007 2000 to 2007

-0.3
-
0.0
-1.7
-0.1
0.1
-0.1
0.4
-0.3
-0.3
0.4
-0.2
0.1
0.2
-0.4
0.1
0.2
-1.5
0.4
-1.4
0.5
-
0.3
0.3
-1.5
-1.1
0.0

-

-
-

-0.2
-0.2

-0.3
-0.2

-0.3
-0.1
0.0
-0.5
-0.1
0.0
0.0
0.2
0.3
-0.1
0.3
-0.1
0.0
0.2
-0.1
0.1
0.1
-0.2
0.1
0.2
0.4
0.2
0.1
0.1
-0.2
-0.3
0.0

-

-0.1
0.0

0.0
0.0

0.0
0.0

-4.6
-0.5

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1.7
2.1
0.5
0.6
0.0
0.0
4.4
4.8
2.5
2.6
0.4
0.3
0.1
0.1
1.1
0.9
2.0
1.7
0.6
0.7
2.3
2.1
0.1
0.2
0.1
0.1
0.2
0.1
1.4
1.4
0.9
0.8
0.8
0.8
2.7
2.4
2.4
2.5
1.0
0.8
1.0
0.7
0.2
0.0
0.9
0.9
0.4
0.3
2.7
2.7
3.4
3.6
0.2
0.2

2.1
0.5
0.0
4.9
2.7
0.4
0.1
0.9
1.8
0.7
2.1
0.1
0.1
0.2
1.3
0.4
0.7
2.5
2.5
0.7
0.7
0.0
0.9
0.4
2.8
3.5
0.2

2.0
0.6
0.0
4.9
2.6
0.4
0.1
0.9
1.7
0.7
2.0
0.2
0.1
0.0
1.5
0.8
0.7
2.9
2.3
0.7
0.6
0.0
0.7
0.2
2.9
3.7
0.2

1.8
0.6
0.0
4.8
2.9
0.5
0.1
1.0
1.8
0.7
2.2
0.1
0.1
0.2
1.4
0.5
0.8
2.6
2.4
0.7
1.0
0.1
0.9
0.3
2.8
3.7
0.2

1.7
0.5
0.0
4.5
2.7
0.4
0.1
1.0
1.8
0.7
2.2
0.1
0.1
0.2
1.3
0.5
0.9
2.7
2.4
0.8
1.0
0.1
0.9
0.4
2.8
3.7
0.2

2.0
0.3
0.0
5.1
2.8
0.4
0.1
1.0
1.7
0.7
2.0
0.2
0.1
0.0
1.5
0.8
0.7
3.0
2.4
0.8
0.6
0.1
0.8
0.2
2.9
4.1
0.2

2.1
0.5
0.0
5.1
2.8
0.3
0.1
0.9
1.8
0.7
2.1
0.1
0.1
0.2
1.4
0.4
0.8
2.6
2.6
0.7
0.9
0.1
1.0
0.4
2.7
4.0
0.2

1.8
0.6
0.0
4.9
2.8
0.5
0.1
0.9
1.8
0.7
2.1
0.1
0.1
0.2
1.4
0.4
0.8
2.6
2.5
0.7
0.9
0.1
1.0
0.5
2.7
4.0
0.2

2.1
-
0.0
5.2
2.8
0.2
0.1
0.9
1.8
0.7
2.2
0.2
0.0
0.0
1.5
0.6
0.6
2.9
2.3
1.9
0.5
0.0
0.8
0.2
3.2
4.1
0.2

2.1
-
0.0
6.0
2.9
0.2
0.2
0.7
2.2
1.0
1.9
0.2
0.0
0.0
1.7
0.7
0.5
3.8
2.1
2.3
0.6
-
0.7
0.2
4.2
4.4
0.2

2.1
-
0.0
5.5
2.9
0.2
0.1
0.8
2.0
0.9
2.0
0.2
0.0
0.0
1.8
0.6
0.6
3.6
2.3
1.9
0.5
-
0.7
0.1
3.6
4.2
0.2

2.0
-
0.0
6.1
2.6
0.2
0.2
0.7
2.2
0.9
1.9
0.3
0.0
0.0
1.8
0.8
0.6
4.2
2.0
2.4
0.5
-
0.6
0.0
4.2
4.5
0.2

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

2.1
1.5

2.0
1.6

-

-
-

2.1
1.6

2.0
1.5

-

-
-

2.1
1.5

1.9
1.5

-

-
-

2.0
1.4

1.8
1.4

-

-

-

1.0

1.0

1.0

0.9

0.9

1.0

1.7
1.3

2.0
1.4

1.7
1.4

1.6
1.2

1.9
1.4

1.6
1.3

1.6
1.2

1.9
1.4

1.6
1.3

1.6
1.2

1.9
1.4

1.6
1.3

1.7
1.3

1.9
1.4

1.7
1.4

1.7
1.3

1.9
1.4

1.7
1.3

1.7
1.3

1.9
1.4

1.7
1.3

1.6
1.3

1.9
1.4

1.6
1.3

1.6
1.3

1.9
1.4

1.6
1.3

86.2
6.1

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

79.2
5.4

81.9
6.0

78.7
5.2

78.3
5.1

78.3
4.9

76.5
4.8

77.0
4.8

78.7
5.0

77.5
4.9

75.5
4.8

75.1
4.5

73.6
4.4

-12.6
-1.8

302

Taxation trends in the European Union

report2009.book  Page 303  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.2.2_T.pdf

Table C.2.2_T: Taxes on Labour as % of Total Taxation: Non-employed

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
3.9
4.6
1.4
1.8
0.1
0.0
9.1
9.9
6.4
6.5
1.1
1.0
0.2
0.2
3.5
2.8
5.3
5.1
1.5
1.6
5.3
5.2
0.2
0.8
0.2
0.3
0.8
0.4
3.8
3.5
2.3
2.1
2.2
2.5
7.0
6.4
5.7
5.4
2.8
2.5
2.8
2.0
0.7
0.1
2.2
2.4
1.2
1.0
6.2
6.0
7.0
7.3
0.5
0.5

4.6
1.7
0.0
10.1
6.9
1.2
0.2
2.7
5.3
1.5
5.1
0.3
0.3
0.5
3.4
1.1
2.4
6.6
5.7
2.3
2.1
0.1
2.4
1.3
6.2
7.3
0.5

4.7
1.7
0.0
10.5
7.0
1.1
0.3
2.7
5.2
1.6
5.1
0.3
0.3
0.6
3.8
1.1
2.5
6.9
5.9
2.3
2.5
0.3
2.6
1.2
6.2
8.3
0.5

4.7
-
0.0
10.6
6.9
0.6
0.4
2.8
5.6
1.6
5.1
0.9
0.1
0.1
3.8
1.6
2.2
7.4
5.3
5.4
1.6
0.1
2.0
0.5
6.8
8.0
0.5

4.8
-
0.0
11.1
7.2
0.6
0.4
2.6
6.0
2.0
4.7
0.9
0.0
0.1
4.5
1.5
2.2
9.0
5.1
5.3
1.6
-
1.8
0.3
7.7
8.3
0.4

4.5
0.9
0.0
10.2
6.7
1.3
0.3
2.9
5.0
1.6
4.8
0.8
0.3
0.1
4.0
1.9
2.4
7.4
5.5
2.4
1.7
0.3
2.0
0.7
6.4
7.8
0.4

4.0
1.7
0.1
10.0
7.2
1.7
0.2
2.8
5.1
1.7
5.3
0.2
0.3
0.6
3.8
1.0
2.5
6.8
5.8
2.1
2.7
0.5
2.6
1.7
6.2
8.3
0.5

4.7
-
0.0
12.3
7.1
0.6
0.5
2.5
6.5
2.2
4.6
0.8
0.0
0.1
4.5
1.6
2.0
9.6
4.9
6.2
1.7
-
1.7
0.6
8.9
8.7
0.5

4.6
-
0.0
12.6
6.5
0.7
0.5
2.4
6.8
2.2
4.6
1.0
0.0
0.1
4.7
2.0
2.1
10.5
4.8
6.4
1.6
-
1.5
0.1
9.1
9.5
0.5

3.9
1.6
0.1
9.1
7.0
1.3
0.2
3.3
5.0
1.6
5.2
0.2
0.3
0.7
3.7
1.3
2.6
6.9
5.8
2.5
2.8
0.2
2.3
1.2
6.4
7.6
0.5

4.0
1.7
0.1
9.5
7.4
1.5
0.2
3.0
5.0
1.7
5.3
0.2
0.4
0.6
3.8
1.3
2.5
6.8
5.7
2.2
2.8
0.4
2.3
0.9
6.3
7.5
0.5

4.5
1.7
0.0
9.9
6.3
1.2
0.3
2.7
4.9
1.7
4.8
0.7
0.3
0.2
3.8
2.2
2.5
7.3
5.4
2.3
1.8
0.0
1.9
0.7
6.2
7.2
0.4

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

5.2
3.9

4.9
3.8

-

-
-

5.3
3.9

5.0
3.7

-

-
-

5.2
3.8

4.7
3.5

-

-
-

4.9
3.6

4.5
3.4

-

-

-

2.4

2.4

2.3

2.2

2.1

2.2

4.2
3.1

4.7
3.5

4.2
3.2

4.0
3.0

4.6
3.5

4.1
3.2

4.1
3.0

4.6
3.5

4.1
3.2

4.2
3.0

4.8
3.5

4.2
3.2

4.3
3.2

4.8
3.6

4.3
3.3

4.3
3.2

4.8
3.7

4.3
3.3

4.3
3.1

4.9
3.6

4.3
3.3

4.1
3.1

4.7
3.6

4.1
3.3

4.0
3.1

4.6
3.6

4.0
3.2

74.5
12.6

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

70.6
12.3

68.8
11.1

67.7
10.5

66.5
10.2

66.5
9.9

64.8
9.9

65.8
10.1

66.6
10.5

65.0
10.0

63.5
9.4

64.7
9.1

64.3
9.0

-10.3
-3.6

Ranking Revenue2)

2007
9
18
27
1
4
20
24
11
8
17
7
25
26
21
10
14
16
3
6
13
12
22
15
19
5
2
23

2007

5 711
142
35
9 981
61 086
57
127
2 591
20 578
11 916
35 262
12
12
70
501
919
42
15 369
6 520
2 971
1 692
257
294
196
4 792
11 259
3 775

2 720

Difference1)
1995 to 2007 2000 to 2007

-0.7
-
0.0
-3.5
-0.1
0.5
-0.3
1.2
-1.5
-0.7
0.7
-0.8
0.2
0.7
-1.0
0.3
0.1
-3.5
1.0
-3.6
1.2
-
0.7
1.1
-2.9
-2.4
0.0

-

-
-

-0.6
-0.5

-0.9
-0.5

-0.6
-0.3
0.0
-0.8
0.1
-0.1
-0.1
0.8
0.4
-0.2
0.5
-0.6
-0.1
0.7
0.0
0.1
-0.3
-0.3
0.3
0.5
1.0
0.7
0.3
0.5
0.0
-0.1
0.1

-

0.0
0.1

0.0
0.1

0.0
0.1

-2.2
-0.9

Taxation trends in the European Union                 303

report2009.book  Page 304  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.3_G.pdf

Table C.3_G: Taxes on Capital as % of GDP: Total

Ranking Revenue2)

2007
8
21
11
13
16
27
9
17
6
7
2
1
25
26
5
23
4
19
18
10
14
22
24
20
12
15
3

2007

33 519
1 585
10 623
17 615
175 907
400
17 842
16 525
117 954
192 059
181 825
2 231
835
1 096
4 098
5 405
620
40 151
19 521
27 210
12 475
6 743
1 825
3 561
14 086
24 149
234 906

40 761

Difference1)
1995 to 2007 2000 to 2007

1.3
-
1.0
1.4
1.7
-0.7
2.8
0.7
3.8
1.9
0.4
7.8
0.2
0.3
-0.2
1.9
5.3
0.1
1.1
1.3
1.5
-
3.2
-4.3
2.1
2.5
2.5

-

-
-

1.8
2.2

1.9
1.6

-2.8
2.2

0.5
0.9
2.2
0.6
0.3
0.8
1.3
-2.5
2.5
0.3
0.9
4.3
1.1
1.5
-1.8
1.0
5.1
-0.7
0.3
1.7
-0.1
-0.2
2.3
-0.4
-2.1
-1.1
0.5

-

0.5
0.7

0.6
0.7

0.5
0.7

-2.0
0.4

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
10.0
9.4
5.5
5.6
8.4
6.7
7.8
6.0
7.3
5.4
2.6
1.6
9.4
7.8
7.2
8.4
11.2
8.3
10.1
10.0
11.8
10.9
14.2
9.2
4.0
3.3
3.9
2.0
11.3
13.1
5.3
4.6
11.4
6.9
7.1
8.4
7.2
8.6
8.8
7.0
7.6
7.2
5.4
5.2
5.3
3.3
6.5
7.0
7.8
7.8
7.3
6.1
11.5
10.9

10.2
4.8
8.3
8.9
7.0
2.4
10.2
7.1
10.9
10.0
11.2
10.0
3.0
4.0
10.9
4.8
9.5
7.1
6.8
8.7
6.8
4.8
4.9
6.5
7.2
7.3
11.8

9.9
4.5
7.9
10.0
6.2
2.5
8.9
7.7
10.1
9.4
10.0
9.0
2.8
3.3
11.2
4.5
9.1
7.4
6.8
8.4
6.4
4.5
4.7
6.5
7.1
7.1
10.9

9.7
4.5
8.3
8.2
5.6
2.5
8.6
7.4
9.3
9.3
10.5
7.7
2.6
3.1
10.6
4.6
9.1
6.9
7.1
7.5
6.5
5.3
3.9
6.3
7.1
6.1
10.2

9.5
4.6
6.2
7.2
6.9
1.9
8.0
9.8
8.7
9.8
11.0
9.9
2.9
2.3
13.1
4.3
6.3
7.8
6.9
7.2
7.8
5.6
3.0
6.9
9.9
8.4
10.9

9.3
4.8
6.9
6.1
5.2
2.1
7.4
8.2
8.8
9.3
10.5
8.9
3.1
2.0
13.1
4.6
7.9
7.7
7.3
7.8
7.4
4.8
3.5
7.0
7.7
5.1
10.1

9.8
-
6.0
6.9
6.6
3.5
7.4
8.1
8.1
9.4
10.9
8.3
4.2
2.9
13.5
4.0
5.7
8.1
7.3
6.9
7.0
6.0
3.0
7.9
7.9
6.3
10.6

9.6
4.7
6.4
6.9
7.1
2.9
8.0
8.7
8.6
9.8
11.2
9.1
3.9
2.6
12.7
4.4
5.9
8.1
6.8
7.1
7.5
6.5
3.1
7.9
8.0
7.1
10.6

8.7
-
7.3
6.4
5.6
3.3
6.6
6.6
7.4
8.2
11.4
6.4
3.7
3.6
11.5
3.4
6.1
7.0
6.1
7.5
6.1
-
2.1
10.8
5.8
4.8
8.9

9.2
5.0
7.2
6.6
5.3
2.5
8.4
7.6
8.7
9.0
11.1
7.6
2.5
2.5
12.2
4.6
8.7
6.8
7.1
7.4
7.4
5.0
3.5
6.9
6.8
5.3
9.8

9.2
-
6.5
6.4
6.3
2.9
7.1
7.0
8.1
9.2
12.5
6.6
3.9
3.2
12.9
3.8
5.9
8.2
7.1
7.3
7.0
-
2.8
8.1
7.1
6.5
10.1

8.9
-
6.1
6.3
6.4
2.5
7.1
6.4
7.4
8.8
11.8
6.7
3.2
3.4
12.1
3.8
5.5
7.9
7.0
7.2
6.6
-
2.5
9.7
6.3
5.9
9.3

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

7.5
7.3

7.6
6.6

-

-
-

8.1
7.6

8.1
6.8

-

-
-

8.5
7.8

8.6
7.0

-

-
-

8.4
8.1

8.6
7.2

-

-

-

11.3

11.0

12.9

14.8

15.8

14.3

8.9
7.2

8.7
8.3

8.9
7.4

9.0
7.3

8.7
8.5

9.0
7.5

8.5
7.1

8.3
8.2

8.5
7.2

8.1
6.9

7.9
8.1

8.1
7.1

8.1
6.8

7.9
7.9

8.1
7.0

8.3
7.0

8.1
7.9

8.3
7.2

8.7
7.3

8.4
8.2

8.7
7.5

9.3
7.6

9.0
8.5

9.4
7.8

9.4
8.0

9.3
9.1

9.5
8.2

32.5
9.5

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

30.3
10.1

31.0
9.5

29.2
10.6

28.5
10.1

31.7
11.2

32.0
11.5

32.5
11.1

30.9
9.7

28.6
8.1

29.2
8.8

28.2
9.4

29.8
11.6

304

Taxation trends in the European Union

report2009.book  Page 305  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.3_T.pdf

Table C.3_T: Taxes on Capital as % of Total Taxation: Total

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
22.8
20.8
19.8
16.0
18.0
-
22.7
19.8
20.3
16.0
12.4
13.0
18.4
13.6
14.0
7.9
5.2
9.1
30.0
26.4
19.8
22.6
25.1
22.6
30.3
24.9
22.6
23.5
22.8
19.3
27.4
26.2
28.5
34.2
29.7
24.0
13.0
11.7
11.2
12.9
7.0
12.6
30.7
33.0
31.1
13.4
12.0
8.2
32.8
22.8
22.9
18.2
22.0
17.5
17.1
18.9
14.8
25.3
21.9
20.3
20.8
21.3
19.1
18.5
18.0
-
13.9
8.6
5.3
22.1
21.2
26.8
18.2
17.6
12.6
15.1
12.3
10.1
31.5
29.9
25.8

21.1
14.0
18.2
14.6
16.5
5.9
25.4
28.2
25.8
22.3
26.2
33.0
9.8
7.7
33.5
11.2
22.5
19.6
15.9
22.0
22.7
18.4
7.9
20.3
21.0
16.2
29.8

20.5
15.5
20.2
13.7
13.3
8.1
28.9
23.6
25.7
20.9
26.9
23.1
8.8
9.0
32.0
12.2
27.8
18.2
16.1
22.9
21.1
18.1
9.3
20.8
15.5
10.9
28.2

20.6
16.2
19.8
12.8
13.1
6.6
26.1
24.4
25.8
21.6
25.6
28.5
10.8
6.9
33.4
12.2
25.2
20.4
16.5
23.8
21.5
17.2
9.1
21.2
17.1
10.7
28.9

21.6
13.6
22.3
16.6
14.6
8.2
28.5
23.7
26.8
21.5
25.8
23.2
9.3
10.9
28.5
12.2
27.8
18.4
16.5
23.9
19.1
19.5
10.2
19.8
16.4
12.5
28.8

22.9
14.5
22.5
18.0
17.9
7.8
31.9
22.9
29.9
22.8
26.6
27.5
10.0
13.5
30.6
13.0
28.3
18.3
16.3
25.8
18.9
16.9
12.9
22.2
16.5
15.0
32.1

21.6
-
18.0
14.0
16.2
10.2
23.2
25.0
24.6
21.3
25.8
30.1
12.5
9.0
34.2
10.3
22.2
20.5
16.6
19.6
21.1
21.1
8.0
21.5
17.1
12.2
29.5

21.1
15.3
18.7
13.8
17.1
8.8
25.1
26.1
25.5
21.8
26.4
32.7
12.1
8.1
33.1
11.2
21.8
20.0
15.4
20.3
22.1
20.8
8.0
22.3
17.5
13.8
29.2

22.0
13.1
21.2
19.8
16.0
7.9
29.0
24.4
28.4
21.6
24.8
25.4
9.6
11.6
29.9
12.0
27.0
19.7
16.1
25.6
18.3
16.2
12.0
20.5
16.2
14.3
30.1

20.5
-
18.5
13.0
15.4
8.3
22.0
22.8
24.5
20.8
28.7
25.8
12.3
10.3
32.9
9.7
21.6
20.7
16.0
20.0
21.3
-
7.7
21.7
15.4
12.9
28.9

20.1
-
17.5
12.8
15.6
7.3
21.3
21.7
22.5
20.1
28.3
25.4
10.4
12.0
32.1
9.4
21.7
19.7
16.3
19.4
20.1
-
6.7
24.6
13.5
11.7
27.2

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

-

-
-

-

-
-

-

-
-

-

-
-

-

-

-

26.3

26.0

29.8

34.0

35.9

32.9

21.3
19.5

21.7
19.6

22.1
19.4

21.5
19.1

20.8
18.9

20.6
19.3

21.4
19.7

22.1
20.6

23.5
21.3

18.8
20.1

20.0
20.6

20.6
21.1

20.5
21.8

21.1
22.2

21.2
22.6

20.5
22.2

19.9
21.9

20.0
21.5

20.5
21.4

21.1
22.0

22.4
22.9

23.0
23.9

EU-25 averages
weighted
arithmetic

19.1
18.1

20.2
18.3

21.1
18.9

21.3
19.4

21.7
19.7

22.1
19.9

21.5
19.5

20.8
19.3

20.7
19.1

21.4
19.5

22.2
20.1

23.5
20.9

23.8
21.6

35.4
25.8

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

33.0
25.4

31.6
25.2

31.7
26.2

31.9
25.1

33.5
27.5

33.3
27.8

34.2
26.7

33.3
23.9

29.9
20.6

29.4
22.2

29.2
24.3

29.8
26.3

Ranking Revenue2)

2007
10
20
11
21
16
27
6
12
5
9
7
1
25
26
4
24
2
18
19
8
14
15
23
13
17
22
3

2007

33 519
1 585
10 623
17 615
175 907
400
17 842
16 525
117 954
192 059
181 825
2 231
835
1 096
4 098
5 405
620
40 151
19 521
27 210
12 475
6 743
1 825
3 561
14 086
24 149
234 906

40 761

Difference1)
1995 to 2007 2000 to 2007

2.9
-
2.4
3.0
4.4
-1.2
10.2
-0.1
7.7
4.2
-1.2
10.2
1.8
0.3
-0.4
5.2
10.0
0.7
2.3
5.0
1.7
-
8.6
-4.7
5.6
5.1
5.8

-

-
-

4.2
4.5

4.7
3.6

-5.6
0.5

1.7
2.0
4.4
1.3
1.8
2.0
4.6
-5.6
4.5
1.2
1.1
1.2
3.1
5.2
-2.7
2.2
10.4
-1.4
1.2
3.3
-1.8
0.1
6.0
1.8
-2.8
-1.1
1.8

-

1.6
1.7

1.8
1.3

1.7
1.7

-3.8
-1.2

Taxation trends in the European Union                 305

report2009.book  Page 306  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.3.1_G.pdf

Table C.3.1_G: Taxes on Capital as % of GDP: Capital and business income

Ranking Revenue2)

2007
11
21
6
19
13
27
9
16
4
17
3
1
26
25
5
24
2
20
12
8
18
23
22
14
10
15
7

2007

21 105
1 296
9 749
11 410
149 306
314
12 529
13 052
81 799
103 595
139 245
1 689
618
925
2 786
4 100
504
28 383
16 768
20 665
8 711
5 247
1 512
3 227
11 698
19 228
140 308

21 600

Difference1)
1995 to 2007 2000 to 2007

0.5
-
1.4
0.5
1.7
-0.7
2.0
0.6
2.8
1.5
1.5
5.7
1.1
0.6
-1.2
1.3
4.4
-0.2
1.2
1.3
0.9
-
2.9
-4.1
1.9
2.5
1.5

-

-
-

1.6
1.8

1.6
1.3

-9.1
0.2

0.1
0.3
2.5
0.3
0.3
0.9
0.6
-1.7
1.9
0.2
0.7
3.3
1.2
1.8
-1.2
0.7
4.0
-0.6
0.4
1.2
-0.4
-0.2
2.3
-0.2
-2.1
-0.4
0.3

-

0.4
0.6

0.4
0.5

0.4
0.6

-2.9
1.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
6.3
6.1
4.5
5.2
7.7
5.8
5.0
3.4
6.2
4.3
2.1
1.0
6.6
5.9
5.7
6.4
7.8
5.6
5.5
5.5
9.1
8.4
10.8
7.4
2.9
2.0
3.3
1.3
7.7
9.2
4.1
3.6
9.3
5.7
5.0
6.2
6.2
7.4
6.7
5.3
5.3
5.3
4.2
4.0
4.4
2.3
5.9
6.3
6.5
6.6
5.8
4.3
6.8
6.6

6.4
-
5.0
4.9
5.5
2.9
5.4
6.3
5.5
4.6
7.6
6.8
2.3
2.0
10.0
3.1
4.5
6.0
6.2
5.0
5.2
5.5
2.1
7.1
6.6
4.2
6.7

6.2
3.8
7.2
7.3
5.1
1.9
6.2
6.3
6.5
4.8
7.4
6.3
2.1
2.7
8.0
3.2
6.9
5.1
5.8
6.2
4.3
3.6
3.7
5.7
5.7
5.4
6.5

6.2
4.2
5.1
4.8
5.8
1.2
6.0
7.4
5.9
5.3
8.3
7.5
1.7
1.5
8.9
3.4
5.2
5.6
5.8
5.5
5.8
4.4
2.1
6.1
8.6
6.3
6.5

5.9
4.3
6.0
3.4
4.1
1.4
5.7
6.6
5.9
4.9
7.6
7.3
2.2
1.2
9.9
3.6
6.4
5.4
6.1
5.8
5.2
3.8
2.6
6.3
6.4
3.3
5.8

6.4
4.0
7.6
6.2
6.0
1.9
7.1
5.7
7.1
5.4
8.4
7.7
2.4
3.4
7.6
3.5
7.4
5.1
5.8
6.2
4.6
3.8
4.0
5.9
5.9
5.6
7.2

6.2
4.3
5.4
4.9
5.9
2.2
5.9
6.4
5.8
5.0
8.2
7.7
2.1
1.6
8.8
3.4
4.8
5.9
5.7
5.4
5.5
5.4
2.2
7.1
6.7
5.0
6.5

5.7
4.4
6.3
3.8
4.2
1.9
6.2
6.1
5.7
4.6
8.5
5.9
1.7
1.9
9.3
3.4
7.1
4.6
5.9
5.6
4.6
4.0
2.7
6.1
5.6
3.5
5.6

5.9
3.8
7.7
5.4
4.6
1.9
6.2
6.0
6.0
4.7
7.7
5.3
1.9
2.4
7.7
3.2
6.7
4.7
6.1
5.7
4.6
4.5
3.0
5.5
5.8
4.3
5.8

5.8
-
5.0
4.5
5.2
1.8
5.0
4.7
5.1
4.3
8.2
5.4
1.9
2.3
9.2
2.9
4.3
5.9
5.8
5.1
5.0
-
1.9
8.5
5.1
3.8
5.7

5.8
-
6.3
4.5
4.4
2.7
4.6
5.1
5.0
4.0
7.5
5.0
1.8
2.7
8.9
2.7
4.8
5.2
4.9
5.4
4.4
-
1.5
9.9
4.6
3.4
5.3

5.9
-
5.5
4.6
5.2
2.2
5.2
5.1
5.7
4.5
8.7
5.3
2.2
2.2
9.8
2.9
4.8
6.2
6.0
5.2
5.3
-
2.2
7.2
5.9
4.3
6.3

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

5.0
5.4

5.0
4.8

-

-
-

5.6
5.6

5.5
4.9

-

-
-

5.8
5.8

5.8
5.1

-

-
-

5.8
6.0

5.8
5.3

-

-

-

6.1

5.7

6.7

7.5

8.0

7.6

6.1
5.3

6.2
6.1

6.1
5.4

6.2
5.4

6.2
6.3

6.2
5.5

5.8
5.2

5.9
6.2

5.9
5.3

5.4
5.1

5.5
6.0

5.4
5.2

5.4
5.0

5.5
5.8

5.4
5.1

5.5
5.1

5.5
5.7

5.5
5.1

5.8
5.3

5.7
5.9

5.8
5.5

6.4
5.6

6.3
6.2

6.4
5.8

6.6
6.0

6.6
6.8

6.6
6.1

39.1
8.5

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

32.4
7.6

34.4
7.3

31.4
8.0

29.8
7.3

32.9
7.7

34.7
8.3

36.3
8.7

34.3
7.7

29.3
5.8

28.5
6.1

26.5
6.5

30.0
8.7

306

Taxation trends in the European Union

report2009.book  Page 307  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.3.1_T.pdf

Table C.3.1_T: Taxes on Capital as % of Total Taxation: Capital and business income

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
14.3
13.5
13.3
13.1
16.7
-
20.8
16.9
17.4
10.3
7.0
9.2
15.6
10.8
11.1
6.2
3.1
7.5
21.1
19.7
13.8
17.8
19.3
17.4
21.0
16.6
15.2
12.7
12.6
9.3
21.0
20.2
18.8
25.9
23.9
18.9
9.6
7.1
5.6
10.9
4.5
9.4
20.9
23.2
24.0
10.2
9.3
6.5
26.7
18.7
18.0
12.9
16.2
12.9
14.7
16.4
11.9
19.2
16.6
14.5
14.5
15.5
13.8
14.4
13.8
-
11.5
6.1
3.7
20.0
18.9
24.7
15.1
14.8
10.1
12.0
8.5
7.0
18.8
18.1
15.3

13.6
12.8
15.2
9.7
13.9
3.8
19.0
21.3
17.4
12.0
19.9
24.9
5.9
4.8
22.8
8.7
18.5
14.1
13.4
17.0
16.9
14.5
5.6
17.9
18.2
12.1
17.8

12.7
13.5
17.7
7.9
10.6
6.3
21.3
18.9
16.7
10.7
20.5
17.9
5.8
6.7
24.4
9.1
22.6
12.4
13.6
17.3
13.3
14.5
7.2
18.5
12.7
7.2
16.1

14.2
-
15.0
10.0
13.4
8.4
17.0
19.5
16.6
10.6
17.9
24.6
6.9
6.2
25.4
7.9
17.6
15.2
14.0
14.3
15.7
19.1
5.6
19.3
14.3
8.1
18.5

14.3
12.0
20.6
12.4
15.2
6.0
22.0
18.1
19.4
12.2
20.0
21.1
8.0
11.5
21.2
9.5
22.1
13.0
13.8
18.3
12.8
13.4
10.5
20.0
13.5
11.4
19.6

13.2
11.5
20.4
11.0
11.8
6.2
20.6
19.4
17.3
10.9
18.9
15.8
6.5
8.5
20.6
8.6
20.3
12.5
14.0
18.1
13.4
16.4
7.9
17.4
13.2
8.8
16.6

13.1
14.5
17.3
7.2
10.4
4.6
19.8
19.5
17.3
11.5
18.6
23.5
7.9
4.4
25.2
9.5
20.3
14.4
14.0
17.8
14.9
13.4
6.9
18.9
14.3
7.0
16.7

13.5
14.0
15.8
9.8
14.2
6.8
18.5
19.3
17.2
11.2
19.4
27.6
6.5
5.0
23.1
8.7
17.6
14.6
12.9
15.5
16.1
17.3
5.7
20.0
14.7
9.7
17.9

13.8
11.0
19.4
14.3
13.2
6.1
20.2
20.0
18.2
10.9
18.3
17.8
7.2
9.5
21.3
8.4
20.5
13.5
13.6
18.8
12.4
13.0
9.6
18.3
13.0
10.8
17.9

13.2
-
14.4
9.2
12.7
5.4
15.0
16.0
15.4
9.9
19.7
20.4
6.1
8.4
24.4
7.2
17.1
14.7
13.6
13.8
15.1
-
5.1
21.5
10.8
7.6
16.5

13.2
-
15.7
9.3
12.8
6.4
15.9
16.7
17.0
10.2
20.0
20.6
6.9
7.1
24.8
7.5
17.3
15.6
13.5
14.2
16.1
-
5.8
19.4
12.7
8.5
18.1

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

-

-
-

-

-
-

-

-
-

-

-
-

-

-

-

14.2

13.5

15.5

17.2

18.3

17.4

14.5
14.5

15.0
14.5

15.3
14.4

14.7
14.2

13.9
13.9

13.8
14.1

14.2
14.5

14.9
15.3

16.1
16.0

12.6
14.8

13.7
15.3

14.2
15.7

14.2
16.3

14.8
16.6

15.2
16.8

14.5
16.7

13.7
16.4

13.7
15.9

13.9
15.5

14.4
15.9

15.7
16.8

16.4
17.9

EU-25 averages
weighted
arithmetic

12.6
13.2

13.7
13.3

14.4
13.8

14.4
14.2

14.9
14.5

15.3
14.6

14.7
14.3

13.9
14.2

13.8
13.9

14.2
14.1

14.9
14.7

16.1
15.5

16.5
16.2

42.9
21.0

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

35.4
19.0

37.8
19.3

36.7
19.8

36.3
22.6

35.8
21.0

38.1
20.8

40.4
20.9

38.7
18.7

32.5
14.4

29.9
15.2

28.8
16.0

30.9
20.5

-12.0
-0.5

Ranking Revenue2)

2007
17
18
7
24
12
27
3
11
4
20
5
2
26
23
6
25
1
19
14
9
15
16
22
8
13
21
10

2007

21 105
1 296
9 749
11 410
149 306
314
12 529
13 052
81 799
103 595
139 245
1 689
618
925
2 786
4 100
504
28 383
16 768
20 665
8 711
5 247
1 512
3 227
11 698
19 228
140 308

21 600

Difference1)
1995 to 2007 2000 to 2007

1.1
-
3.4
1.1
4.5
-1.3
7.3
0.4
5.8
3.3
2.2
7.0
4.1
1.5
-3.1
3.6
8.7
0.0
2.8
4.7
0.7
-
7.8
-4.7
5.1
5.0
3.5

-

-
-

3.8
3.6

3.9
3.0

0.7
0.3
5.6
0.7
1.7
2.4
2.1
-3.5
3.5
0.6
1.0
1.0
3.7
6.1
-1.9
1.5
8.2
-1.2
1.4
2.2
-2.3
-0.1
5.9
2.1
-3.1
0.0
1.0

-

1.2
1.5

1.2
0.9

1.2
1.6

-4.9
-0.6

Taxation trends in the European Union                 307

report2009.book  Page 308  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.3.1.1_G.pdf

Table C.3.1.1_G: Taxes on Capital as % of GDP: Income of Corporations

Ranking Revenue2)

2007
11
14
4
10
19
27
13
26
5
20
8
1
23
25
3
21
2
12
24
22
9
18
16
17
7
6
15

2007

12 069
995
6 152
8 191
73 170
261
6 704
5 867
50 065
57 128
58 501
1 079
572
734
1 977
2 854
368
20 125
7 065
8 509
6 029
3 814
1 161
1 754
6 970
13 202
70 217

17 460

Difference1)
1995 to 2007 2000 to 2007

1.3
-
0.3
1.3
1.0
-0.7
0.8
0.2
2.9
1.2
1.0
2.7
0.9
0.5
-1.1
0.9
4.1
0.3
1.0
0.0
1.3
-
2.8
-3.4
1.6
1.4
0.7

-

-
-

1.3
1.4

1.1
0.9

0.4
0.6
1.4
0.3
0.0
0.8
-0.3
-1.6
1.6
0.2
0.9
0.7
1.2
1.9
-1.5
0.7
3.8
-0.8
0.4
0.3
-0.2
0.1
2.2
-0.3
-2.0
0.2
-0.1

-

0.2
0.4

0.3
0.3

0.3
0.4

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
3.6
3.1
3.4
3.9
4.8
4.1
3.6
2.8
3.0
1.7
1.7
0.7
3.5
3.6
2.6
3.4
4.8
2.9
3.0
3.1
3.8
3.7
6.9
6.2
2.7
1.9
2.6
0.5
5.4
7.3
2.8
2.3
6.7
3.2
3.5
4.2
2.6
3.3
2.8
1.9
3.7
3.4
3.1
2.7
3.4
1.3
3.2
3.4
3.9
4.2
4.0
2.6
3.4
3.5

3.0
3.1
4.3
2.9
1.7
1.1
3.7
3.4
3.3
2.5
3.1
6.0
2.0
0.6
8.0
2.3
3.9
3.6
2.4
2.0
3.4
2.6
1.6
3.2
4.2
2.1
2.8

3.2
2.8
3.5
3.3
3.0
0.9
3.8
4.1
3.1
2.8
2.9
6.2
1.6
0.7
7.0
2.2
2.9
4.3
2.2
2.4
3.9
3.0
1.2
3.5
5.9
3.8
3.5

3.5
2.5
4.5
3.9
2.5
1.4
3.5
3.2
3.9
2.3
2.9
4.6
2.0
2.1
5.8
2.2
4.5
3.6
2.3
2.5
2.8
2.7
2.8
3.0
3.3
3.6
3.4

3.7
2.9
4.8
4.4
3.0
1.5
3.9
2.7
4.2
2.8
3.5
5.5
2.3
2.8
5.0
2.4
5.0
3.6
2.3
2.4
3.0
2.8
3.0
3.2
3.4
3.6
4.0

3.2
3.2
3.8
2.4
2.8
2.0
3.9
3.1
2.9
2.7
3.2
6.7
2.0
0.8
6.7
2.3
2.7
4.5
2.0
2.4
3.6
3.8
1.2
4.1
4.3
3.1
3.5

2.9
3.2
4.6
2.9
1.9
1.6
3.8
2.9
3.1
2.1
3.5
4.3
1.5
1.4
7.3
2.2
4.5
3.0
2.3
1.8
2.9
2.8
1.7
3.4
3.4
2.2
2.7

3.2
2.6
4.7
3.2
2.2
1.7
3.7
3.0
3.5
2.3
3.1
3.7
1.8
1.9
5.7
2.2
4.1
3.3
2.4
2.2
3.0
3.2
1.9
3.0
3.5
2.9
2.9

3.4
-
3.4
3.0
2.7
2.4
3.4
2.8
2.5
2.3
2.8
5.8
2.3
1.3
7.6
2.2
2.5
4.5
2.3
2.6
3.2
3.7
1.0
4.1
4.3
2.6
3.9

2.7
-
3.4
2.5
2.4
1.6
3.1
2.0
2.0
2.0
3.3
4.7
1.8
1.8
6.8
1.8
2.3
4.1
2.1
2.7
2.8
-
0.9
5.0
2.8
2.6
3.2

2.3
-
4.6
2.3
2.1
2.4
2.8
2.3
1.9
1.8
2.9
4.2
1.8
2.1
6.6
1.9
2.6
3.3
1.6
2.7
2.4
-
0.5
6.6
2.3
2.6
2.8

2.8
-
3.8
2.7
2.6
1.8
3.2
2.3
2.7
2.3
3.8
4.6
2.2
1.6
7.5
1.9
2.6
4.5
2.2
2.7
3.2
-
1.0
4.3
3.5
2.8
3.9

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

2.2
2.9

2.3
2.8

-

-
-

2.6
3.1

2.7
2.8

-

-
-

2.9
3.3

3.0
3.1

-

-
-

2.8
3.4

3.0
3.2

-

-

-

4.5

4.2

5.2

5.9

6.7

6.1

3.1
3.2

3.0
3.6

3.1
3.2

3.2
3.2

3.1
3.7

3.2
3.3

3.0
3.1

2.9
3.6

3.0
3.1

2.7
3.1

2.7
3.6

2.7
3.1

2.6
3.0

2.6
3.3

2.6
3.0

2.8
3.0

2.7
3.2

2.8
3.0

3.0
3.2

2.9
3.4

3.0
3.2

3.4
3.4

3.3
3.6

3.4
3.4

3.4
3.7

3.5
4.0

3.5
3.7

60.4
6.1

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

43.0
6.4

47.0
5.9

45.5
6.6

43.2
5.9

45.7
6.3

48.8
6.8

55.2
7.4

47.5
5.9

32.9
4.0

32.3
4.4

28.3
3.9

34.7
5.2

-25.7
-0.9

-11.0
-1.1

308

Taxation trends in the European Union

report2009.book  Page 309  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.3.1.1_T.pdf

Table C.3.1.1_T: Taxes on Capital as % of Total Taxation: Income of Corporations

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
8.2
6.9
10.1
12.8
13.1
12.0
7.4
5.7
7.6
4.3
5.2
2.3
11.3
12.2
8.0
10.1
12.8
8.6
7.0
7.0
8.8
8.9
16.6
20.1
8.9
6.6
8.6
1.9
14.8
18.4
7.1
6.0
19.5
10.6
9.1
11.0
6.2
7.2
7.9
5.8
10.1
10.0
10.5
9.3
8.8
3.4
10.9
10.2
9.0
9.4
8.3
5.3
9.4
9.5

6.4
9.9
12.8
6.0
4.7
5.1
13.1
9.1
9.3
5.0
8.6
13.1
5.3
4.9
19.2
5.9
14.5
8.1
5.3
5.6
8.2
10.1
4.6
10.3
7.7
4.6
7.9

7.1
7.9
12.5
6.4
5.7
5.4
12.2
9.6
10.0
5.4
7.6
11.1
6.1
6.6
15.3
5.7
12.6
8.8
5.6
7.1
8.7
11.6
5.0
9.3
8.1
6.0
8.1

7.4
-
10.1
6.1
6.5
7.1
10.6
8.6
7.7
5.3
6.6
20.9
6.8
4.1
19.4
5.5
9.7
11.4
5.3
7.3
9.5
12.8
2.6
11.2
9.4
5.1
10.8

7.1
10.6
11.2
4.8
6.8
6.0
12.1
9.5
8.7
5.9
7.6
23.9
6.4
2.6
17.4
5.9
10.0
11.0
4.5
6.9
10.6
12.3
3.1
11.7
9.4
5.9
9.8

6.7
10.4
12.3
6.0
4.2
3.6
13.1
10.0
9.6
5.9
7.7
19.2
7.1
2.1
20.4
6.1
12.3
9.4
5.5
6.3
9.9
9.3
4.1
9.8
9.3
4.3
8.2

8.3
8.7
13.1
8.8
7.7
4.9
12.3
8.5
11.6
6.5
8.2
15.0
7.5
9.4
13.8
6.4
14.8
9.3
5.6
7.1
8.4
9.9
7.7
10.7
7.7
7.4
10.8

7.1
8.7
10.3
6.6
7.1
2.9
12.0
12.0
9.2
6.3
6.9
20.6
5.3
2.3
17.8
5.6
10.3
10.9
5.0
7.5
11.3
9.8
3.1
10.1
12.5
7.3
9.7

7.7
7.4
12.0
7.7
6.5
4.7
11.4
10.3
11.0
5.3
7.1
13.1
6.9
7.3
15.4
5.8
13.2
9.7
5.5
7.6
7.9
9.7
7.2
9.4
7.6
7.3
9.3

6.3
-
11.0
5.5
6.3
5.1
9.9
7.5
8.1
5.2
8.6
17.9
6.8
5.0
19.0
4.9
9.5
11.4
5.0
7.5
9.6
-
2.8
11.7
7.5
5.6
11.1

6.0
-
9.7
5.1
5.9
4.6
9.4
6.8
6.1
4.7
8.0
17.6
5.9
6.4
18.1
4.5
9.0
10.1
4.9
7.1
8.4
-
2.4
12.7
6.0
5.1
9.2

5.4
-
12.7
4.8
5.2
6.7
8.3
8.0
5.8
4.2
7.1
15.8
5.5
7.4
17.7
4.5
9.8
8.1
3.8
7.3
7.4
-
1.3
16.5
5.0
5.4
7.9

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

5.6
8.1

5.9
7.7

-

-
-

6.3
8.5

6.6
7.7

-

-
-

7.0
9.1

7.5
8.3

-

-
-

6.8
9.5

7.3
8.6

-

-

-

10.5

10.0

12.1

13.5

15.2

14.1

7.4
8.9

7.6
8.8

7.3
10.0

7.6
10.1

7.6
8.8

7.9
8.8

7.9
8.7

7.2
9.9

7.4
8.5

7.5
8.6

6.7
9.8

6.8
8.5

6.8
8.3

6.6
9.2

6.7
8.2

6.7
8.4

7.0
8.9

7.1
8.2

7.1
8.7

7.3
9.3

7.6
8.7

7.6
9.3

8.1
9.8

8.5
9.3

8.5
9.8

8.5
10.5

8.7
9.8

Ranking Revenue2)

2007
19
9
4
23
22
27
6
20
5
25
16
2
14
17
3
24
1
12
26
21
10
8
15
7
13
18
11

2007

12 069
995
6 152
8 191
73 170
261
6 704
5 867
50 065
57 128
58 501
1 079
572
734
1 977
2 854
368
20 125
7 065
8 509
6 029
3 814
1 161
1 754
6 970
13 202
70 217

17 460

Difference1)
1995 to 2007 2000 to 2007

2.8
-
0.4
2.6
2.5
-1.5
2.9
0.0
7.1
2.8
1.7
0.7
3.4
1.2
-2.8
2.5
9.6
1.0
2.4
0.6
2.7
-
7.5
-5.6
4.0
2.8
1.5

-

-
-

3.0
3.0

2.8
2.1

1.1
1.4
2.8
0.8
0.5
2.3
-0.7
-4.0
3.6
0.7
1.9
-4.0
3.6
6.4
-3.0
1.5
9.1
-1.8
1.2
0.5
-1.2
0.7
5.7
0.7
-3.5
1.0
-0.2

-

0.8
1.0

0.9
0.4

0.8
1.0

69.1
16.3

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

57.4
15.7

51.7
16.2

56.8
18.3

58.5
21.3

52.4
18.3

56.6
18.2

62.9
18.4

54.5
14.7

38.1
10.3

34.9
10.8

31.6
10.2

36.9
14.3

-32.2
-2.0

-15.5
-4.0

Taxation trends in the European Union                 309

report2009.book  Page 310  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.3.1.2_G.pdf

Table C.3.1.2_G: Taxes on Capital as % of GDP: Income of households

Ranking Revenue2)

2007
17
24
25
18
16
21
2
14
6
11
5
1
23
19
9
15
4
27
8
22
13
12
20
26
10
7
3

2007

1 541
33
123
832
15 325
39
3 810
1 720
12 874
18 938
22 595
531
30
95
382
741
82
-3 347
2 925
729
1 257
1 016
110
49
1 876
3 889
40 126

2 005

Difference1)
1995 to 2007 2000 to 2007

-0.5
-
-0.1
-0.5
0.4
0.1
1.5
0.1
0.4
0.6
-0.3
3.1
0.1
0.2
0.2
0.4
0.3
0.0
0.1
0.2
-0.4
-
0.1
-0.2
0.6
1.1
0.8

-

-
-

0.3
0.4

0.4
0.3

-2.2
1.6

-0.1
0.0
-0.1
0.0
0.2
0.1
0.9
0.0
0.4
0.1
-0.6
2.5
0.0
0.2
0.3
0.1
0.4
0.5
0.2
0.1
-0.3
-0.5
0.1
-0.2
-0.1
-0.5
0.4

-

0.1
0.2

0.1
0.3

0.1
0.2

8.6
0.8

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
0.5
0.6
0.1
0.1
0.1
0.2
0.4
-0.6
0.6
0.3
0.3
0.1
2.0
1.1
0.8
0.7
1.2
0.8
1.0
0.8
1.5
1.4
3.4
0.7
0.1
0.1
0.3
0.2
1.1
0.9
0.7
0.6
1.5
1.3
-0.6
0.1
1.1
0.9
0.2
0.1
0.8
1.0
0.8
1.1
0.3
0.2
0.1
0.3
1.0
0.9
1.2
0.9
2.0
1.6

0.5
0.1
0.1
-0.5
0.3
0.2
0.8
0.7
0.7
0.8
1.3
0.8
0.2
0.3
0.8
0.7
1.4
-0.1
0.9
0.2
0.9
1.0
0.2
0.2
0.6
0.6
1.5

0.5
0.1
0.2
-0.1
0.4
0.2
1.4
0.7
0.7
0.8
1.1
1.1
0.1
0.2
0.9
0.7
1.5
-0.4
0.8
0.3
0.9
0.9
0.2
0.2
0.6
0.6
1.4

0.4
0.1
0.1
1.2
0.4
0.1
1.5
0.6
0.7
0.8
1.1
1.1
0.0
0.3
0.8
0.6
1.4
-0.5
0.8
0.2
0.8
1.0
0.3
0.1
0.7
0.7
1.5

0.4
0.1
0.1
2.3
0.4
0.3
1.6
0.7
0.8
0.8
1.2
1.2
0.0
0.4
1.1
0.6
1.4
-0.5
0.8
0.2
0.8
0.7
0.2
0.1
0.8
1.0
1.6

0.4
0.1
0.1
0.8
0.5
0.2
2.1
0.7
1.1
1.0
1.4
1.7
0.1
0.3
1.5
0.6
1.4
-0.6
0.9
0.2
0.7
0.8
0.3
0.1
0.9
1.3
1.8

0.5
0.1
0.2
0.4
0.4
0.2
1.1
0.8
0.8
0.9
2.1
0.8
0.2
0.1
0.8
0.7
1.1
-1.1
0.9
0.2
1.0
1.3
0.2
0.3
1.1
1.7
1.5

0.5
0.1
0.2
1.2
0.4
0.1
0.8
0.8
0.8
0.8
1.6
0.6
0.0
0.1
0.9
0.5
1.0
-0.8
0.9
0.1
1.0
1.3
0.2
0.3
0.9
1.3
1.5

1.0
-
0.2
0.9
0.3
0.1
0.5
0.7
0.8
0.4
1.8
0.3
0.0
0.1
0.8
0.3
1.2
-0.6
1.0
0.0
1.2
-
0.2
0.3
0.4
0.1
1.1

0.7
-
0.2
0.8
0.3
0.1
0.6
0.7
0.8
0.5
2.0
0.2
0.0
0.1
0.9
0.5
1.0
-0.7
1.1
0.1
1.2
-
0.3
0.3
0.5
0.6
1.1

0.7
-
0.2
0.8
0.3
0.3
0.6
0.8
0.7
0.5
2.0
0.2
0.0
0.1
0.8
0.4
1.0
-0.7
1.0
0.0
1.2
-
0.3
0.3
0.6
0.8
1.1

0.6
-
0.2
0.6
0.4
0.2
0.7
1.0
0.8
0.8
1.6
0.5
0.0
0.1
0.9
0.4
1.1
-0.7
1.0
0.1
1.1
1.6
0.3
0.3
0.7
0.9
1.4

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

0.6
0.6

0.7
0.5

-

-
-

0.7
0.6

0.7
0.6

-

-
-

0.7
0.6

0.7
0.6

-

-
-

0.7
0.7

0.8
0.6

-

-

-

0.6

0.6

0.6

0.6

0.7

0.7

0.9
0.6

0.7
0.7

0.8
0.6

0.9
0.7

0.8
0.7

0.9
0.7

0.8
0.6

0.7
0.8

0.8
0.6

0.8
0.6

0.7
0.7

0.8
0.6

0.8
0.6

0.7
0.7

0.8
0.6

0.8
0.6

0.6
0.7

0.8
0.6

0.9
0.7

0.7
0.7

0.9
0.7

1.0
0.8

0.8
0.9

1.0
0.8

1.0
0.8

0.9
1.0

1.0
0.9

78.1
2.4

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

69.3
2.7

70.9
2.6

65.0
2.3

64.1
2.5

67.3
3.1

60.1
2.2

60.4
1.9

63.3
1.8

63.3
2.0

69.3
2.7

65.4
2.7

75.9
4.0

310

Taxation trends in the European Union

report2009.book  Page 311  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.3.1.2_T.pdf

Table C.3.1.2_T: Taxes on Capital as % of Total Taxation: Income of households

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1.0
1.3
0.3
0.3
0.3
0.5
0.8
-1.2
1.6
0.8
0.8
0.4
6.4
3.8
2.4
2.1
3.3
2.3
2.3
1.9
3.4
3.5
8.1
2.4
0.5
0.3
1.1
0.7
2.9
2.2
1.8
1.6
4.3
4.3
-1.5
0.2
2.6
2.1
0.7
0.4
2.1
2.9
2.8
4.0
0.8
0.6
0.3
1.0
2.4
2.0
2.4
1.8
5.4
4.4

1.0
0.2
0.4
-0.3
1.1
0.7
4.8
2.1
2.1
1.9
2.7
3.3
0.3
0.8
2.4
1.8
4.7
-1.0
1.9
0.8
2.7
3.4
0.6
0.6
1.3
1.3
4.0

1.2
0.3
0.4
-1.0
0.8
0.6
2.7
2.1
2.2
1.9
3.2
2.6
0.6
0.9
2.1
1.8
4.6
-0.4
2.1
0.7
2.7
3.5
0.6
0.7
1.2
1.3
4.3

0.9
0.2
0.4
2.5
1.1
0.4
4.8
2.0
2.0
1.8
2.8
3.3
0.2
1.2
2.1
1.5
4.3
-1.3
1.9
0.5
2.4
3.6
0.7
0.4
1.6
1.4
4.3

0.9
0.2
0.3
4.5
1.1
1.0
5.3
2.2
2.3
1.9
3.0
3.4
0.0
1.4
2.8
1.6
4.0
-1.3
1.8
0.5
2.2
2.3
0.5
0.2
1.9
1.9
4.5

0.9
0.3
0.3
1.5
1.3
0.8
6.5
2.3
3.1
2.3
3.3
4.8
0.2
1.0
4.2
1.7
4.1
-1.5
2.0
0.6
2.1
2.8
0.8
0.3
2.1
2.7
4.8

1.2
0.3
0.5
0.8
0.9
0.5
3.4
2.2
2.4
2.0
5.0
2.8
0.5
0.5
2.0
1.7
4.0
-2.7
2.0
0.5
3.0
4.3
0.6
1.0
2.4
3.3
4.2

1.2
-
0.5
1.3
0.9
0.4
2.3
3.0
2.3
1.7
3.8
1.8
0.1
0.4
2.2
1.1
4.2
-1.7
2.2
0.2
3.4
5.7
0.7
0.9
1.5
1.7
3.8

1.5
-
0.5
1.5
0.7
0.7
2.0
2.5
2.1
1.2
4.6
0.7
0.1
0.4
2.1
1.1
3.6
-1.8
2.3
0.1
3.5
-
0.7
0.8
1.4
1.5
3.1

1.0
0.3
0.5
2.4
0.9
0.3
2.5
2.4
2.4
1.8
3.8
2.0
0.1
0.4
2.5
1.4
3.8
-2.0
2.0
0.3
2.9
4.1
0.7
1.0
1.9
2.5
4.2

2.2
-
0.5
1.8
0.7
0.3
1.4
2.3
2.5
1.0
4.4
1.0
0.0
0.4
2.2
0.7
4.5
-1.5
2.3
0.1
3.6
-
0.6
0.6
0.9
0.2
3.2

1.5
-
0.5
1.5
0.8
0.3
1.7
2.4
2.4
1.0
4.7
0.8
0.1
0.4
2.4
1.3
4.1
-1.6
2.5
0.2
3.7
-
0.7
0.7
1.1
1.1
3.3

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

1.5
1.8

1.7
1.5

-

-
-

1.7
1.8

1.8
1.5

-

-
-

1.7
1.7

1.8
1.5

-

-
-

1.7
1.9

2.0
1.6

-

-

-

1.5

1.4

1.3

1.5

1.5

1.6

2.0
1.7

1.7
1.8

2.1
1.7

2.1
1.8

1.9
2.0

2.3
1.8

2.3
1.7

1.8
2.1

2.1
1.7

2.1
1.6

1.7
1.9

2.0
1.6

2.0
1.7

1.7
2.0

1.9
1.7

1.9
1.7

1.6
1.9

2.0
1.7

2.0
1.9

1.7
2.0

2.2
1.9

2.2
2.1

2.1
2.4

2.4
2.1

2.4
2.2

2.2
2.7

2.6
2.2

87.7
6.0

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

78.7
6.3

73.2
6.4

78.5
7.4

69.4
6.2

71.5
7.6

67.1
5.7

67.6
5.5

75.3
5.8

72.3
6.2

70.3
6.6

72.5
8.0

78.8
9.7

Ranking Revenue2)

2007
18
24
26
21
16
20
2
12
6
13
5
1
23
17
7
15
4
27
9
22
14
8
19
25
11
10
3

2007

1 541
33
123
832
15 325
39
3 810
1 720
12 874
18 938
22 595
531
30
95
382
741
82
-3 347
2 925
729
1 257
1 016
110
49
1 876
3 889
40 126

2 005

Difference1)
1995 to 2007 2000 to 2007

-1.2
-
-0.2
-1.1
0.9
0.5
5.0
0.0
0.8
1.3
-1.0
7.1
0.4
0.8
0.6
1.1
-0.2
0.0
0.2
0.6
-1.5
-
0.2
-0.3
1.5
2.2
2.2

-

-
-

0.7
0.9

1.0
0.8

-8.9
3.7

-0.1
0.1
-0.2
-0.1
0.7
0.2
3.0
0.1
0.9
0.4
-1.6
5.3
-0.1
0.6
0.9
0.1
0.3
1.1
0.6
0.1
-0.9
-1.5
0.2
-0.7
0.1
-0.9
1.2

-

0.3
0.4

0.3
0.7

0.3
0.4

7.3
2.0

Taxation trends in the European Union                 311

report2009.book  Page 312  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.3.1.3_G.pdf

Table C.3.1.3_G: Taxes on Capital as % of GDP: Income of self-employed

Ranking Revenue2)

2007
8
18
3
16
5
26
15
7
10
13
1
22
27
24
14
23
17
9
6
2
19
25
20
4
11
21
12

2007

7 494
268
3 474
2 386
60 811
14
2 016
5 465
18 860
27 529
58 149
79
16
96
427
506
55
11 605
6 779
11 427
1 426
416
242
1 424
2 852
2 137
29 965

2 136

Difference1)
1995 to 2007 2000 to 2007

-0.2
-
1.2
-0.2
0.4
-0.1
-0.3
0.3
-0.5
-0.3
0.9
0.0
0.1
-0.1
-0.3
0.0
0.0
-0.5
0.1
1.1
0.0
-
0.0
-0.5
-0.3
0.0
0.0

-

-
-

0.1
0.0

0.1
0.0

6.1
0.7

-0.2
-0.3
1.2
0.0
0.0
0.0
-0.1
-0.1
-0.2
-0.2
0.4
0.1
0.0
-0.3
0.0
0.0
-0.2
-0.3
-0.2
0.8
0.0
0.2
0.0
0.3
0.0
-0.1
0.0

-

0.0
0.0

0.0
-0.1

0.0
0.0

5.7
0.4

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
2.2
2.4
0.9
1.1
2.7
1.5
1.1
1.2
2.5
2.3
0.1
0.2
1.1
1.1
2.4
2.3
1.8
1.9
1.5
1.7
3.8
3.2
0.5
0.4
0.1
0.0
0.3
0.5
1.2
1.1
0.5
0.6
1.0
1.1
2.0
1.9
2.5
3.2
3.7
3.3
0.9
0.9
0.3
0.2
0.7
0.8
2.6
2.6
1.6
1.6
0.6
0.7
1.5
1.5

2.4
1.3
1.5
1.1
2.5
0.1
1.1
2.5
2.0
1.7
3.4
0.4
0.0
0.6
1.2
0.5
1.2
2.3
2.7
2.9
0.9
0.1
0.7
2.3
1.6
0.7
1.5

2.3
1.0
2.7
1.1
2.4
0.1
1.0
2.3
1.7
1.5
3.5
0.5
0.1
0.3
1.1
0.5
1.1
2.0
2.6
3.6
0.8
0.2
0.7
2.6
1.6
0.6
1.5

2.4
1.1
1.6
1.0
2.1
0.2
1.1
2.5
1.9
1.6
3.2
0.5
0.0
0.4
1.1
0.6
1.1
2.0
2.8
3.6
0.8
0.1
0.8
2.8
1.7
0.7
1.5

2.3
1.2
2.6
1.1
2.1
0.1
1.1
2.4
1.8
1.6
3.3
0.5
0.1
0.2
1.1
0.4
1.1
1.9
2.7
3.5
0.8
0.3
0.8
2.7
1.6
0.8
1.5

2.5
1.0
1.4
1.3
2.7
0.2
1.2
2.5
2.1
1.6
3.4
0.5
0.0
0.6
1.2
0.6
1.0
2.3
2.8
2.9
0.9
0.3
0.8
2.6
1.5
0.7
1.4

2.3
1.1
1.6
1.0
1.9
0.1
1.0
2.5
1.8
1.6
3.8
0.5
0.1
0.3
1.1
0.5
1.1
2.0
2.8
3.5
0.8
0.3
0.8
2.5
1.6
0.7
1.5

2.4
1.1
2.8
1.0
1.9
0.1
1.1
2.4
1.8
1.6
3.5
0.5
0.1
0.2
1.2
0.5
1.1
1.9
2.9
3.3
0.8
0.3
0.8
2.4
1.5
0.7
1.5

2.5
-
1.4
1.3
2.5
0.3
1.3
2.5
2.2
1.5
3.2
0.5
0.0
0.6
1.5
0.5
1.0
2.2
2.9
2.4
0.9
0.2
0.8
2.7
1.6
0.7
1.4

2.5
-
1.5
1.2
2.4
0.2
1.3
2.0
2.3
1.8
2.9
0.5
0.0
0.5
1.5
0.5
1.0
2.5
2.7
2.4
1.0
-
0.8
3.2
1.7
0.7
1.4

2.4
-
1.5
1.1
2.3
0.2
1.3
2.1
2.3
1.7
3.0
0.5
0.0
0.5
1.5
0.6
1.2
2.4
2.7
2.4
1.0
-
0.9
2.6
1.8
0.7
1.4

2.5
-
1.5
1.3
2.1
0.2
1.3
2.1
2.3
1.8
2.9
0.5
0.0
0.5
1.5
0.5
1.0
2.5
2.4
2.6
0.9
-
0.7
3.0
1.9
0.6
1.4

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

2.2
1.8

2.0
1.5

-

-
-

2.3
1.9

2.1
1.5

-

-
-

2.3
1.8

2.0
1.5

-

-
-

2.3
1.9

2.1
1.5

-

-

-

1.0

0.9

0.9

1.0

0.7

0.8

2.2
1.5

2.4
1.8

2.2
1.5

2.1
1.5

2.3
1.8

2.1
1.5

2.0
1.5

2.2
1.8

2.0
1.5

2.0
1.4

2.1
1.8

2.0
1.5

2.0
1.4

2.2
1.8

2.0
1.5

1.9
1.5

2.1
1.7

2.0
1.5

2.0
1.5

2.1
1.7

2.0
1.5

2.0
1.5

2.2
1.7

2.1
1.5

2.1
1.5

2.3
1.8

2.1
1.6

44.0
3.0

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

41.4
3.0

42.8
3.2

44.5
3.2

43.8
3.4

44.4
3.3

46.8
3.3

49.0
3.5

50.0
3.8

50.7
3.4

50.0
3.4

49.7
3.5

50.1
3.7

312

Taxation trends in the European Union

report2009.book  Page 313  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.3.1.3_T.pdf

Table C.3.1.3_T: Taxes on Capital as % of Total Taxation: Income of self-employed

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
5.1
5.4
2.7
3.7
7.4
4.4
2.2
2.5
6.4
5.7
0.3
0.5
3.4
3.8
7.5
7.0
4.8
5.7
3.4
3.8
8.8
7.8
1.2
1.4
0.2
0.1
1.1
1.9
3.2
2.7
1.3
1.7
2.9
3.7
5.3
5.1
5.9
7.1
10.6
10.3
2.4
2.7
1.1
0.5
1.8
2.2
8.8
7.7
3.7
3.5
1.3
1.5
4.0
4.2

5.2
3.8
4.5
2.2
5.4
0.5
4.0
7.3
5.5
3.6
7.8
1.7
0.2
1.4
2.7
1.6
3.4
5.4
6.5
10.9
2.3
0.5
2.1
8.4
3.7
1.4
4.3

5.2
3.4
4.5
2.2
4.8
0.5
3.4
7.7
5.4
3.8
9.2
1.5
0.2
1.0
2.8
1.4
3.4
5.3
6.4
11.0
2.4
0.9
2.0
7.6
3.7
1.4
4.3

5.2
3.4
7.6
2.0
5.0
0.4
3.6
7.8
5.3
3.7
8.5
1.4
0.2
0.7
3.1
1.4
3.4
5.0
6.6
10.6
2.3
1.2
2.2
7.7
3.5
1.4
4.2

5.2
3.4
7.0
2.1
5.5
0.4
3.5
7.5
4.9
3.7
8.2
1.3
0.3
0.7
3.0
1.1
3.2
5.1
6.3
10.7
2.3
1.0
2.0
8.6
3.5
1.5
4.1

5.1
2.9
7.3
2.1
6.2
0.4
3.2
7.3
4.7
3.5
8.4
1.3
0.2
1.1
3.2
1.3
3.2
5.2
6.2
10.6
2.4
0.6
1.9
9.0
3.6
1.3
4.0

5.4
3.1
4.1
2.6
6.5
0.5
3.9
7.4
6.1
3.5
7.9
1.7
0.0
2.0
3.2
1.4
3.8
5.6
6.4
8.3
2.6
0.9
2.0
7.3
3.4
1.3
4.0

5.4
3.9
4.4
2.2
5.9
0.4
3.6
7.1
5.8
3.7
8.0
1.5
0.1
2.1
3.0
1.4
4.1
5.9
6.3
9.0
2.6
0.4
1.8
6.8
3.4
1.4
4.0

5.5
-
4.3
2.6
6.0
0.8
4.1
7.8
6.6
3.5
7.5
1.8
0.0
1.7
3.8
1.3
3.8
5.5
6.5
6.8
2.8
0.6
2.2
7.3
3.5
1.4
3.9

5.4
-
4.2
2.3
5.7
0.5
4.1
6.7
6.8
3.9
6.8
1.9
0.0
1.7
3.8
1.5
4.2
6.0
6.1
6.5
3.0
-
2.3
6.9
3.8
1.4
3.9

5.7
-
4.2
2.6
5.3
0.5
4.0
7.1
6.9
4.1
7.3
2.0
0.0
1.6
4.1
1.3
3.7
6.3
5.8
7.1
2.8
-
1.8
7.6
4.1
1.3
4.1

5.6
-
4.2
2.5
5.9
0.5
4.0
6.8
6.8
4.2
7.0
1.9
0.0
1.6
4.0
1.3
4.0
6.2
6.2
6.5
3.0
-
2.0
8.0
3.7
1.4
4.0

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

5.5
4.9

5.1
4.1

-

-
-

5.7
5.0

5.2
4.1

-

-
-

5.5
4.8

5.0
4.0

-

-
-

5.6
4.9

5.1
4.0

-

-

-

2.2

2.0

2.1

2.2

1.6

1.7

5.3
3.9

5.8
4.8

5.3
4.0

5.1
3.9

5.6
4.7

5.1
4.0

5.1
3.9

5.5
4.7

5.1
4.1

5.0
3.9

5.4
4.7

5.1
4.1

5.1
3.9

5.5
4.7

5.1
4.0

5.0
4.0

5.4
4.7

5.0
4.1

5.0
3.9

5.4
4.6

5.1
4.1

5.1
3.9

5.5
4.6

5.2
4.1

5.2
4.0

5.6
4.7

5.2
4.1

44.6
7.5

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

43.0
8.0

42.1
6.9

45.7
7.8

45.3
8.3

47.1
8.9

49.5
10.2

52.4
10.7

53.1
10.8

54.8
10.3

54.9
10.5

54.8
10.4

54.2
10.4

Ranking Revenue2)

2007
9
17
5
19
6
26
13
4
10
14
3
23
27
25
15
22
16
8
7
1
18
24
20
2
12
21
11

2007

7 494
268
3 474
2 386
60 811
14
2 016
5 465
18 860
27 529
58 149
79
16
96
427
506
55
11 605
6 779
11 427
1 426
416
242
1 424
2 852
2 137
29 965

2 136

Difference1)
1995 to 2007 2000 to 2007

-0.6
-
3.2
-0.5
1.1
-0.2
-0.6
0.4
-2.1
-0.8
1.4
-0.8
0.2
-0.5
-0.9
0.0
-0.8
-1.0
0.2
3.5
-0.4
-
0.1
1.3
-0.4
0.0
-0.1

-

-
-

0.2
-0.4

0.1
0.1

9.7
2.8

-0.3
-1.2
3.0
-0.1
0.5
-0.2
-0.2
0.3
-0.9
-0.4
0.7
-0.2
0.1
-0.9
0.2
-0.1
-1.2
-0.6
-0.3
1.6
-0.2
0.8
0.0
2.0
0.3
-0.1
0.1

-

0.1
0.1

0.0
-0.2

0.1
0.1

7.1
1.5

Taxation trends in the European Union                 313

report2009.book  Page 314  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.3.2_G.pdf

Table C.3.2_G: Taxes on Capital as % of GDP: Stocks of capital / wealth

Ranking Revenue2)

2007
3
22
24
9
19
27
7
14
6
1
8
5
20
26
4
17
11
13
21
12
10
18
23
25
16
15
2

2007

12 414
289
873
6 205
26 601
86
5 312
3 473
36 155
88 464
42 580
541
217
171
1 312
1 305
116
11 768
2 753
6 545
3 764
1 496
313
334
2 388
4 921
94 598

19 160

Difference1)
1995 to 2007 2000 to 2007

0.8
-
-0.4
0.9
0.0
0.0
0.8
0.0
1.0
0.4
-1.1
2.1
-0.8
-0.3
1.0
0.6
0.8
0.2
-0.2
0.0
0.6
-
0.3
-0.3
0.2
0.0
1.0

-

-
-

0.2
0.5

0.3
0.3

3.9
0.4

0.3
0.6
-0.3
0.3
0.0
-0.1
0.8
-0.9
0.6
0.2
0.1
1.0
-0.1
-0.3
-0.6
0.3
1.0
-0.1
-0.1
0.5
0.3
0.0
0.0
-0.2
0.0
-0.6
0.2

-

0.1
0.1

0.2
0.2

0.1
0.1

1.2
0.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
3.7
3.3
1.0
0.4
0.7
1.0
2.7
2.6
1.1
1.1
0.6
0.6
2.8
2.0
1.5
2.0
3.4
2.8
4.7
4.5
2.8
2.5
3.5
1.8
1.0
1.3
0.6
0.7
3.6
3.9
1.3
1.0
2.1
1.3
2.1
2.2
1.0
1.1
2.1
1.7
2.3
2.0
1.2
1.2
0.9
0.9
0.6
0.8
1.3
1.2
1.5
1.9
4.6
4.3

3.4
0.5
0.9
2.7
1.0
0.6
1.8
1.6
2.9
4.4
2.8
1.5
0.8
0.7
3.2
1.0
1.5
2.3
1.1
1.9
2.3
1.1
0.9
0.8
1.3
1.8
4.3

3.7
0.7
0.7
2.8
1.1
0.6
2.7
1.4
3.6
4.7
2.6
2.7
0.7
0.6
3.2
1.3
2.2
2.3
1.0
2.2
2.1
0.9
0.9
0.7
1.4
1.7
4.4

3.8
0.8
0.7
2.8
1.1
0.5
3.2
1.5
3.8
4.6
2.8
2.3
0.6
0.6
3.4
1.3
2.1
2.0
1.0
2.5
2.2
1.0
0.9
0.7
1.3
1.8
4.6

3.4
0.4
1.0
2.4
1.1
0.7
2.0
2.4
2.8
4.5
2.6
2.5
1.2
0.9
4.2
1.0
1.1
2.2
1.1
1.6
2.0
1.2
0.9
0.8
1.3
2.1
4.4

3.4
0.4
1.0
2.0
1.2
0.7
2.1
2.3
2.8
4.7
3.0
1.4
1.8
1.0
3.8
1.0
1.1
2.2
1.1
1.7
2.0
1.1
0.9
0.8
1.3
2.1
4.1

3.5
0.6
0.9
2.8
1.1
0.6
2.2
1.5
3.0
4.4
2.6
1.7
0.9
0.6
2.9
1.2
1.6
2.1
1.1
1.8
2.7
1.0
0.8
0.8
1.2
1.8
4.2

3.8
0.7
0.7
2.8
1.1
0.6
2.4
1.3
3.3
4.6
2.8
2.5
0.8
0.7
2.9
1.3
2.5
2.2
1.1
1.8
2.0
0.9
0.9
0.8
1.4
1.8
4.3

3.4
-
1.0
2.0
1.1
0.6
2.0
1.8
2.7
4.7
3.3
1.5
1.9
0.9
3.5
0.9
1.2
2.1
1.1
1.9
1.8
0.6
0.9
0.8
1.3
2.1
3.9

3.1
-
1.1
1.8
1.2
0.7
2.1
1.7
2.4
4.5
3.6
1.3
1.4
1.0
2.9
0.9
1.2
2.0
1.2
2.1
1.6
-
0.6
1.2
1.3
2.0
3.7

2.9
-
1.0
1.8
1.1
0.6
2.0
1.5
2.4
4.3
3.9
1.4
1.9
0.9
2.6
0.7
1.3
1.9
1.2
2.2
1.7
-
0.6
0.9
1.2
1.5
3.6

3.3
-
1.0
1.8
1.1
0.7
2.0
1.9
2.5
4.7
3.8
1.3
1.7
1.0
3.2
0.9
1.2
2.0
1.1
2.1
1.7
-
0.7
0.9
1.3
2.2
3.8

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

2.5
1.9

2.6
1.8

-

-
-

2.6
2.0

2.6
1.9

-

-
-

2.6
2.0

2.7
1.9

-

-
-

2.6
2.1

2.8
1.9

-

-

-

5.2

5.3

6.2

7.3

7.7

6.7

2.8
1.9

2.6
2.1

2.8
2.0

2.8
1.9

2.5
2.2

2.8
2.0

2.7
1.8

2.4
2.1

2.7
1.9

2.7
1.8

2.5
2.0

2.7
1.9

2.7
1.8

2.5
2.1

2.7
1.9

2.8
1.9

2.6
2.2

2.8
2.0

2.8
2.0

2.6
2.3

2.9
2.1

2.9
2.0

2.7
2.3

3.0
2.1

2.9
2.0

2.7
2.3

2.9
2.1

39.4
3.7

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

39.6
4.0

38.0
3.9

40.0
4.2

40.6
4.3

42.1
4.1

41.2
4.1

40.4
3.9

40.8
3.8

41.5
4.0

42.4
4.1

43.0
4.1

43.3
4.1

314

Taxation trends in the European Union

report2009.book  Page 315  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.3.2_T.pdf

Table C.3.2_T: Taxes on Capital as % of Total Taxation: Stocks of capital / wealth

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
8.4
7.3
2.9
1.3
1.9
2.8
5.6
5.3
2.8
2.8
1.7
2.0
8.9
6.6
4.7
5.9
9.3
8.2
10.8
10.2
6.4
6.0
8.3
5.8
3.4
4.6
2.0
2.6
9.8
9.7
3.2
2.6
6.1
4.2
5.3
5.7
2.4
2.5
6.1
5.3
6.3
5.8
4.1
4.2
2.4
2.5
2.1
2.3
3.1
2.8
3.1
3.8
12.7
11.7

7.5
1.2
3.0
4.9
2.6
2.1
6.4
6.9
8.3
10.2
6.3
8.2
3.9
2.9
10.7
2.5
4.0
5.5
2.6
5.0
5.8
3.9
2.3
2.3
2.8
4.1
12.0

7.5
1.3
2.8
4.0
2.8
2.0
6.6
6.8
8.3
10.6
7.0
5.1
5.6
3.0
10.0
2.5
4.2
5.4
2.5
4.8
5.9
3.5
2.3
2.3
2.8
4.1
11.3

8.6
2.5
1.9
5.5
2.8
1.7
9.8
4.7
10.5
10.6
6.7
6.4
2.0
2.0
9.4
3.5
6.2
5.2
2.5
7.5
6.0
3.6
2.4
2.2
3.0
3.6
12.5

7.5
1.7
2.5
5.6
2.6
2.0
6.3
4.9
8.5
10.1
7.0
4.9
2.9
2.5
8.1
2.7
4.9
6.0
2.5
5.9
6.6
3.9
2.3
2.3
2.8
3.8
12.2

8.2
2.1
1.8
5.5
2.8
1.9
8.8
4.5
10.1
10.7
6.5
7.6
2.4
2.1
8.6
3.6
6.5
6.1
2.4
6.7
6.0
3.1
2.4
2.3
3.2
3.5
12.2

7.5
-
3.0
4.0
2.7
1.9
6.2
5.5
8.0
10.8
7.9
5.6
5.5
2.8
8.8
2.4
4.5
5.3
2.6
5.3
5.4
2.0
2.4
2.2
2.8
4.1
10.9

7.8
1.9
2.5
5.7
2.7
1.8
7.5
4.8
8.9
10.2
6.3
5.2
3.0
2.3
7.5
3.1
5.2
5.7
2.5
5.6
7.8
3.7
2.1
2.3
2.8
3.7
12.1

8.4
2.1
1.8
5.7
2.8
2.0
7.9
4.3
9.6
10.6
6.9
7.4
2.7
2.4
7.9
3.6
7.5
5.9
2.4
5.8
5.8
3.2
2.3
2.4
3.2
3.7
12.2

7.4
-
2.8
3.7
2.7
1.9
6.1
6.1
7.5
10.5
8.7
5.2
5.4
3.2
8.1
2.2
4.2
5.1
2.5
5.8
5.1
-
1.9
2.3
2.7
4.4
10.8

7.0
-
3.1
3.6
3.0
2.0
6.3
5.7
7.1
10.2
8.6
5.0
4.4
3.6
7.7
2.2
4.7
5.0
2.7
5.7
5.0
-
1.6
3.1
2.7
4.1
10.7

6.6
-
2.9
3.8
2.9
1.6
6.1
5.2
7.4
10.0
9.7
5.1
5.7
3.2
7.1
1.7
4.8
4.6
2.9
5.8
5.3
-
1.6
2.2
2.6
3.1
10.5

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

6.2
5.3

6.5
4.9

-

-
-

6.3
5.3

6.6
5.0

-

-
-

6.4
5.4

6.8
5.0

-

-
-

6.4
5.5

6.8
5.1

-

-

-

12.1

12.5

14.4

16.8

17.6

15.5

6.8
5.0

6.2
5.6

6.8
5.2

6.8
5.1

6.0
5.8

6.8
5.3

6.8
5.0

6.0
5.5

6.8
5.2

7.0
4.9

6.2
5.5

7.0
5.1

6.9
5.0

6.2
5.6

6.9
5.2

7.2
5.2

6.6
5.9

7.2
5.4

7.3
5.2

6.7
6.0

7.3
5.5

7.4
5.3

6.7
6.1

7.4
5.5

7.2
5.3

6.6
6.1

7.3
5.5

40.1
8.9

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

37.6
9.1

38.7
9.0

39.0
9.1

40.6
10.0

42.4
10.8

39.9
10.5

39.1
10.5

40.5
10.3

40.9
10.4

42.1
10.3

43.3
10.7

43.0
11.0

Ranking Revenue2)

2007
6
20
26
12
21
27
5
14
4
2
8
7
16
25
3
17
10
13
22
11
9
15
23
24
18
19
1

2007

12 414
289
873
6 205
26 601
86
5 312
3 473
36 155
88 464
42 580
541
217
171
1 312
1 305
116
11 768
2 753
6 545
3 764
1 496
313
334
2 388
4 921
94 598

19 160

Difference1)
1995 to 2007 2000 to 2007

1.8
-
-1.0
1.8
-0.1
0.1
2.8
-0.4
1.9
0.8
-3.3
3.2
-2.3
-1.2
2.7
1.6
1.3
0.7
-0.4
0.3
1.0
-
0.8
-0.1
0.5
0.0
2.2

-

-
-

0.3
0.9

0.8
0.6

2.9
2.1

1.0
1.7
-1.2
0.7
0.1
-0.4
2.5
-2.2
0.9
0.6
0.1
0.1
-0.5
-0.9
-0.8
0.7
2.2
-0.2
-0.1
1.1
0.5
0.2
0.1
-0.3
0.3
-1.0
0.7

-

0.4
0.2

0.6
0.3

0.5
0.2

0.6
0.3

Taxation trends in the European Union                 315

report2009.book  Page 316  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.4_G.pdf

Table C.4_G: Environmental taxes as % of GDP

Ranking Revenue2)

2007
22
4
14
1
20
18
17
25
27
21
13
5
24
26
12
8
3
2
16
10
7
23
6
19
9
11
15

2007

7 010
991
3 185
13 381
54 185
352
4 632
4 626
19 106
39 968
39 552
535
434
518
954
2 888
204
21 888
6 612
8 350
4 785
2 567
1 038
1 249
4 944
8 737
50 241

8 210

Difference1)
1995 to 2007 2000 to 2007

-0.1
-
-0.4
1.4
-0.1
1.3
-0.6
-1.1
-0.4
-0.6
-1.0
0.6
0.8
-0.1
-0.3
-0.1
0.6
0.2
0.3
0.9
-0.6
-
-1.2
-0.1
-0.2
-0.1
-0.4

-

-
-

-0.4
-0.3

-0.3
-0.1

4.3
0.5

-0.2
1.0
-0.1
0.6
-0.1
0.6
-0.4
-0.3
-0.4
-0.3
-0.5
0.7
-0.3
-0.6
-0.1
-0.1
0.1
0.0
0.0
0.6
0.2
-1.4
0.1
0.1
-0.4
-0.1
-0.5

-

-0.3
-0.1

-0.3
-0.1

-0.3
-0.1

8.5
0.5

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
2.1
2.3
3.4
2.8
2.5
2.6
5.9
5.2
2.2
2.5
2.3
2.1
2.4
2.3
2.0
2.5
1.8
2.1
2.1
2.3
2.6
3.0
3.4
3.0
2.1
2.2
1.8
2.5
2.6
2.8
2.9
2.8
3.7
3.7
3.9
3.8
2.4
2.6
2.7
2.1
2.9
3.0
2.1
2.4
3.0
3.3
2.3
1.9
2.8
2.9
2.6
2.8
2.5
2.8

2.2
2.2
2.5
5.4
2.5
2.0
2.3
2.3
2.1
2.5
2.8
2.9
2.3
2.8
2.8
2.8
3.4
3.7
2.7
2.4
3.2
2.1
3.3
2.4
3.0
2.8
2.7

2.3
3.1
2.7
6.0
2.5
2.3
2.5
2.1
1.9
2.3
2.7
3.5
2.7
2.3
3.0
2.7
3.3
3.9
2.6
2.7
3.1
2.0
3.2
2.6
3.1
2.8
2.5

2.2
3.1
2.6
6.2
2.4
2.2
2.5
2.0
1.9
2.3
2.7
3.3
2.4
1.8
2.6
2.8
3.4
4.1
2.5
2.8
3.0
1.9
3.0
2.4
3.0
2.7
2.4

2.3
2.5
2.6
5.3
2.4
1.7
2.9
2.3
2.2
2.4
3.1
2.7
2.4
2.4
2.8
2.9
3.7
3.9
2.4
2.1
2.7
3.5
2.9
2.2
3.1
2.7
3.0

2.5
2.3
2.6
5.4
2.3
1.7
3.0
2.7
2.3
2.6
3.4
2.5
2.5
2.9
2.8
3.3
4.1
3.9
2.3
2.1
3.4
3.9
4.2
2.0
3.4
2.8
3.1

2.3
3.0
2.6
5.2
2.7
1.9
2.3
2.2
2.1
2.5
2.9
3.7
2.5
2.8
2.8
2.6
3.4
3.7
2.7
2.5
3.1
2.4
3.3
2.6
3.2
2.9
2.7

2.4
3.4
2.6
5.6
2.5
2.1
2.5
2.1
2.0
2.4
2.8
4.0
2.6
2.7
3.0
2.7
3.1
3.9
2.7
2.6
3.1
2.4
3.3
2.7
3.2
2.8
2.6

2.4
-
2.4
5.3
2.1
1.9
3.0
2.9
2.3
2.6
3.3
2.5
3.0
2.6
2.9
3.4
3.9
3.8
2.3
1.8
3.5
3.0
5.1
1.9
3.3
3.0
3.1

2.5
-
2.7
4.8
2.2
1.5
3.1
3.1
2.2
2.8
3.4
2.8
1.7
1.9
2.9
2.9
3.1
3.8
2.1
1.9
3.5
-
4.4
2.1
3.1
3.1
2.9

2.2
-
2.9
4.5
2.3
1.0
3.1
3.1
2.2
2.7
3.5
2.9
1.2
1.9
3.0
3.0
3.2
3.6
2.1
1.8
3.5
-
4.2
2.3
2.9
2.8
2.9

2.5
-
2.5
4.9
2.2
1.6
3.0
3.1
2.1
2.6
3.4
2.5
2.2
2.2
3.0
2.9
3.5
3.8
2.4
1.8
3.3
-
4.5
2.1
3.3
2.9
2.9

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

2.7
2.9

2.8
2.8

-

-
-

2.7
2.9

2.8
2.8

-

-
-

2.7
2.9

2.7
2.8

-

-
-

2.7
3.0

2.8
3.0

-

-

-

3.3

3.2

3.2

3.0

3.0

2.9

2.8
3.0

2.7
3.0

2.8
3.0

2.7
2.8

2.6
2.8

2.7
2.8

2.7
2.7

2.6
2.7

2.7
2.8

2.7
2.7

2.6
2.8

2.7
2.8

2.7
2.8

2.7
2.8

2.7
2.8

2.7
2.9

2.6
2.9

2.7
2.9

2.6
2.8

2.5
2.8

2.6
2.8

2.5
2.7

2.5
2.7

2.6
2.8

2.5
2.7

2.4
2.6

2.5
2.7

29.8
3.6

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

28.7
3.3

28.8
3.3

30.9
3.4

28.8
3.7

25.7
3.6

25.1
3.3

25.1
3.4

24.4
3.3

27.4
3.6

30.1
4.0

33.4
4.4

34.2
4.1

316

Taxation trends in the European Union

report2009.book  Page 317  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.4_T.pdf

Table C.4_T: Environmental taxes as % of Total Taxation

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
4.8
5.0
10.0
9.0
6.8
7.7
12.1
10.8
5.7
6.3
7.0
7.0
7.8
7.9
6.3
7.7
4.9
6.2
4.9
5.3
6.0
7.1
8.2
9.6
6.7
7.6
6.1
8.8
7.2
7.1
7.2
7.3
10.8
12.1
9.9
9.9
5.8
5.8
7.8
6.4
8.0
8.8
7.0
8.2
7.9
8.6
7.7
5.9
6.4
6.6
5.5
5.6
6.7
7.6

5.3
10.2
7.1
11.4
6.5
6.9
8.2
6.9
5.8
5.5
6.8
11.9
9.1
9.6
8.2
7.3
9.3
10.3
6.3
8.2
9.1
8.7
8.7
8.5
7.4
5.7
7.4

5.0
7.5
7.6
10.7
5.7
5.5
9.1
6.8
6.4
5.5
7.4
8.9
8.1
8.1
7.1
7.6
13.1
9.8
5.6
6.4
8.0
11.4
7.9
6.5
6.6
5.3
8.1

5.4
-
7.3
10.7
5.2
5.7
9.4
8.9
6.9
6.0
7.8
9.1
9.0
8.0
7.4
8.8
15.4
9.7
5.2
5.2
10.5
10.6
13.4
5.2
7.2
5.7
8.6

5.4
7.5
7.7
10.8
5.5
5.2
9.3
8.2
6.9
5.8
8.0
8.8
7.7
9.1
7.3
8.6
14.9
9.8
5.2
6.0
9.9
12.6
10.9
5.6
7.4
5.4
8.6

4.9
9.3
7.1
12.4
6.1
7.1
7.7
6.3
5.1
5.2
6.4
9.0
7.9
6.1
7.3
7.6
10.0
10.4
5.9
8.2
8.3
6.8
7.8
8.3
6.8
5.6
6.5

5.1
9.3
7.4
10.8
6.7
6.1
8.0
6.7
6.1
5.8
7.1
11.4
8.8
9.8
7.3
7.0
10.9
9.9
6.3
7.6
8.9
8.5
8.7
7.9
7.2
5.9
7.7

4.9
7.5
7.3
11.2
6.4
6.4
8.2
6.8
6.1
5.8
6.9
9.4
8.1
9.7
7.1
7.4
10.9
9.7
6.1
7.3
9.1
7.6
8.6
7.1
6.8
5.9
7.8

5.2
9.0
7.3
11.8
6.3
7.4
8.1
6.6
5.4
5.2
6.7
9.9
9.2
8.1
7.9
7.3
9.8
10.5
6.2
8.1
8.7
7.2
8.3
8.2
7.0
5.7
6.9

5.6
-
7.8
9.8
5.4
4.3
9.4
10.5
6.6
6.3
8.2
10.6
5.5
6.9
7.8
7.2
12.0
9.6
5.0
5.2
10.8
-
11.5
5.4
6.6
6.1
8.5

5.6
-
7.3
9.9
5.3
4.6
9.2
10.1
6.4
6.0
7.8
9.7
6.8
7.0
7.5
7.5
12.8
9.5
5.4
5.0
10.0
-
12.2
5.5
7.2
5.7
8.3

5.1
-
8.0
9.3
5.8
2.7
9.2
10.7
6.7
6.3
8.8
10.7
3.7
6.8
8.0
7.2
11.9
9.1
5.2
5.0
10.9
-
10.8
5.8
6.4
5.7
8.3

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

6.8
8.2

7.0
7.5

-

-
-

6.6
8.2

6.9
7.7

-

-
-

6.5
8.1

6.8
7.7

-

-
-

6.5
8.3

6.8
8.1

-

-

-

7.7

7.6

7.3

6.8

6.9

6.6

7.0
8.1

6.6
8.1

6.9
7.9

6.7
7.6

6.3
7.5

6.7
7.5

6.7
7.6

6.5
7.5

6.7
7.5

6.9
7.6

6.5
7.5

6.9
7.6

6.9
7.9

6.7
7.7

6.9
7.8

6.8
8.0

6.5
7.8

6.8
7.9

6.6
7.7

6.4
7.5

6.6
7.7

6.4
7.4

6.2
7.2

6.4
7.4

6.2
7.2

5.8
7.0

6.2
7.1

34.8
9.2

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

32.9
7.8

33.1
8.2

37.8
10.2

34.2
9.6

28.9
8.1

25.2
7.1

22.8
6.3

24.3
6.3

25.8
6.7

24.6
6.6

27.2
7.6

29.2
7.4

Ranking Revenue2)

2007
27
3
15
1
23
14
8
19
25
26
21
5
16
20
12
11
2
4
22
9
6
13
7
10
18
24
17

2007

7 010
991
3 185
13 381
54 185
352
4 632
4 626
19 106
39 968
39 552
535
434
518
954
2 888
204
21 888
6 612
8 350
4 785
2 567
1 038
1 249
4 944
8 737
50 241

8 210

Difference1)
1995 to 2007 2000 to 2007

-0.3
-
-1.3
2.8
-0.2
4.3
-1.4
-4.4
-1.8
-1.5
-2.9
-2.5
3.1
-0.7
-0.8
0.0
-1.1
0.9
0.6
2.8
-2.9
-
-2.9
1.9
0.0
-0.3
-1.6

-

-
-

-1.0
-1.4

-0.8
-0.4

-5.7
-1.8

-0.3
2.5
-0.8
1.4
0.0
1.5
-1.3
-0.4
-1.5
-0.6
-1.5
-0.7
-1.4
-2.0
0.1
-0.5
-2.3
0.1
0.2
1.3
0.0
-4.3
0.0
1.3
-0.2
0.2
-1.4

-

-0.6
-0.4

-0.5
-0.6

-0.6
-0.3

0.3
-0.7

Taxation trends in the European Union                 317

report2009.book  Page 318  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.4.1_G.pdf

Table C.4.1_G: Environmental taxes as % of GDP: Energy

Ranking Revenue2)

2007
25
1
5
6
12
11
27
26
24
23
9
17
19
22
2
8
16
15
21
3
10
18
4
13
20
7
14

2007

4 469
881
2 939
5 116
45 275
290
2 259
2 739
14 674
27 360
31 567
280
358
459
888
2 099
98
10 368
4 453
7 403
3 330
2 118
807
1 004
3 006
7 314
37 502

3 625

Difference1)
1995 to 2007 2000 to 2007

-0.2
-
0.0
0.1
-0.1
1.3
-0.5
-1.3
-0.4
-0.6
-1.1
1.3
0.7
0.5
-0.4
-0.6
0.9
0.2
0.2
1.2
-0.6
-
-0.8
-0.3
-0.5
-0.2
-0.5

-

-
-

-0.4
-0.2

-0.4
-0.1

-0.1
0.8
0.2
-0.4
-0.2
0.7
-0.2
-0.4
-0.3
-0.4
-0.5
1.1
-0.1
-0.1
-0.2
-0.3
0.4
0.0
0.1
0.6
0.4
-1.5
-0.1
-0.1
-0.3
-0.1
-0.5

-

-0.3
-0.1

-0.3
-0.1

-0.3
0.0

-2.0
-0.7

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1.3
1.4
3.0
2.6
2.3
2.3
2.3
2.7
1.9
2.1
1.9
1.6
1.2
1.2
1.2
1.5
1.4
1.7
1.4
1.7
2.1
2.4
1.8
1.0
1.7
1.6
1.6
1.8
2.4
2.7
2.1
2.3
1.8
1.5
1.8
1.8
1.6
1.7
2.4
1.8
2.0
1.9
1.7
1.9
2.3
2.7
1.8
1.7
1.7
1.9
2.2
2.4
1.8
2.2

1.4
2.7
2.4
2.4
2.0
1.8
1.2
1.2
1.4
1.6
2.2
1.8
2.0
1.6
2.5
2.1
1.3
2.0
1.6
2.3
2.0
1.7
2.3
2.0
1.8
2.3
1.9

1.5
2.7
2.5
2.5
2.1
1.9
1.3
1.2
1.5
1.6
2.2
1.9
2.2
1.7
2.8
2.1
1.3
2.0
1.8
2.3
2.1
1.8
2.5
2.1
1.9
2.4
2.0

1.4
2.3
2.1
2.6
2.0
1.2
1.4
1.6
1.7
1.8
2.6
0.7
1.8
1.8
2.7
2.4
1.4
1.9
1.6
1.8
1.6
3.2
2.4
2.0
2.0
2.4
2.4

1.4
2.0
2.2
2.7
2.2
1.5
1.3
1.4
1.7
1.8
2.3
1.0
1.8
2.0
2.6
2.2
1.4
1.8
1.7
2.0
2.1
1.7
2.7
1.9
2.0
2.5
2.2

1.5
2.1
2.2
2.7
1.9
1.4
1.6
1.8
1.8
2.0
2.9
0.5
2.1
2.1
2.7
2.8
1.6
1.9
1.6
1.8
2.2
3.8
3.3
1.8
2.2
2.5
2.4

1.4
2.6
2.3
2.7
2.3
1.5
1.3
1.3
1.6
1.7
2.4
1.9
2.0
2.0
2.7
2.3
1.3
1.8
1.8
2.1
2.2
2.0
2.6
2.2
2.0
2.5
2.1

1.5
3.0
2.4
2.6
2.2
1.8
1.3
1.3
1.6
1.7
2.2
2.1
2.1
1.8
2.9
2.1
1.2
1.9
1.9
2.1
2.2
2.3
2.6
2.2
1.9
2.4
2.0

1.6
-
2.0
2.4
1.7
1.6
1.7
2.1
1.9
2.0
2.9
0.5
2.7
1.7
2.8
2.9
1.6
1.8
1.6
1.5
2.4
2.5
3.9
1.7
2.2
2.6
2.4

1.6
-
2.2
2.3
1.8
1.0
1.7
2.5
1.8
2.0
3.0
0.5
1.5
1.1
2.8
2.4
0.8
1.7
1.4
1.4
2.6
-
3.3
1.9
2.1
2.7
2.3

1.6
-
2.1
2.2
1.8
1.2
1.7
2.3
1.7
2.0
3.0
0.5
1.8
1.3
2.8
2.4
1.3
1.8
1.7
1.3
2.4
-
3.5
1.8
2.3
2.6
2.3

1.5
-
2.3
2.2
1.9
0.6
1.7
2.5
1.8
2.0
3.1
0.5
1.0
1.1
2.8
2.7
0.9
1.7
1.4
1.2
2.6
-
3.1
2.1
2.1
2.4
2.3

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

2.1
2.0

2.1
1.9

-

-
-

2.1
2.0

2.1
1.9

-

-
-

2.1
2.0

2.1
2.0

-

-
-

2.0
2.0

2.1
2.1

-

-

-

1.7

1.6

1.5

1.4

1.3

1.3

2.2
2.1

2.1
2.0

2.2
2.0

2.1
2.0

2.0
1.8

2.1
1.9

2.0
1.9

1.9
1.8

2.0
1.9

2.0
1.9

1.9
1.8

2.0
1.9

2.0
2.0

2.0
1.9

2.0
2.0

2.0
2.1

1.9
1.9

2.0
2.0

1.9
2.0

1.9
1.9

1.9
2.0

1.9
1.9

1.8
1.8

1.9
1.9

1.8
1.9

1.7
1.7

1.8
1.8

34.8
2.6

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

30.6
3.0

32.4
2.8

31.4
3.4

29.8
3.2

25.8
2.5

23.3
1.8

21.9
1.7

20.9
1.4

22.6
1.7

22.2
1.6

21.8
1.5

23.8
1.9

-11.1
-0.8

318

Taxation trends in the European Union

report2009.book  Page 319  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.4.1_T.pdf

Table C.4.1_T: Environmental taxes as % of Total Taxation: Energy

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
3.0
3.1
8.9
8.5
6.3
6.7
4.6
5.6
4.7
5.3
5.7
5.3
3.8
3.9
3.7
4.6
3.8
4.9
3.3
3.9
4.8
5.9
4.3
3.1
5.6
5.8
5.4
6.4
6.7
6.8
5.2
6.0
5.2
5.0
4.7
4.7
3.9
3.8
6.9
5.5
5.6
5.5
5.8
6.7
6.1
7.3
6.2
5.2
3.9
4.4
4.6
4.8
5.0
6.1

3.3
6.9
6.4
5.3
4.6
4.2
5.0
5.5
5.5
4.4
6.8
2.0
6.4
6.8
7.0
7.2
5.8
4.6
3.6
5.1
6.5
12.0
8.5
5.0
4.8
4.8
6.7

3.2
7.0
6.3
5.4
4.9
4.0
4.5
4.6
5.1
4.1
6.2
2.3
6.2
5.8
6.8
6.3
4.9
4.6
3.7
5.4
4.7
10.7
6.5
5.8
4.2
4.5
6.5

3.4
-
6.1
4.9
4.2
4.7
5.2
6.4
5.6
4.5
6.7
1.9
7.9
5.4
7.1
7.4
6.2
4.6
3.5
4.1
7.3
8.8
10.4
4.6
4.7
5.1
6.7

3.2
8.2
6.4
5.6
5.8
5.0
4.3
4.1
4.8
4.0
5.8
5.8
6.9
7.1
7.0
6.1
4.1
4.9
4.1
6.6
6.4
7.3
6.7
6.5
4.5
5.2
6.0

3.0
6.6
6.3
5.6
5.5
4.8
4.5
4.1
4.9
4.1
5.6
3.2
6.2
7.1
6.7
5.9
4.3
4.8
4.0
6.1
6.2
6.2
7.1
5.7
4.4
5.1
6.2

3.1
8.1
6.5
4.7
5.1
5.9
3.9
3.7
3.9
3.6
5.2
5.0
6.5
5.6
7.0
5.6
3.9
5.2
3.9
6.7
5.7
6.0
6.1
6.8
4.1
4.7
5.0

3.3
9.0
6.5
5.3
5.6
5.9
4.4
4.0
4.6
4.0
5.5
6.2
7.5
6.5
7.9
5.5
3.8
5.1
4.3
6.7
6.4
8.4
6.7
7.1
4.5
5.0
5.8

3.3
8.0
6.7
4.9
5.3
6.3
4.2
3.9
4.2
3.7
5.4
5.4
7.7
6.1
7.6
5.5
3.8
5.3
4.2
6.9
6.0
6.6
6.4
6.8
4.2
4.9
5.4

3.5
-
6.1
4.5
4.3
3.5
5.2
7.4
5.2
4.5
6.8
1.9
5.6
4.1
7.2
6.2
4.6
4.6
3.8
3.6
7.1
-
9.4
4.9
5.0
5.0
6.6

3.6
-
6.3
4.7
4.5
3.0
5.2
8.4
5.4
4.6
7.2
2.0
5.0
4.1
7.4
6.0
3.2
4.3
3.4
3.7
7.8
-
8.7
4.8
4.5
5.4
6.7

3.5
-
6.4
4.4
4.9
1.5
5.2
8.5
5.5
4.7
7.9
2.0
3.1
4.0
7.6
6.5
3.2
4.2
3.4
3.3
8.1
-
8.0
5.2
4.7
5.0
6.6

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

5.3
5.4

5.4
5.1

-

-
-

5.1
5.3

5.3
5.2

-

-
-

5.0
5.3

5.2
5.2

-

-
-

4.9
5.4

5.2
5.6

-

-

-

3.9

3.9

3.4

3.2

3.0

2.9

5.3
5.7

5.0
5.2

5.3
5.4

5.1
5.3

4.8
4.8

5.1
5.1

5.1
5.4

4.8
4.8

5.1
5.2

5.2
5.3

4.9
4.9

5.2
5.3

5.2
5.6

5.0
5.1

5.2
5.5

5.1
5.8

4.9
5.2

5.1
5.5

4.9
5.5

4.7
5.0

4.9
5.4

4.7
5.2

4.5
4.8

4.7
5.1

4.5
5.1

4.2
4.6

4.4
4.9

36.1
7.0

Convergence indicators
St.dev/mean
Max-min
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

33.3
6.7

31.0
7.5

35.0
8.5

35.6
10.0

30.6
8.3

24.6
5.4

21.9
4.1

23.7
5.0

28.2
5.7

26.7
4.7

26.7
5.0

28.6
5.9

Ranking Revenue2)

2007
27
1
4
18
16
8
23
25
24
26
15
20
9
11
3
12
13
17
21
2
10
7
6
5
22
19
14

2007

4 469
881
2 939
5 116
45 275
290
2 259
2 739
14 674
27 360
31 567
280
358
459
888
2 099
98
10 368
4 453
7 403
3 330
2 118
807
1 004
3 006
7 314
37 502

3 625

Difference1)
1995 to 2007 2000 to 2007

-0.4
-
-0.1
0.2
-0.2
4.2
-1.4
-4.8
-1.7
-1.3
-3.1
2.3
2.5
1.4
-1.0
-1.2
2.0
0.5
0.5
3.6
-2.6
-
-1.8
1.0
-0.8
-0.4
-1.6

-

-
-

-1.1
-0.9

-0.9
-0.2

-7.5
-1.1

-0.1
1.9
-0.1
-0.7
-0.1
1.8
-0.7
-0.8
-1.4
-0.8
-1.4
2.0
-0.7
-0.4
-0.1
-1.0
0.2
0.1
0.2
1.5
0.8
-4.9
-0.4
0.4
-0.3
0.0
-1.4

-

-0.7
-0.2

-0.6
-0.2

-0.7
-0.1

-2.0
-2.5

Taxation trends in the European Union                 319

report2009.book  Page 320  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.4.2_G.pdf

Table C.4.2_G: Environmental taxes as % of GDP: Transport

Ranking Revenue2)

2007
11
20
25
1
18
27
5
8
16
12
15
3
21
26
24
10
2
4
9
22
7
19
14
23
6
17
13

2007

2 042
88
213
5 024
8 910
9
2 368
1 887
4 281
11 444
7 521
255
60
40
66
647
90
7 731
2 087
740
1 453
433
169
106
1 829
1 308
10 933

3 787

Difference1)
1995 to 2007 2000 to 2007

0.0
-
-0.2
0.1
0.0
-0.2
-0.1
0.2
0.0
0.0
0.1
-0.7
0.3
-0.6
0.0
0.5
-0.7
0.0
0.1
0.1
0.0
-
-0.5
-0.1
0.2
0.1
-0.1

-

-
-

0.0
-0.1

0.0
-0.1

0.0
0.1
-0.2
0.4
0.0
-0.2
-0.2
0.1
0.0
0.1
0.0
-0.3
-0.1
-0.5
0.1
0.3
-0.6
0.0
0.0
0.1
-0.2
0.3
0.1
0.0
-0.1
0.1
0.0

-

0.0
0.0

0.0
-0.1

0.0
-0.1

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
0.6
0.7
0.3
0.2
0.2
0.3
2.2
1.7
0.4
0.4
0.1
0.2
1.2
1.1
0.8
1.0
0.4
0.4
0.6
0.5
0.5
0.5
1.6
2.0
0.3
0.3
0.1
0.7
0.2
0.1
0.6
0.4
1.7
2.1
1.4
1.3
0.8
0.9
0.2
0.2
0.9
1.1
0.3
0.1
0.5
0.4
0.2
0.2
1.0
1.0
0.4
0.3
0.5
0.5

0.7
0.2
0.2
2.2
0.4
0.1
1.2
0.8
0.4
0.6
0.5
1.6
0.3
0.5
0.1
0.5
1.8
1.3
0.8
0.3
1.0
0.1
0.5
0.2
1.2
0.4
0.5

0.6
0.2
0.3
1.8
0.3
0.2
1.4
0.8
0.4
0.5
0.5
2.0
0.3
0.7
0.1
0.4
2.3
1.4
0.8
0.2
1.1
0.1
0.4
0.2
1.1
0.3
0.6

0.6
0.3
0.2
2.3
0.4
0.1
1.2
0.8
0.4
0.6
0.5
1.5
0.3
0.1
0.1
0.6
1.8
1.4
0.8
0.2
0.9
0.1
0.5
0.2
1.1
0.4
0.5

0.7
0.2
0.3
1.9
0.4
0.2
1.1
0.9
0.4
0.7
0.5
1.9
0.3
0.7
0.1
0.4
2.0
1.2
0.9
0.2
1.0
0.1
0.4
0.2
1.0
0.3
0.5

0.7
0.2
0.4
2.2
0.4
0.2
1.4
0.9
0.4
0.6
0.5
1.9
0.2
0.7
0.1
0.4
2.5
1.5
0.7
0.1
1.2
0.1
0.9
0.2
1.2
0.3
0.6

0.7
0.2
0.3
1.8
0.3
0.0
1.1
0.8
0.4
0.7
0.5
1.8
0.4
0.7
0.1
0.2
2.1
1.2
0.9
0.2
0.9
0.1
0.5
0.2
1.2
0.3
0.5

0.7
0.2
0.2
2.0
0.4
0.1
1.1
0.9
0.4
0.6
0.5
1.9
0.4
0.8
0.1
0.5
1.8
1.3
0.8
0.3
0.9
0.1
0.5
0.2
1.2
0.3
0.5

0.7
-
0.3
2.3
0.4
0.2
1.3
0.8
0.4
0.6
0.4
2.0
0.1
0.8
0.1
0.3
2.3
1.4
0.7
0.1
1.1
0.0
1.1
0.2
1.1
0.3
0.6

0.7
-
0.4
2.1
0.4
0.3
1.4
0.6
0.4
0.7
0.4
2.3
0.0
0.7
0.1
0.3
2.2
1.5
0.7
0.2
1.0
-
1.0
0.2
1.0
0.4
0.6

0.7
-
0.3
2.1
0.4
0.2
1.3
0.8
0.4
0.6
0.4
2.0
0.0
0.8
0.1
0.3
2.3
1.3
0.7
0.3
1.0
-
1.0
0.2
1.0
0.3
0.6

0.6
-
0.4
2.1
0.4
0.3
1.3
0.6
0.4
0.6
0.4
2.3
0.0
0.8
0.1
0.2
2.3
1.3
0.7
0.2
0.9
-
1.0
0.2
0.8
0.3
0.6

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

0.5
0.9

0.6
0.8

-

-
-

0.6
0.9

0.6
0.8

-

-
-

0.5
0.9

0.6
0.8

-

-
-

0.6
0.9

0.6
0.8

-

-

-

1.3

1.3

1.4

1.4

1.4

1.3

0.6
0.8

0.6
0.9

0.6
0.8

0.6
0.7

0.6
0.9

0.6
0.8

0.6
0.7

0.6
0.9

0.6
0.7

0.6
0.7

0.6
0.8

0.6
0.7

0.6
0.7

0.6
0.8

0.6
0.7

0.6
0.7

0.6
0.8

0.6
0.7

0.6
0.7

0.6
0.8

0.6
0.7

0.6
0.7

0.6
0.8

0.6
0.7

0.6
0.7

0.6
0.8

0.6
0.7

Convergence indicators
St.dev/mean 116.3 112.0 110.1 111.3 107.6 107.0 101.1
Max-min
2.1
2.2
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

2.2

2.3

2.3

2.3

2.3

96.8
1.9

97.3
2.1

98.1
1.9

96.1
2.1

96.3
2.2

92.8
2.2

-23.5
-0.2

-14.2
-0.1

320

Taxation trends in the European Union

report2009.book  Page 321  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.4.2_T.pdf

Table C.4.2_T: Environmental taxes as % of Total Taxation: Transport

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1.4
1.5
0.9
0.5
0.5
0.9
4.6
3.5
0.9
1.0
0.2
0.7
4.0
3.9
2.6
3.0
1.1
1.3
1.4
1.3
1.1
1.2
3.9
6.5
0.9
1.1
0.5
2.3
0.5
0.3
1.6
1.0
4.8
7.1
3.5
3.4
1.8
1.9
0.7
0.5
2.4
3.3
1.2
0.2
1.3
1.2
0.7
0.7
2.4
2.2
0.8
0.6
1.5
1.3

1.5
0.6
0.9
3.9
0.9
0.6
3.7
2.7
1.2
1.5
1.2
6.3
1.2
2.6
0.3
1.1
6.3
3.2
2.0
0.7
2.9
0.3
1.1
0.6
2.3
0.6
1.4

1.5
0.7
0.8
3.7
0.9
0.1
3.7
2.6
1.2
1.7
1.2
5.5
1.3
2.6
0.3
0.4
6.8
3.3
2.1
0.7
2.5
0.2
1.2
0.6
2.6
0.6
1.4

1.4
0.9
0.5
4.6
1.0
0.2
3.8
2.6
1.1
1.4
1.2
4.0
1.0
0.3
0.3
1.6
5.4
3.5
2.0
0.7
2.5
0.5
1.2
0.6
2.6
0.8
1.2

1.6
0.5
1.0
4.3
0.8
0.6
4.3
2.8
1.3
1.4
1.1
6.9
0.5
2.2
0.3
1.0
9.0
3.6
1.6
0.4
3.4
0.4
2.3
0.6
2.5
0.6
1.7

1.5
0.6
0.5
4.1
0.9
0.2
3.8
2.8
1.2
1.3
1.2
5.7
1.2
2.8
0.3
1.3
5.4
3.4
1.9
1.1
2.7
0.2
1.3
0.6
2.8
0.6
1.4

1.5
0.7
0.5
4.3
1.0
0.2
3.9
2.7
1.2
1.3
1.2
4.5
1.1
1.7
0.3
1.4
5.3
3.5
2.0
0.9
2.7
0.2
1.3
0.6
2.6
0.8
1.3

1.4
0.5
1.0
3.7
0.8
0.7
4.5
2.2
1.3
1.1
1.1
6.6
1.1
2.2
0.3
1.0
8.1
3.5
1.9
0.6
3.3
0.2
1.2
0.7
2.3
0.6
1.6

1.4
-
0.9
4.6
1.0
0.6
4.1
2.6
1.3
1.4
0.9
7.2
0.3
2.4
0.4
0.8
9.1
3.5
1.6
0.3
3.2
0.2
2.9
0.6
2.3
0.6
1.7

1.5
-
0.8
4.4
0.9
0.7
4.0
2.6
1.1
1.4
0.8
7.8
0.1
2.7
0.4
0.8
8.2
3.2
1.6
0.7
2.9
-
2.6
0.6
2.1
0.7
1.7

1.3
-
1.1
4.3
1.0
0.8
3.9
2.2
1.2
1.5
1.0
8.7
0.0
2.7
0.4
0.4
8.7
3.3
1.7
0.5
2.8
-
2.6
0.6
1.7
0.7
1.7

1.5
-
1.1
4.3
0.9
0.9
4.1
2.0
1.2
1.5
0.8
8.5
0.0
2.6
0.4
0.8
8.8
3.7
1.6
0.6
3.0
-
2.7
0.6
2.0
0.7
1.7

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

1.4
2.7

1.4
2.2

-

-
-

1.4
2.7

1.4
2.2

-

-
-

1.3
2.6

1.4
2.2

-

-
-

1.4
2.7

1.5
2.2

-

-

-

3.1

3.1

3.3

3.1

3.1

3.1

1.5
2.1

1.4
2.7

1.5
2.2

1.4
2.0

1.3
2.5

1.4
2.1

1.4
1.9

1.4
2.5

1.4
2.1

1.5
1.9

1.5
2.4

1.5
2.0

1.5
1.9

1.5
2.4

1.5
2.0

1.5
1.9

1.4
2.3

1.5
2.0

1.5
1.8

1.5
2.2

1.5
1.9

1.5
1.7

1.5
2.2

1.5
1.8

1.5
1.7

1.4
2.1

1.5
1.8

Ranking Revenue2)

2007
13
20
26
2
19
27
3
6
17
12
16
4
18
25
24
10
1
5
9
22
7
15
14
23
8
21
11

2007

2 042
88
213
5 024
8 910
9
2 368
1 887
4 281
11 444
7 521
255
60
40
66
647
90
7 731
2 087
740
1 453
433
169
106
1 829
1 308
10 933

3 787

Difference1)
1995 to 2007 2000 to 2007

0.1
-
-0.6
0.3
0.0
-0.6
0.1
0.4
-0.1
-0.1
0.2
-4.8
0.9
-2.2
0.1
1.2
-3.9
0.2
0.1
0.2
-0.4
-
-1.3
0.0
0.7
0.2
-0.2

-

-
-

0.1
-0.6

0.0
-0.4

0.0
0.4
-0.5
0.9
0.1
-0.5
-0.5
0.4
-0.2
0.2
0.0
-2.7
-0.2
-1.7
0.2
0.6
-3.4
0.0
0.0
0.1
-0.8
1.0
0.1
0.0
0.0
0.2
-0.1

-

0.1
-0.2

0.1
-0.4

0.1
-0.3

Convergence indicators
St.dev/mean 158.2 157.1 149.9 148.7 141.3 137.9 122.9 111.1 110.8 105.0
Max-min
5.5
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

6.8

6.1

6.7

8.2

9.0

8.7

8.7

8.8

7.9

96.5
5.0

96.6
5.2

90.6
4.6

-67.6
-4.1

-47.3
-3.3

Taxation trends in the European Union                 321

report2009.book  Page 322  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_C.4.3_G.pdf

Table C.4.3_G: Environmental taxes as % of GDP: Pollution/Resources

Ranking Revenue2)

2007
7
10
19
1
24
3
22
24
20
14
17
24
11
13
24
8
4
2
18
12
23
21
6
5
15
16
9

2007

499
22
34
3 241
0
54
5
0
151
1 164
464
0
16
18
0
142
16
3 789
72
207
2
16
61
139
109
115
1 806

798

Difference1)
1995 to 2007 2000 to 2007

0.0
-
-0.2
1.1
0.0
0.2
0.0
0.0
0.0
0.0
0.0
0.0
-0.1
0.0
0.0
0.0
0.3
0.0
0.0
-0.4
0.0
-
0.1
0.2
0.1
0.0
0.1

-

-
-

0.0
0.0

0.0
0.1

0.0
0.1
-0.1
0.6
0.0
0.1
0.0
0.0
0.0
0.0
0.0
0.0
-0.1
0.1
0.0
0.0
0.3
0.0
0.0
-0.1
0.0
-0.1
0.1
0.3
0.0
0.0
0.0

-

0.0
0.0

0.0
0.0

0.0
0.0

66.4
0.8

71.1
0.6

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
0.1
0.2
0.1
0.0
0.0
0.0
1.4
0.8
0.0
0.0
0.4
0.3
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.1
0.0
0.0
0.0
0.0
0.1
0.2
0.1
0.0
0.0
0.0
0.1
0.1
0.3
0.0
0.7
0.7
0.0
0.0
0.1
0.1
0.0
0.0
0.0
0.4
0.2
0.1
0.3
0.0
0.1
0.0
0.0
0.1
0.1
0.1

0.2
0.1
0.0
1.3
0.0
0.3
0.0
0.0
0.0
0.1
0.0
0.0
0.1
0.1
0.0
0.1
0.2
0.6
0.0
0.1
0.0
0.1
0.2
0.3
0.1
0.0
0.1

0.2
0.1
0.0
1.6
0.0
0.3
0.0
0.0
0.0
0.1
0.0
0.0
0.1
0.1
0.0
0.1
0.2
0.7
0.0
0.3
0.0
0.1
0.2
0.3
0.1
0.0
0.1

0.2
0.0
0.1
0.8
0.0
0.3
0.0
0.0
0.0
0.1
0.0
0.0
0.2
0.0
0.0
0.2
0.0
0.7
0.0
0.2
0.0
0.1
0.1
0.0
0.0
0.1
0.0

0.2
0.1
0.0
0.8
0.0
0.3
0.0
0.0
0.0
0.1
0.0
0.0
0.2
0.0
0.0
0.2
0.1
0.6
0.0
0.2
0.0
0.3
0.2
0.3
0.0
0.1
0.1

0.2
0.0
0.1
0.6
0.0
0.1
0.0
0.0
0.0
0.1
0.0
0.0
0.3
0.0
0.0
0.1
0.0
0.6
0.0
0.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0

0.2
0.1
0.0
0.8
0.0
0.3
0.0
0.0
0.0
0.1
0.0
0.0
0.2
0.0
0.0
0.2
0.0
0.6
0.0
0.1
0.0
0.3
0.3
0.3
0.0
0.1
0.1

0.2
0.2
0.0
1.0
0.0
0.2
0.0
0.0
0.0
0.1
0.0
0.0
0.1
0.1
0.0
0.2
0.0
0.6
0.0
0.1
0.0
0.0
0.2
0.3
0.0
0.0
0.1

0.2
-
0.1
0.6
0.0
0.1
0.0
0.0
0.0
0.1
0.0
0.0
0.3
0.0
0.0
0.2
0.0
0.6
0.0
0.3
0.0
0.5
0.0
0.0
0.0
0.0
0.0

0.2
-
0.2
0.4
0.0
0.1
0.0
0.0
0.0
0.1
0.0
0.0
0.2
0.1
0.0
0.2
0.0
0.6
0.0
0.3
0.0
-
0.0
0.0
0.0
0.0
0.0

0.2
-
0.1
0.5
0.0
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.4
0.1
0.0
0.2
0.0
0.7
0.0
0.3
0.0
-
0.0
0.0
0.0
0.0
0.0

0.2
-
0.2
0.3
0.0
0.1
0.0
0.0
0.0
0.1
0.0
0.0
0.2
0.0
0.0
0.1
0.0
0.6
0.0
0.4
0.0
-
0.1
0.0
0.0
0.0
0.0

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

0.1
0.1

0.1
0.1

-

-
-

0.1
0.1

0.1
0.1

-

-
-

0.1
0.1

0.1
0.1

-

-
-

0.1
0.1

0.1
0.1

-

-

-

0.3

0.3

0.3

0.2

0.3

0.3

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.1

0.1
0.2

0.1
0.1

0.1
0.2

0.1
0.2

0.1
0.1

0.1
0.2

0.1
0.2

0.1
0.1

0.1
0.2

Convergence indicators
St.dev/mean 233.0 207.4 225.4 231.1 214.1 228.4 230.5 212.3 211.0 233.1 265.4 290.8 299.4
Max-min
1.4
0.8
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

0.8

0.8

1.3

1.6

0.6

0.6

0.6

0.6

0.7

0.8

1.0

322

Taxation trends in the European Union

report2009.book  Page 323  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_C.4.3_T.pdf

Table C.4.3_T: Environmental taxes as % of Total Taxation: Pollution/Resources

Tables

Annex A

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
0.3
0.4
0.2
0.0
0.1
0.1
2.9
1.6
0.0
0.0
1.1
1.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.2
0.1
0.1
0.0
0.0
0.2
0.7
0.2
0.0
0.0
0.0
0.4
0.4
0.8
0.0
1.7
1.7
0.1
0.1
0.2
0.4
0.0
0.0
0.0
1.3
0.5
0.2
0.9
0.0
0.1
0.1
0.1
0.1
0.2
0.1

0.4
0.3
0.1
3.1
0.0
1.0
0.0
0.0
0.0
0.2
0.1
0.0
0.3
0.2
0.0
0.4
0.7
1.7
0.1
0.8
0.0
0.3
0.5
0.9
0.1
0.1
0.2

0.4
0.4
0.1
1.6
0.0
1.0
0.0
0.0
0.1
0.2
0.1
0.0
0.6
0.1
0.0
0.5
0.0
1.7
0.1
0.4
0.0
1.0
0.7
0.8
0.1
0.1
0.2

0.4
0.3
0.1
1.7
0.0
0.9
0.0
0.0
0.0
0.2
0.1
0.0
0.7
0.0
0.0
0.4
0.3
1.7
0.1
0.5
0.0
1.2
0.4
0.8
0.1
0.1
0.2

0.5
0.0
0.2
1.2
0.0
0.4
0.0
0.0
0.0
0.1
0.1
0.0
0.8
0.2
0.0
0.4
0.0
1.6
0.1
0.5
0.0
0.1
0.1
0.0
0.1
0.0
0.1

0.5
0.4
0.1
2.5
0.0
0.9
0.0
0.0
0.0
0.2
0.1
0.0
0.4
0.3
0.0
0.3
0.7
1.7
0.0
0.3
0.0
0.4
0.6
0.8
0.1
0.1
0.2

0.5
0.5
0.1
2.0
0.0
0.8
0.0
0.0
0.0
0.2
0.1
0.0
0.4
0.3
0.0
0.5
0.1
1.7
0.1
0.4
0.0
0.1
0.6
0.8
0.1
0.1
0.2

0.4
0.0
0.3
1.6
0.0
0.8
0.0
0.0
0.0
0.2
0.1
0.0
0.7
0.0
0.0
0.4
0.0
1.6
0.1
0.5
0.0
0.5
0.2
0.0
0.1
0.1
0.1

0.5
-
0.3
1.1
0.0
0.4
0.0
0.0
0.0
0.1
0.1
0.0
0.8
0.1
0.0
0.6
0.0
1.6
0.1
0.7
0.0
1.6
0.1
0.0
0.1
0.0
0.1

0.5
-
0.4
1.0
0.0
0.4
0.1
0.0
0.0
0.1
0.1
0.0
1.1
0.2
0.0
0.5
0.0
1.6
0.0
0.7
0.0
-
0.1
0.0
0.1
0.0
0.1

0.5
-
0.5
0.9
0.0
0.4
0.1
0.0
0.0
0.2
0.1
0.0
0.5
0.2
0.0
0.5
0.0
1.6
0.0
0.8
0.0
-
0.1
0.0
0.0
0.1
0.0

0.4
-
0.6
0.7
0.0
0.4
0.1
0.0
0.0
0.2
0.0
0.0
0.6
0.1
0.0
0.3
0.0
1.6
0.0
1.1
0.0
-
0.2
0.0
0.0
0.1
0.0

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 averages
weighted
arithmetic

EA-16 averages
weighted
arithmetic

EU-25 averages
weighted
arithmetic

-

-
-

0.2
0.2

0.2
0.3

-

-
-

0.2
0.2

0.2
0.3

-

-
-

0.2
0.2

0.2
0.3

-

-
-

0.2
0.2

0.2
0.3

-

-

-

0.8

0.7

0.6

0.5

0.7

0.6

0.2
0.2

0.2
0.2

0.2
0.3

0.2
0.3

0.2
0.2

0.2
0.3

0.2
0.3

0.2
0.2

0.2
0.3

0.2
0.4

0.2
0.3

0.2
0.3

0.2
0.4

0.2
0.3

0.2
0.3

0.2
0.4

0.2
0.3

0.2
0.4

0.3
0.4

0.2
0.3

0.3
0.4

0.3
0.4

0.2
0.3

0.3
0.4

0.2
0.4

0.2
0.3

0.2
0.4

Convergence indicators
St.dev/mean 231.7 203.0 227.6 249.4 205.2 214.9 231.4 208.8 207.7 208.6 225.1 248.9 262.7
Max-min
2.9
1.6
1) In percentage points  2) In millions of euro
See explanatory notes in Annex B
Source:  Commission services

1.7

3.1

2.0

2.5

1.7

1.7

1.6

1.6

1.6

1.6

1.6

Ranking Revenue2)

2007
8
11
17
1
24
3
22
24
21
14
18
24
10
12
24
7
5
2
19
13
23
20
6
4
15
16
9

2007

499
22
34
3 241
0
54
5
0
151
1 164
464
0
16
18
0
142
16
3 789
72
207
2
16
61
139
109
115
1 806

798

Difference1)
1995 to 2007 2000 to 2007

0.0
-
-0.5
2.3
0.0
0.7
-0.1
0.0
0.0
-0.1
0.0
0.0
-0.3
0.1
0.0
0.0
0.8
0.1
0.0
-0.9
0.0
-
0.3
0.8
0.1
0.0
0.2

-

-
-

0.0
0.1

0.1
0.1

-0.1
0.2
-0.2
1.3
0.0
0.3
0.0
0.0
0.0
0.0
0.0
0.0
-0.5
0.2
0.0
0.0
0.8
0.1
0.0
-0.3
0.0
-0.4
0.3
0.9
0.1
-0.1
0.1

-

0.0
0.1

0.0
0.1

0.0
0.1

31.0
1.4

47.8
1.3

Taxation trends in the European Union                 323

report2009.book  Page 324  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_ITR C.pdf

Table D.1: Implicit tax rates in %: Consumption

Ranking
2007
11
8
13
1
19
9
7
27
26
21
25
14
20
24
4
3
18
5
12
15
17
23
10
16
6
2
22

Difference1)
1995 to 2007 2000 to 2007

1.4
-
-0.7
3.2
1.0
3.1
0.8
-
1.7
-2.0
-0.3
8.8
0.2
0.2
5.8
-3.7
5.5
3.5
1.1
0.6
1.2
-
-0.5
-5.9
-1.2
0.2
-1.5

-

-
-

0.2
1.5

0.0
0.7

-2.4
0.2

0.1
5.8
2.0
0.3
0.9
4.6
-0.3
-1.1
0.3
-1.4
-0.8
8.6
0.9
-0.1
3.8
-0.4
4.5
3.0
-0.5
3.6
1.1
1.3
0.6
-1.1
-2.1
1.6
-1.0

-

0.0
1.3

0.0
1.1

0.0
1.1

-1.4
-2.3

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 average
weighted
arithmetic

EA-16 average
weighted
arithmetic

EU-25 average
weighted
arithmetic

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
22.0
21.0
20.6
25.4
18.9
-
21.4
18.9
22.1
33.7
33.5
30.5
19.8
18.5
18.8
24.4
19.9
21.3
25.6
23.9
24.8
15.4
16.7
-
15.9
15.2
14.2
19.5
20.3
21.5
17.1
17.3
17.4
21.4
14.3
12.6
19.6
17.5
19.4
17.9
17.5
17.7
26.9
22.8
21.1
27.1
25.6
30.8
20.3
16.5
14.8
26.8
24.4
23.3
21.6
22.1
20.5
21.4
17.2
20.7
20.3
19.3
19.2
18.1
15.5
-
24.1
23.0
24.6
20.6
18.8
26.4
26.5
27.6
27.6
27.8
26.6
27.6
18.4
19.1
20.0

22.3
25.5
21.1
34.0
18.3
23.4
26.5
15.2
16.4
19.9
17.4
20.4
20.1
16.7
26.3
25.8
19.9
26.5
21.2
20.2
21.0
17.7
23.8
20.2
27.2
27.4
18.6

22.2
24.4
22.2
33.9
18.1
22.2
26.4
14.8
16.3
20.1
16.7
20.0
20.2
16.5
26.2
26.4
19.7
25.0
21.7
19.5
20.6
17.9
23.6
22.2
27.6
27.5
18.7

21.8
19.7
19.4
33.4
18.9
19.8
25.9
16.5
15.7
20.9
17.9
12.7
18.7
18.0
23.1
27.5
15.9
23.7
22.1
17.8
19.2
16.8
23.5
21.7
28.6
26.3
19.4

21.4
18.7
19.3
33.7
18.5
20.0
24.9
16.1
15.4
20.3
17.1
15.4
17.4
17.9
22.8
25.4
18.1
23.9
22.5
17.9
19.9
16.2
23.9
19.4
27.7
26.8
19.0

22.0
23.2
21.8
33.3
18.2
19.8
25.9
15.3
16.0
20.1
16.8
20.0
18.5
16.1
25.3
27.6
17.6
24.8
22.1
18.4
19.7
16.4
23.9
21.5
27.7
26.9
19.1

21.3
20.6
19.6
33.3
18.6
19.9
24.7
15.5
15.8
20.0
16.6
18.9
18.6
17.0
23.9
26.0
16.5
24.2
22.2
18.3
19.8
17.7
24.0
21.1
28.1
26.9
19.2

22.5
17.6
19.7
33.7
19.0
17.9
25.7
-
15.9
22.1
18.0
11.3
19.5
19.2
22.5
27.9
14.8
23.9
22.8
19.5
20.0
15.9
25.1
21.4
29.4
26.9
19.9

21.6
-
19.4
31.9
18.1
20.5
25.2
-
14.6
22.2
17.3
11.3
18.9
20.4
21.6
27.2
14.8
23.6
22.1
19.7
19.3
-
22.9
23.6
29.3
26.7
19.9

21.3
-
21.2
31.6
18.3
19.8
24.7
-
14.4
22.1
17.1
12.3
17.9
16.4
20.8
29.5
14.0
23.4
21.1
20.7
19.6
-
24.1
24.6
27.4
26.9
19.9

21.4
-
18.6
32.7
18.3
18.6
25.4
-
15.3
22.0
17.8
11.5
21.1
20.7
21.6
27.6
13.8
23.5
22.3
18.9
19.9
-
24.4
23.0
29.1
27.2
19.7

-

-
-

-

-
-

-

-
-

-

-
-

-

-

-

29.3

27.9

28.2

28.8

29.9

30.3

20.5
21.1

20.0
20.9

19.6
20.4

19.6
20.7

19.6
21.1

19.7
21.4

19.7
21.9

19.8
22.0

20.0
22.2

19.4
20.3

19.3
20.2

19.4
20.3

19.6
20.5

20.1
20.8

19.6
20.5

19.2
20.1

19.2
20.5

19.1
20.7

19.1
21.1

19.2
21.3

19.4
21.4

19.6
21.5

20.0
21.4

20.0
21.1

20.0
21.2

20.1
21.3

20.5
21.5

20.1
21.1

19.6
20.7

19.7
21.0

19.6
21.2

19.7
21.5

19.7
21.9

19.8
22.0

20.0
22.2

Convergence indicators
23.8
St.dev/mean
Max-min
18.2
1) in percentage points
See explanatory notes in Annex B
Source:  Commission services

24.0
19.3

23.4
20.6

24.6
21.2

23.9
22.5

22.7
20.6

22.4
19.3

22.0
18.3

21.5
17.8

22.4
18.0

22.0
19.2

21.8
18.8

21.3
18.3

324

Taxation trends in the European Union

report2009.book  Page 325  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_ITR L.pdf

Table D.2: Implicit tax rates in %: Labour

Tables

Annex A

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 average
weighted
arithmetic

EA-16 average
weighted
arithmetic

EU-25 average
weighted
arithmetic

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
42.3
43.5
43.8
29.9
34.3
-
41.4
40.3
40.5
37.0
40.8
40.2
39.0
40.5
39.4
33.8
37.3
38.6
25.7
27.4
29.7
35.5
34.6
-
31.6
29.5
29.0
41.3
41.7
41.2
44.0
43.6
38.0
24.0
22.8
22.1
31.0
36.5
39.2
32.3
40.2
34.5
31.2
29.6
29.3
41.2
40.9
42.6
20.1
21.4
19.0
34.3
30.6
34.6
41.0
40.6
38.5
35.0
33.2
36.8
30.0
27.4
26.5
30.1
31.8
-
36.9
37.5
38.5
30.9
37.1
38.5
41.4
44.1
44.3
43.1
46.2
46.8
26.1
25.0
25.7

42.7
30.6
41.1
37.1
39.0
33.9
25.4
35.1
30.8
41.9
42.5
24.1
33.1
33.6
30.7
38.8
21.3
34.6
40.8
34.2
28.6
30.4
37.4
30.5
41.6
44.5
25.8

43.8
34.7
41.7
37.1
38.8
34.1
25.4
34.2
30.3
41.9
42.9
24.5
33.2
34.9
30.4
38.4
21.3
31.6
40.8
33.1
28.1
28.0
37.6
32.9
41.5
45.0
25.5

43.6
35.9
40.5
40.2
40.4
39.3
28.7
-
28.3
42.6
44.2
21.8
36.9
38.7
29.6
42.6
19.2
34.1
40.5
35.8
26.6
37.6
37.8
37.4
43.3
48.5
25.1

43.9
38.7
40.7
41.0
40.7
37.8
28.5
34.5
28.7
42.1
43.7
21.5
36.7
41.2
29.9
41.4
20.6
34.5
40.1
33.6
27.0
32.2
37.7
36.3
44.1
47.2
25.3

44.0
36.3
41.8
37.5
39.2
36.1
26.3
33.7
29.9
41.4
43.1
22.7
36.7
36.0
29.5
38.3
21.0
31.4
41.0
32.7
27.9
28.9
37.5
34.5
41.5
44.7
24.8

43.6
32.9
41.2
38.8
40.4
37.8
26.0
34.4
29.8
41.2
43.5
22.2
37.8
38.1
28.3
41.2
20.8
30.9
40.8
32.4
27.6
31.1
37.6
36.7
43.8
44.8
24.1

43.4
35.5
41.4
38.1
40.4
36.9
25.0
35.6
29.9
41.5
43.4
22.7
36.6
36.9
29.3
39.3
20.4
31.5
40.8
32.7
27.8
29.5
37.7
36.1
42.5
44.7
24.3

44.3
-
40.7
38.9
40.6
38.9
28.6
-
28.6
42.3
44.8
22.5
37.2
38.3
28.8
42.8
18.2
33.2
40.3
35.6
26.2
-
37.5
38.0
43.8
49.4
25.0

43.9
-
40.3
40.7
40.6
37.6
29.5
-
28.7
41.8
43.4
21.5
36.1
38.4
29.3
43.7
19.9
32.8
40.7
35.9
26.3
-
37.0
38.3
43.6
48.4
24.4

43.4
-
39.5
40.2
39.6
37.8
29.3
-
29.5
41.5
41.8
21.3
34.6
35.0
29.6
43.0
17.8
33.6
39.4
36.3
26.4
-
36.8
39.4
45.3
48.0
24.8

-

-
-

-

-
-

-

-
-

-

-
-

-

-

-

38.7

39.0

39.2

38.5

37.9

37.8

37.5
36.1

37.2
35.9

36.8
35.5

36.4
35.1

36.5
35.0

36.2
34.8

36.2
34.5

36.4
34.4

36.5
34.4

38.2
34.2

39.0
34.4

39.5
34.6

39.9
34.7

39.7
34.7

39.5
34.6

39.1
34.5

38.9
34.2

38.9
34.3

38.5
34.1

38.4
34.1

38.5
34.2

38.7
34.3

36.9
35.7

37.4
35.6

37.4
36.0

37.7
36.1

37.5
36.1

37.2
35.9

36.8
35.7

36.4
35.4

36.6
35.2

36.2
34.9

36.3
34.7

36.4
34.8

36.6
34.8

Convergence indicators
19.7
St.dev/mean
Max-min
27.8
1) in percentage points
See explanatory notes in Annex B
Source:  Commission services

20.6
30.2

20.6
28.5

20.9
31.2

19.8
29.3

19.2
26.6

18.8
24.8

19.3
24.0

18.7
24.3

18.3
23.7

17.8
23.7

17.3
23.3

17.5
23.9

Ranking
2007
3
23
5
10
9
15
25
12
17
6
1
26
19
16
18
7
27
14
8
13
22
21
11
20
4
2
24

Difference1)
1995 to 2007 2000 to 2007

-1.5
-
0.9
-3.2
-0.5
-4.8
-4.0
-
2.6
0.1
6.0
1.8
-8.2
-2.2
2.0
-1.4
1.1
-0.4
2.5
-1.9
3.5
-
-1.6
-7.6
-2.9
-3.7
0.3

-

-
-

0.5
0.7

-0.4
-0.9

-2.2
-3.9

-1.6
-8.9
0.7
-4.0
-1.8
-4.0
-2.8
1.0
2.9
-0.8
0.3
2.4
-5.7
-8.9
1.3
-0.2
-0.5
-0.3
0.9
1.4
3.0
-2.1
-0.7
-5.4
-2.7
-4.1
0.8

-

-0.6
-1.5

-0.8
0.1

-0.6
-1.1

-1.7
-2.7

Taxation trends in the European Union                 325

report2009.book  Page 326  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_ITR K.pdf

Table D.3: Implicit tax rates in %: Capital

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 average
weighted
arithmetic

EA-16 average
weighted
arithmetic

EU-25 average
weighted
arithmetic

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
31.1
29.6
25.3
-
-
-
25.6
22.3
26.3
44.9
30.8
29.9
24.4
22.5
22.4
10.3
4.9
14.1
18.5
-
-
-
17.7
-
42.4
28.3
-
40.7
38.7
32.3
36.2
29.1
27.4
50.5
22.0
16.3
14.6
11.5
20.4
12.1
5.9
9.2
-
-
-
-
16.9
-
-
-
-
16.4
22.6
21.6
26.1
35.8
26.1
-
20.7
20.9
34.0
30.6
20.8
-
-
-
23.1
17.5
-
17.5
21.7
35.1
26.7
25.5
28.1
35.9
34.2
19.9
42.7
45.6
34.6

32.9
-
28.0
45.8
21.1
8.1
17.8
16.0
32.7
37.9
29.8
23.1
8.4
8.5
-
16.8
-
20.4
27.4
19.1
27.3
-
18.9
18.5
26.4
28.8
38.8

30.9
-
23.7
30.7
20.9
6.4
14.8
17.7
30.0
37.4
29.2
22.5
9.6
5.7
-
16.4
-
24.3
29.3
22.5
32.2
-
17.4
22.5
27.4
29.3
41.6

31.9
-
24.8
36.7
20.9
7.8
16.8
16.4
30.3
36.5
31.6
22.5
8.2
7.1
-
16.7
-
21.0
28.3
20.7
31.4
-
17.0
22.5
25.8
30.3
36.9

32.4
-
25.6
49.8
22.1
8.0
19.4
16.8
36.4
39.2
29.6
27.0
9.6
9.1
-
16.6
-
18.2
24.2
21.6
28.5
-
22.1
19.5
26.9
35.9
41.3

32.0
-
25.9
44.8
23.9
8.3
21.1
15.9
40.9
40.8
34.2
30.6
11.0
11.6
-
16.3
-
17.2
24.4
22.8
30.8
-
22.0
18.2
24.0
29.1
44.4

29.3
-
20.9
36.0
28.9
6.0
-
19.9
29.7
38.1
29.6
23.8
11.2
7.2
-
15.9
-
20.8
27.3
20.5
32.7
-
15.7
22.9
36.0
43.4
44.7

27.9
-
23.9
31.7
24.4
10.5
-
-
-
36.1
31.5
18.5
17.4
9.0
-
-
-
22.7
29.3
21.7
26.4
-
-
28.2
31.2
29.9
36.1

30.0
-
20.1
38.7
25.8
11.6
-
-
-
36.0
28.9
21.2
22.0
8.9
-
-
-
22.9
29.7
20.4
27.1
-
-
27.9
32.5
30.4
38.4

31.0
-
21.3
38.6
29.0
9.2
-
-
-
38.5
30.5
22.6
19.0
8.4
-
-
-
23.0
28.3
21.8
29.6
-
-
26.3
32.0
36.3
41.8

26.7
-
22.3
30.9
25.5
9.3
-
-
-
35.3
27.9
17.0
15.6
8.9
-
-
-
23.7
29.2
21.3
23.3
-
-
33.1
30.6
27.0
34.2

-

-
-

-

-
-

-

-
-

-

-
-

-

-
-

-

-
-

-

41.5

37.9

40.5

40.9

43.2

41.8

-
-

-
-

-
-

-
-

-
-

-
-

-
-

25.3
24.0

27.5
25.4

28.2
26.1

28.5
26.8

30.6
28.0

30.5
27.3

28.5
26.3

27.8
25.5

27.8
25.2

28.1
25.0

28.9
25.9

31.0
26.9

32.1
29.8

26.3
23.1

28.3
23.7

29.4
24.7

30.1
25.6

32.6
26.6

33.1
25.5

31.3
24.3

30.0
23.6

29.2
23.6

29.9
24.0

31.2
25.2

33.0
25.7

34.2
28.7

Difference1)
1995 to 2007 2000 to 2007

5.9
-
-0.7
15.0
2.0
-3.8
-
-
-
8.4
8.8
34.2
-5.8
3.0
-
-
-
-5.3
-0.1
-
13.2
-
-
-17.6
-1.4
15.9
8.1

-

-
-

6.2
6.4

7.1
4.8

1.8
-
4.7
8.9
-4.5
4.3
-
-
12.7
2.6
6.6
26.7
3.4
4.9
-
-
-
-4.5
-1.3
-
1.3
-
7.5
-5.4
-9.3
-7.5
-2.0

-

-
-

1.6
3.2

1.0
3.2

2.4
1.5

Convergence indicators
26.3
St.dev/mean
Max-min
25.9
1) in percentage points
See explanatory notes in Annex B
Source:  Commission services

27.6
26.4

26.3
27.1

27.1
29.8

28.5
33.4

32.3
38.8

31.9
40.7

30.8
35.9

30.9
29.7

33.0
37.7

34.1
41.8

31.8
36.4

34.7
40.2

9.1
14.3

326

Taxation trends in the European Union

report2009.book  Page 327  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_ITR KI.pdf

Table D.3.1: Implicit tax rates in %: Capital and business income

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 average
weighted
arithmetic

EA-16 average
weighted
arithmetic

EU-25 average
weighted
arithmetic

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
19.6
19.2
16.9
-
-
-
23.5
19.1
22.6
29.1
17.5
21.2
20.7
17.9
17.8
8.1
3.0
11.6
13.0
-
-
-
13.6
-
29.4
18.9
-
22.0
21.4
15.6
27.7
22.5
18.1
38.2
17.7
12.8
10.8
7.0
10.1
10.2
3.7
6.9
-
-
-
-
13.1
-
-
-
-
11.6
16.7
15.9
22.4
31.0
21.1
-
15.7
14.9
23.7
22.3
15.0
-
-
-
19.2
12.4
-
15.8
19.3
32.3
22.2
21.5
22.4
28.6
23.7
13.9
25.5
27.7
20.6

20.1
-
25.7
30.2
17.1
6.1
12.9
13.1
21.1
19.3
21.9
15.7
5.9
6.6
-
11.8
-
13.9
23.3
14.5
19.1
-
14.7
16.3
21.3
20.3
22.4

19.7
-
21.8
21.3
16.7
6.0
12.4
13.1
19.7
18.7
24.2
17.4
5.4
5.3
-
12.5
-
14.3
23.9
15.6
19.7
-
13.2
20.0
21.1
20.0
21.1

19.7
-
20.7
17.2
16.7
4.5
11.2
14.1
20.1
19.8
21.3
18.6
7.0
3.6
-
12.8
-
17.2
24.9
16.9
22.3
-
13.1
20.0
22.9
19.0
24.0

20.3
-
23.3
36.1
18.2
6.1
13.5
13.7
23.4
19.8
21.8
18.9
7.2
7.4
-
11.6
-
12.5
20.6
15.9
19.2
-
17.7
17.4
21.5
27.1
24.6

20.0
-
23.7
31.0
20.2
6.5
14.6
12.6
26.5
21.9
25.6
23.5
8.8
9.9
-
11.9
-
12.3
20.7
16.2
20.9
-
17.9
16.4
19.6
22.2
27.1

19.0
-
17.4
23.8
24.3
3.8
-
15.1
20.1
20.6
22.5
17.9
6.7
4.5
-
12.3
-
15.0
22.9
15.9
24.3
-
11.1
20.3
31.2
32.4
26.8

19.9
-
18.0
27.4
24.2
7.0
-
-
-
19.8
22.4
19.1
10.2
5.2
-
-
-
16.8
23.7
16.6
21.7
-
-
23.6
26.9
25.6
25.7

19.6
-
16.7
27.6
21.4
9.5
-
-
-
17.8
20.1
17.3
12.2
6.1
-
-
-
17.0
25.1
14.8
20.2
-
-
25.0
27.2
20.1
24.1

17.9
-
20.3
22.7
20.2
8.1
-
-
-
17.8
21.9
14.7
9.8
6.2
-
-
-
17.2
24.7
15.4
20.0
-
-
25.2
25.7
19.7
22.5

17.4
-
18.3
22.1
20.7
6.8
-
-
-
17.4
19.4
13.6
9.0
6.2
-
-
-
17.7
24.4
15.1
17.6
-
-
28.9
24.4
17.6
20.7

-

-
-

-

-
-

-

-
-

-

-
-

-

-
-

-

-
-

-

22.5

19.7

21.0

20.7

22.0

22.2

-
-

-
-

-
-

-
-

-
-

-
-

-
-

16.9
17.5

18.8
18.7

19.4
19.3

19.6
19.9

21.5
20.8

21.8
20.3

20.0
19.6

19.0
18.7

18.9
18.2

18.9
17.8

19.4
18.5

21.4
19.5

22.6
22.0

17.3
16.6

19.0
17.0

19.9
17.8

20.4
18.5

22.3
19.3

22.8
18.5

21.2
17.5

19.7
16.8

19.2
16.7

19.6
17.1

20.7
18.2

22.3
18.7

23.4
21.1

Convergence indicators
33.1
St.dev/mean
Max-min
25.4
1) in percentage points
See explanatory notes in Annex B
Source:  Commission services

31.4
22.7

28.7
19.5

28.8
21.5

29.3
22.2

33.7
28.5

32.4
28.0

29.8
21.3

29.1
18.9

31.6
24.3

33.3
30.0

28.5
24.5

33.3
30.2

Tables

Annex A

Difference1)
1995 to 2007 2000 to 2007

2.7
-
0.9
7.9
2.9
-3.5
-
-
-
6.4
9.7
25.4
0.7
3.4
-
-
-
-4.4
1.3
-
8.7
-
-
-16.4
-0.2
14.7
5.0

-

-
-

5.3
5.2

5.6
3.9

0.9
4.7

0.6
-
6.1
5.2
-3.6
4.2
-
-
9.3
1.4
5.2
20.3
4.0
5.7
-
-
-
-3.4
-0.5
-
-0.6
-
8.1
-4.4
-9.0
-3.8
-1.2

-

-
-

0.8
2.1

0.6
2.5

-0.4
1.6

Taxation trends in the European Union                 327

report2009.book  Page 328  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>Annex_A_IT COR.pdf

Table D.3.1.1: Implicit tax rates in %: Corporate income

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 average
weighted
arithmetic

EA-16 average
weighted
arithmetic

EU-25 average
weighted
arithmetic

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
20.7
23.6
19.5
-
-
-
24.1
28.3
47.2
30.8
21.9
20.2
-
-
-
8.8
3.0
15.2
-
-
-
-
25.1
-
59.7
28.5
-
33.2
32.9
21.5
30.1
23.7
19.5
38.7
24.3
17.7
13.0
8.8
61.6
10.7
2.5
11.2
-
-
-
-
24.8
-
-
-
-
11.0
17.3
20.0
24.8
37.1
23.6
-
37.2
46.8
-
22.7
17.0
-
-
-
32.9
22.2
-
19.5
32.7
51.2
17.9
18.4
19.0
32.8
30.8
19.2
23.2
31.8
23.3

22.0
-
32.0
23.2
-
6.5
-
21.0
31.2
24.4
24.7
22.1
6.6
5.7
-
17.5
-
14.4
26.8
21.9
19.0
-
21.0
35.3
18.7
25.3
19.4

22.2
-
29.8
26.7
-
6.9
-
20.1
35.2
26.4
21.4
18.9
8.0
7.2
-
17.1
-
14.4
26.0
18.7
18.8
-
23.0
22.6
18.6
22.7
19.9

23.1
-
30.3
21.1
-
4.7
-
26.0
31.4
29.0
21.0
24.7
8.3
2.6
-
19.8
-
18.1
28.3
37.0
22.4
-
24.6
34.7
21.2
23.5
23.9

22.1
-
25.4
29.1
-
5.9
-
21.6
43.5
26.1
20.8
23.6
9.6
8.0
-
17.0
-
12.5
22.9
20.8
19.4
-
33.6
23.5
17.9
31.7
24.5

21.6
-
25.6
32.3
-
6.5
-
18.6
53.3
31.4
27.1
26.8
11.1
10.8
-
14.7
-
11.9
23.0
19.5
22.6
-
30.4
20.3
15.1
21.7
27.7

23.6
-
26.2
24.4
-
4.1
-
29.0
30.7
29.6
19.3
25.2
8.6
3.9
-
23.9
-
18.5
26.6
37.1
25.5
-
19.6
40.0
30.3
41.0
31.0

26.8
-
30.1
21.3
-
8.9
-
-
-
28.7
22.5
29.5
12.6
6.3
-
-
-
21.9
27.0
42.5
21.5
-
-
49.5
25.2
29.2
30.2

27.4
-
27.8
29.0
-
11.9
-
-
-
24.7
18.8
25.9
17.1
8.7
-
-
-
22.8
28.6
42.7
20.0
-
-
52.4
25.9
23.6
29.3

23.5
-
41.4
22.2
-
9.8
-
-
-
26.2
26.0
24.0
14.9
8.9
-
-
-
22.5
27.6
46.2
21.3
-
-
49.8
23.6
23.9
29.1

22.5
-
31.4
22.2
-
9.1
-
-
-
26.0
21.9
19.9
47.9
10.1
-
-
-
23.7
26.9
51.6
19.4
-
-
52.9
22.1
22.3
24.6

-

-
-

-

-
-

-

-
-

-

-
-

-

-
-

-

-
-

-

21.6

19.2

20.6

19.4

21.4

20.6

-
-

-
-

-
-

-
-

-
-

-
-

-
-

20.5
22.4

23.7
24.8

25.3
26.3

23.0
26.8

25.6
27.9

25.5
26.5

27.1
25.7

25.4
25.4

24.2
23.4

24.4
22.3

25.4
23.9

30.0
25.2

33.1
28.7

21.9
26.0

24.6
26.0

26.7
25.5

25.3
25.5

27.2
25.5

27.6
24.7

28.4
23.7

25.1
22.6

23.1
20.9

23.2
20.2

25.2
21.9

28.7
22.5

30.5
25.5

Difference1)
1995 to 2007 2000 to 2007

1.2
-
-23.1
10.6
-
-6.4
-
-
-
11.6
10.6
21.0
-48.5
-0.5
-
-
-
-8.9
1.3
-
-
-
-
-31.7
-1.1
13.6
-0.1

-

-
-

12.9
10.2

8.5
-1.3

-2.9
-
-2.1
6.4
-
4.7
-
-
29.1
3.6
10.8
13.5
4.5
6.7
-
-
-
-7.5
-1.8
-
-
-
13.3
-20.5
-12.4
-8.2
-7.9

-

-
-

8.0
4.6

3.0
0.7

Convergence indicators
68.0
St.dev/mean
Max-min
50.4
1) in percentage points
See explanatory notes in Annex B
Source:  Commission services

51.6
43.8

41.6
40.9

40.6
43.7

39.2
43.2

36.5
37.1

34.0
34.7

35.0
34.4

34.1
29.6

30.5
28.3

34.8
37.6

35.3
46.8

41.5
50.9

-26.2
0.6

4.9
13.9

328

Taxation trends in the European Union

report2009.book  Page 329  Thursday, May 28, 2009  1:35 PM

<@>Annex_A_ITR HH.pdf

Table D.3.1.2: Implicit tax rates in %: Capital and business income of households and self-employed

Tables

Annex A

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

EU-27 average
weighted
arithmetic

EA-16 average
weighted
arithmetic

EU-25 average
weighted
arithmetic

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
14.9
13.3
13.6
-
-
-
18.7
9.5
8.5
19.5
7.7
20.7
-
-
-
5.1
2.5
3.9
-
-
-
-
8.7
-
14.7
13.1
-
12.6
12.8
11.2
17.9
14.5
12.8
27.1
6.3
5.0
1.7
0.7
0.2
3.3
2.5
1.9
-
-
-
-
6.7
-
-
-
-
10.5
13.0
10.8
8.5
9.0
11.2
-
10.8
8.1
-
14.9
10.5
-
-
-
7.8
7.9
-
12.5
12.6
17.2
24.2
21.2
21.0
19.4
15.9
6.7
22.5
17.6
13.7

14.8
-
18.2
29.8
-
2.6
-
9.7
12.4
12.4
15.1
10.5
0.5
2.0
-
6.8
-
10.5
7.8
11.7
11.8
-
8.8
12.0
18.5
15.2
19.1

14.5
-
10.5
13.3
-
3.4
-
9.6
12.5
13.0
16.1
11.1
0.7
1.8
-
7.6
-
11.9
8.8
12.6
15.0
-
7.8
12.5
18.7
13.6
17.4

13.9
-
10.3
7.8
-
3.3
-
9.4
13.0
12.6
14.2
8.8
1.1
2.2
-
7.3
-
12.9
9.8
11.9
15.1
-
7.5
13.3
19.4
13.6
18.2

15.1
-
17.3
42.0
-
5.3
-
9.7
12.6
13.0
15.1
11.0
0.5
2.5
-
6.6
-
10.4
6.8
12.6
10.3
-
7.3
13.4
21.1
18.7
18.7

13.0
-
9.2
19.6
-
2.8
-
8.9
13.6
13.2
16.7
7.0
1.1
2.5
-
6.2
-
8.0
8.1
10.0
16.3
-
6.9
11.8
23.1
22.7
17.1

14.9
-
17.6
21.9
-
4.5
-
9.5
13.7
13.3
16.8
15.3
1.0
2.6
-
8.0
-
10.8
7.1
13.4
8.6
-
8.0
13.1
23.2
20.5
20.4

13.3
-
8.2
33.8
-
2.6
-
-
-
12.7
15.1
5.3
0.4
2.6
-
-
-
8.7
8.5
10.0
15.8
-
-
13.0
22.2
19.6
16.4

13.1
-
8.2
22.9
-
3.9
-
-
-
12.0
14.5
5.6
0.2
2.4
-
-
-
8.6
9.7
8.0
16.0
-
-
13.9
22.4
14.8
14.8

13.2
-
8.4
21.5
-
4.3
-
-
-
11.6
14.0
3.8
0.2
2.3
-
-
-
9.4
10.2
8.0
14.0
-
-
13.5
22.3
13.7
12.6

13.2
-
8.9
20.4
-
2.8
-
-
-
11.8
13.2
4.1
0.2
1.9
-
-
-
10.3
11.0
7.9
12.5
-
-
16.4
21.5
11.5
13.1

-

-
-

-

-
-

-

-
-

-

-
-

-

-
-

-

-
-

-

17.4

14.2

14.6

14.4

24.2

28.7

-
-

-
-

-
-

-
-

-
-

-
-

-
-

11.9
12.0

12.2
12.0

12.4
11.9

12.7
12.4

13.1
12.3

13.7
12.2

13.3
12.3

13.2
12.5

13.6
12.6

12.9
12.0

13.1
12.1

13.8
12.9

14.3
14.5

12.2
10.2

12.4
10.4

12.6
10.5

13.3
11.1

14.6
12.0

14.7
11.3

14.0
10.5

14.0
10.7

14.2
11.1

14.7
11.9

15.1
12.9

15.6
12.6

16.5
13.8

Convergence indicators
48.9
St.dev/mean
Max-min
20.9
1) in percentage points
See explanatory notes in Annex B
Source:  Commission services

47.9
21.3

48.1
22.2

47.5
22.6

56.5
33.4

42.7
22.0

36.9
20.5

34.3
18.3

33.5
18.0

44.7
29.2

56.6
41.5

40.2
22.3

44.9
25.4

Difference1)
1995 to 2007 2000 to 2007

1.3
-
10.2
-1.2
-
1.2
-
-
-
1.4
5.1
22.1
1.5
1.4
-
-
-
-0.3
-2.7
-
-
-
-
-4.8
3.2
12.7
8.7

-

-
-

2.4
3.3

4.3
3.8

-3.8
4.5

1.9
-
9.5
0.0
-
2.2
-
-
1.1
-0.6
1.1
20.1
0.6
0.8
-
-
-
2.5
0.3
-
-
-
0.8
0.6
1.1
-3.4
5.4

-

-
-

0.8
3.1

1.9
2.8

1.8
3.4

Taxation trends in the European Union                 329

report2009.book  Page 330  Thursday, May 28, 2009  1:35 PM

Annex A

Tables

<@>AnnexAITRE.pdf

Table D.4_T: Implicit tax rates: Energy1) 

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995
91.7
-
39.0
202.9
168.3
6.5
112.2
157.7
128.1
168.5
237.9
26.4
10.1
12.3
140.9
58.5
52.0
112.4
123.1
20.7
164.6
-
126.0
29.9
96.7
138.3
142.6

1996
90.9
-
41.6
216.5
151.9
13.4
121.0
161.3
134.3
166.8
261.6
27.1
18.1
16.4
138.6
53.1
60.8
110.8
117.0
26.0
163.5
-
126.1
29.5
96.2
169.2
148.2

1997
90.7
-
42.0
221.7
149.6
17.9
139.4
157.0
128.9
168.6
272.1
26.4
26.7
25.0
142.7
62.2
72.1
125.6
137.1
27.6
152.5
-
138.5
32.1
106.6
168.0
185.9

1998
91.2
-
46.0
251.4
150.3
30.5
140.4
138.6
138.5
169.7
260.9
29.3
44.7
38.9
151.2
76.9
126.8
131.2
130.2
37.7
159.4
36.2
177.2
32.2
104.6
172.7
211.5

1999
92.5
29.0
52.0
289.6
177.5
30.8
144.6
132.2
144.0
175.9
264.5
31.9
41.6
54.4
158.8
79.3
139.3
146.4
136.5
48.1
151.4
56.1
155.0
33.2
109.8
178.3
225.7

2000
92.5
36.4
55.9
313.7
192.7
32.2
140.5
117.3
137.8
173.0
248.7
43.0
48.3
58.0
164.3
79.6
142.2
154.4
142.6
59.2
111.8
58.3
118.2
42.4
108.7
182.0
249.5

2001
92.4
46.2
65.5
326.1
200.4
44.2
123.7
118.0
134.6
160.4
240.4
61.1
43.2
64.7
164.3
82.3
176.4
160.0
148.2
66.7
133.4
37.9
135.8
37.1
112.7
181.6
238.7

2002
97.6
37.4
74.6
336.0
211.6
45.9
147.3
110.8
141.5
176.8
237.5
64.4
48.2
75.6
169.7
92.8
135.4
164.4
152.1
77.4
157.7
36.6
144.5
44.1
113.7
194.4
247.3

2003
97.4
49.4
73.4
335.7
225.3
51.0
152.1
111.1
141.4
172.1
243.6
125.1
51.7
79.7
173.8
96.5
120.3
169.1
152.4
72.1
167.7
43.8
141.4
59.3
112.4
204.7
227.1

2004
109.4
64.1
81.7
337.0
219.0
63.4
171.4
115.4
141.2
177.5
236.2
145.4
60.8
77.7
185.8
96.8
120.4
179.9
165.0
75.3
155.3
54.8
145.7
70.2
113.1
208.9
238.4

2005
116.3
62.0
96.8
332.9
212.8
77.4
169.6
115.7
140.3
175.0
236.6
146.0
72.2
81.6
194.0
100.9
118.3
197.9
160.5
95.9
167.5
59.5
144.9
77.3
115.8
210.7
235.2

2006
115.2
67.8
103.3
329.2
209.7
86.9
168.4
114.6
145.8
178.4
246.2
146.5
76.1
83.4
194.6
104.4
140.0
216.1
157.8
101.4
171.7
67.4
147.4
83.0
111.8
217.9
239.7

-

-

-

-

-

-

-

164.8

160.6

143.2

161.9

171.7

-
-
-

-
-
-

-
-
-

-
-
-

184.1
167.3
121.4

165.1
159.3
122.3

165.2
161.2
121.0

168.3
162.0
127.5

167.5
162.0
133.2

EU-27 average
GDP-weighted
base-weighted
arithmetic
EA-16 average
GDP-weighted
base-weighted
arithmetic
EU-25 average
158.6
GDP-weighted
143.7
base-weighted
arithmetic
102.7
Convergence indicators
41.2
St.dev/mean
Max-min
231.4
1) Energy taxes in Euro per tons of oil equivalent (TOE), base year: 2000
See explanatory notes in Annex B
Source:  Commission services

179.2
173.7
137.1

184.8
170.7
127.7

172.2
158.4
121.7

167.8
152.4
112.7

160.0
144.8
106.4

39.2
260.6

39.9
231.6

40.7
254.3

42.1
248.2

189.1
171.9
122.3

179.1
173.3
133.1

189.9
175.3
128.3

38.4
281.5

185.8
170.0
125.8

177.6
172.2
137.4

186.7
173.7
132.5

193.9
177.8
130.9

185.5
180.0
141.8

195.0
181.9
138.5

193.6
178.3
135.2

189.7
184.5
147.8

194.7
182.2
142.3

195.4
180.3
141.1

189.1
184.4
153.2

196.4
184.1
147.6

193.8
181.2
144.9

187.7
184.0
155.5

195.0
184.8
151.7

196.6
184.4
149.1

190.5
187.0
159.2

198.0
187.9
155.6

38.8
289.0

37.8
299.3

36.5
291.9

35.0
282.2

33.7
273.4

32.8
261.8

Ranking
2006
16
26
20
1
6
22
10
17
14
8
2
13
25
23
7
19
15
5
11
21
9
27
12
24
18
4
3

Difference
1995 to 2006 2000 to 2006

23.5
-
64.4
126.2
41.4
80.4
56.2
-43.1
17.7
9.9
8.3
120.1
66.0
71.1
53.7
45.9
88.0
103.7
34.7
80.8
7.0
-
21.4
53.0
15.0
79.6
97.2

-

-
-
-

25.2
25.8
38.2

39.4
44.2
52.9

-8.4
30.4

22.6
31.5
47.5
15.5
17.0
54.7
27.9
-2.7
8.0
5.4
-2.6
103.5
27.8
25.4
30.3
24.8
-2.2
61.7
15.2
42.3
59.9
9.1
29.1
40.6
3.1
35.9
-9.7

-

7.5
12.5
26.7

11.3
13.7
26.0

8.1
12.6
27.2

-5.6
-19.8

330

Taxation trends in the European Union

report2009.book  Page 331  Thursday, May 28, 2009  1:35 PM

Tables

Annex A

<@>AnnexAITREdef.pdf

Table D.5_T: Implicit tax rates, deflated: Energy1) 

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995
102.0
-
50.4
221.9
172.4
9.9
134.1
206.1
147.5
176.4
270.5
30.4
13.7
15.4
167.8
110.7
60.7
122.9
128.8
35.0
190.6
-
181.2
40.1
103.4
144.7
152.3

1996
99.9
-
50.2
233.3
154.9
17.1
142.6
197.1
150.3
172.2
287.4
30.4
21.3
18.0
158.1
82.9
69.5
119.9
120.9
37.9
184.9
-
162.9
37.2
101.9
177.4
154.0

1997
96.9
-
47.3
233.8
151.3
20.3
159.3
181.2
140.5
172.3
291.9
28.8
29.1
25.3
160.4
83.1
81.7
133.0
141.4
35.0
166.6
-
166.9
38.0
111.7
173.8
192.3

1998
97.1
-
48.7
264.3
152.1
33.3
156.2
152.5
148.7
173.0
274.8
31.3
47.3
38.9
169.0
91.5
140.6
138.5
133.6
43.0
170.2
77.2
203.2
37.3
108.2
178.3
217.8

1999
98.1
31.8
53.7
301.4
179.7
32.4
153.1
141.6
151.3
179.9
274.2
33.2
43.6
55.3
170.6
87.9
152.6
153.4
139.1
51.8
158.3
79.6
169.4
36.8
113.8
182.3
229.4

2000
92.5
36.4
55.9
313.7
192.7
32.2
140.5
117.3
137.8
173.0
248.7
43.0
48.3
58.0
164.3
79.6
142.2
154.4
142.6
59.2
111.8
58.3
118.2
42.4
108.7
182.0
249.5

2001
90.6
44.4
64.4
319.0
198.3
42.0
116.7
114.5
130.6
158.2
234.2
59.5
42.6
65.4
167.3
77.8
179.3
155.4
146.3
64.8
129.9
28.0
126.0
35.2
111.0
176.7
235.0

2002
95.2
35.5
74.7
326.0
208.3
42.5
134.1
104.7
133.5
172.8
225.6
62.1
45.8
77.4
172.2
85.8
134.7
157.7
149.1
73.0
150.0
22.3
126.8
40.8
111.8
186.9
239.0

2003
94.9
46.8
73.2
323.8
221.3
46.4
138.0
101.9
129.8
166.1
226.4
116.6
47.0
83.1
177.6
86.0
119.3
160.5
148.2
66.6
156.7
22.0
119.0
53.0
110.8
195.2
214.1

2004
104.0
57.8
79.3
319.1
213.7
55.9
153.6
102.9
125.0
168.8
213.9
131.9
51.3
80.0
181.0
85.0
117.3
169.1
157.9
66.7
141.7
24.4
118.7
60.2
110.5
198.8
220.8

2005
107.0
53.0
94.5
305.5
205.5
65.5
151.3
100.2
119.3
162.7
208.2
128.4
55.1
78.2
178.0
87.5
112.3
181.5
150.3
84.2
148.8
24.7
115.0
66.0
111.5
196.9
212.4

2006
102.8
53.2
100.8
295.2
200.7
68.9
146.9
96.0
119.2
161.9
210.4
125.5
52.8
74.5
167.8
86.6
125.8
193.6
144.5
87.5
148.1
26.1
114.4
69.0
105.3
199.3
211.1

-

-

-

-

-

-

-

166.5

158.3

134.5

142.5

141.5

-
-
-

-
-
-

-
-
-

-
-
-

189.2
172.6
127.9

175.5
169.8
136.9

173.7
168.3
142.9

176.1
169.9
138.9

178.1
174.7
139.7

EU-27 average
GDP-weighted
base-weighted
arithmetic
EA-16 average
GDP-weighted
base-weighted
arithmetic
EU-25 average
171.2
GDP-weighted
157.0
base-weighted
arithmetic
119.6
Convergence indicators
42.2
St.dev/mean
Max-min
260.6
1) Energy taxes in Euro per tons of oil equivalent (TOE), base year: 2000
See explanatory notes in Annex B
Source:  Commission services

184.4
179.0
144.1

189.8
175.7
133.7

175.5
160.0
122.5

178.6
164.7
130.0

170.0
154.9
119.3

39.0
269.7

41.1
271.6

39.6
243.5

42.6
270.4

189.1
171.9
122.3

179.1
173.3
133.1

189.9
175.3
128.3

38.4
281.5

182.4
166.6
122.7

174.3
169.0
134.6

183.3
170.5
129.6

187.5
171.6
125.5

179.5
174.2
136.2

188.6
175.9
133.2

184.6
169.6
127.6

181.5
176.5
140.0

185.7
173.8
135.0

183.0
168.4
130.0

177.9
173.4
141.9

184.2
172.5
137.1

177.4
165.4
129.8

172.7
169.2
140.4

178.7
169.3
137.0

175.6
164.3
129.2

171.2
168.1
139.5

177.2
168.2
136.3

39.3
291.0

38.4
303.7

37.5
301.8

36.5
294.7

35.4
280.8

35.0
269.0

Ranking
2006
17
25
18
1
4
24
10
19
14
8
3
13
26
22
7
21
12
6
11
20
9
27
15
23
16
5
2

Difference
1995 to 2006 2000 to 2006

0.7
-
50.4
73.3
28.3
58.9
12.8
-110.1
-28.2
-14.6
-60.1
95.1
39.2
59.1
0.0
-24.1
65.2
70.7
15.7
52.5
-42.5
-
-66.8
28.9
1.9
54.7
58.8

-

-
-
-

-6.9
-6.7
-0.2

6.0
11.2
16.8

-7.2
8.4

10.2
16.8
45.0
-18.5
7.9
36.7
6.3
-21.3
-18.6
-11.1
-38.3
82.5
4.5
16.5
3.5
7.0
-16.3
39.2
1.9
28.3
36.3
-32.2
-3.8
26.6
-3.4
17.4
-38.3

-

-13.4
-7.7
6.8

-8.0
-5.2
6.3

-12.7
-7.1
8.0

-3.5
-12.5

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report2009.book  Page 333  Thursday, May 28, 2009  1:35 PM

Annex B

Methodology and explanatory
notes

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report2009.book  Page 335  Thursday, May 28, 2009  1:35 PM

Methodology and explanatory notes

Annex B

ANNEX B: METHODOLOGY AND EXPLANATORY NOTES

The 'Taxation trends' survey assesses the tax system from a number of angles. The examination of the tax structures
by tax type and by level of government illustrates the relative importance of the different tax instruments used in
raising revenues and the distribution of financial resources among the constituent elements of the state apparatus,
respectively. The breakdown into taxes on consumption, labour and capital allows an assessment of the manner in
which the tax burden is distributed among the different factors. The implicit tax rates measure in turn the actual or
effective average tax burden levied on different types of economic income or activities. 

For the purposes of assembling these backward-looking aggregate metrics, national accounts provide time series for
observing  changes  in  the  overall  effective  tax  burden  and  a  coherent  framework  for  matching  tax  revenues  with
income  flow  data  and  economic  aggregates.  Given  the  consistency  and  harmonised  computation  of  the  ESA95
system,  national  accounts  data  provided  by  the  Member  States  also  allow  a  good  degree  of  international
comparability. However, it should be kept in mind that the tax base derived from national accounts data does not
correspond  to  the  actual  or  legal  tax  base  used  in  computing  tax  liabilities.  The  bases  calculated  using  national
accounts are in some instances narrower (omitting capital gains on capital for instance) and in others broader (due to
the exclusion of some deductions from the tax base).

This methodological section explains the methods of, and the reasoning behind, the calculation of the various ratios
presented in the survey; approaching them in the order in which they appear in Annex A. Given that Parts A and B
(Tax  structure  by  tax  type  and  Tax  structure  by  level  of  government)  follow  ESA95  classifications,  a  simple
description of the aggregates and the data sources is provided. Parts C and D (Tax structure by economic function
and the Implicit tax rates) present statistics developed by the EU Commission Directorate-General for Taxation and
Customs Union specifically for this publication, so the reasoning will be delved into in greater detail, with attention
given  to  both  their  theoretical  and  practical  limitations.  Annex  B  concludes  with  an  in-depth  discussion  of  the
approaches  used  in  calculating  the  split  of  personal  income  tax  according  to  its  sources,  a  process  critical  to  the
creation of meaningful statistics for Parts C and D.

Data coverage and reliability has generally improved over time. On the other hand, in some cases a reassessment of
the quality of the data has led us to reconsider publication of some series or data points as problems of comparability
appeared. In particular, the coverage of the ITR on capital is patchy as the computation of the ITR on capital is quite
demanding in terms of the required level of detail in national accounts data. In many cases it was not possible to
compute  the  implicit  tax rate on capital even though data on capital tax revenue were available,  because the data
needed to compute the denominator of the ITR (i.e. the sum of revenues accruing to capital) are missing. Overall, the
degree of cross-country comparability seems satisfactory.

Ranking

In all the tables of Annex A, a ranking is given whereby the Member state with the highest ratio is listed with number
1, the second with number 2 and so on. The ranking refers to the order of the Member States for each specific ratio
and only includes those Member States for which 2007 data is available in the respective table. The rankings are also
shown in the country tables in Part III. No ranking is given if more than 10 % of data points are missing.

Total

In some countries the sum of the taxes in % of GDP in each of the Parts A, B and C of the country chapters data table
and in the corresponding Annex A tables adds up to more than the total. This is the case whenever the table contains
the item 'amounts assessed but unlikely to be collected' (d995) because this item in general cannot be attributed with
certainty to any detailed category and is therefore listed ‘below the line’1). The excess is, therefore, exactly equal to
this amount.

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Annex B

Methodology and explanatory notes

Averages

This report computes arithmetic and weighted averages for three groups of countries: the EU as a whole (EU-27), the
EU-25 (i.e. the EU-27 minus Bulgaria and Romania which joined the Union on 1 January 2007) and the euro area in
its current 16-country composition (EA-16). EU-27 averages are calculated and presented in the tables and graphs
only if data are available for both Bulgaria and Romania. In the report EU-27 averages are used whenever possible;
however, given that most data for Bulgaria and Romania exist only for a limited number of years, when the focus is
on the trend over the entire 1995–2007 period, we typically refer to the EU-25 average. Occasionally, averages for
other groupings (the former EU-15, the NMS-10 and NMS-12) are used for illustrative purposes in the text of the
main parts, but never in tables and graphs. 

As already mentioned in Part I, when the type of average is not indicated explicitly, the arithmetic average was used.
In the tables and graphs in the main part of the report as well as in Annex A, in general, no adjustment for missing
values  is  made:  the  average  shown  is  simply  the  result  of  the  customary  formula  applied  to  the  available  data.
However, in calculating the averages of the ITRs on consumption, labour and capital, missing values for Greece and
Spain (only for the latter ITR) for the period 1995–1999 have been replaced by the values covering the same period
available in the last publication of the report. 

Data sources

The national accounts data utilised for this report were extracted from the Eurostat public database (formerly known
as NewCronos) on 9 February 2009. In addition, more disaggregated tax data submitted to Eurostat (the National
Tax  List)  were  used  for  the  classification  of  revenue  by  economic  function  and  to  determine  the  level  of
environmental taxes. Data for 2007 should be regarded as provisional. In very few cases, estimates at the detailed
level have been used if statistics were not available; in those cases, the estimates were either supplied by Member
States administrations or computed using proxies. In the case of the base of the ITR on consumption (P31_S14dom –
Final consumption of households on the economic territory (domestic concept), no data for 2007 was available for
Bulgaria,  Portugal,  Romania  and  the  United  Kingdom.  In  order  to  get  an  estimation  for  the  missing  values,  the
growth rate for 'Private final consumption expenditure at current prices' from the AMECO database was used.

The output gap measure shown in the country chapters is based on the production function approach and is taken
from the AMECO database.

The  country  chapters  of  the  non-euro  area  Member  States  for  illustrative  reasons  often  contain  not  only  data  in
national currency, but also rounded figures in euro, e.g. for income thresholds or changes in tax revenue. In these
cases the exchange rates of the time of writing (February-March 2009) were used.

Although  all  Member  States  authorities  have  provided  disaggregated  data  on  their  tax  revenue  (the  National  Tax
List), its level of detail varies. Information on the level of disaggregation utilised for the computation of the indicators
for each Member State (formerly included in the report as Annex B) is available on the homepage of the Directorate-
General for Taxation and Customs Union (http://ec.europa.eu/taxtrends). 

1)

For some countries more detailed breakdown is available and accessible on the Eurostat homepage.

336

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Methodology and explanatory notes

Annex B

Part A:

Tax structure by tax type

Definition of the aggregates

Total taxes (incl. SSC) are defined as: taxes on production and imports (d2), current taxes on income and wealth
(d5), capital taxes (d91), actual compulsory social contributions (d61111 + d61121 + d61131). Indirect taxes, direct
taxes and social contributions add up to the total of taxes received by the general government.

Taxes (excl. SSC) are defined as total taxes (incl. SSC) minus actual compulsory social contributions.

'Indirect  taxes'  are  defined  as  taxes  linked  to  production  and  imports  (code  d2  in  the  ESA95  system),  i.e.  as
compulsory levies on producer units in respect of the production or importation of goods and services or the use of
factors of production. They include VAT, import duties, excise duties and other specific taxes on services (transport,
insurance  etc.) and  on  financial and  capital transactions.  They  also  include  taxes  on production  (d29) defined as
'taxes that enterprises incur as a result of engaging in production', such as professional licences, taxes on land and
building and payroll taxes. 

Indirect taxes are defined as the sum of the following ESA95 tax categories:

• VAT: value added type taxes (d211).

• Excise duties and consumption taxes: excise and consumption taxes (d214a) + excise duties (d2122c).

• Other taxes on products (incl. import duties): taxes and duties on imports excluding VAT (d212), excluding
excise  duties  (d2122c),  taxes  on  products,  except  VAT  and  import  duties  (d214),  excluding  excise  duties
(d214a).

• Other taxes on production (d29).

'Direct  taxes'  are  defined  as  current  taxes  on  income  and  wealth  (d5)  plus  capital  taxes  including  taxes  such  as
inheritance or gift taxes (d91). Income tax (d51) is a subcategory, which includes personal income tax (PIT) and
corporate income tax (CIT) as well as capital gains taxes.

Direct taxes are defined as the sum of the following ESA categories:

• personal income tax: taxes on individual or households income including holding gains (d51a + d51c1);

• corporate income tax: taxes on the income or profits of corporations including holding gains (d51b + d51c2);

• other income and capital taxes: other taxes on income corresponding to other taxes on holding gains (d51c3),
taxes on winnings from lottery or gambling (d51d) and other taxes on income n.e.c. (d51e); taxes on capital
defined as other current taxes (d59) and capital taxes (d91).

Note that in some Member States, such as the United Kingdom, Sweden, Italy, and Ireland, the ‘Taxes on individual
or  household  holding  gains’  and  ‘Taxes  on  holding  gains  of  corporations’  are  not  included  in  D51c1  and  D51c2,
respectively, but in ‘Other income and capital taxes’. This difference in reporting should be taken into consideration
when comparing the levels of the three detailed categories of direct taxes between Member States.

'Actual compulsory social contributions' are paid by employers and employees on the basis of a work contract, or by
self- and non-employed persons. They include three subcategories:

• compulsory employers' actual social contributions (d61111);

Taxation trends in the European Union                 337

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Annex B

Methodology and explanatory notes

• compulsory employees' social contributions (d61121);

• compulsory social contributions by self- and non-employed persons (d61131).

Prior  to  the  2003  edition  actual  social  contributions  (ESA95  code  d611),  which  include  both  compulsory  and
voluntary  contributions,  were  used  for  the  purposes  of  calculating  the  statistics.  Voluntary  contributions  vary  in
their  purpose  (e.g.  the  purchase  of  'extra  years'  for  pensions  and  the  wish  to  complete  a  gap  in  the  social
contributions  due  to  years  worked  abroad)  and  may  vary  in  the  degree  to  which  they  are  voluntary  in  a  real
economic sense, but, as they are essentially a form of household saving they should not be considered as compulsory
levies  imposed  by  the  government.  In  addition,  'imputed  social  contributions'  (d612),  which  relate  to  unfunded
social security schemes, are excluded such that the definition used in this survey corresponds to Indicator 2 of the
four  indicators  of  general  government  and  European  Union  levies  issued  by  Eurostat  (see  Box  B.1).  In  practice,
imputed social contributions mainly relate to a number of EU governments, which do not pay actual contributions
for  their  employees  but  nevertheless  guarantee  them  a  pension  upon  retirement;  imputed  social  contributions
represent  the  contributions  the  government  should  pay  to  a  pension  fund  in  order  to  provide  a  pension  of  an
equivalent amount to the employees. Including imputed social contributions in the definition of compulsory levies
would  allow  greater  comparability  over  time  and  across  countries,  given  that  some  governments  make  actual
contributions  for  their  employees  while  others  simply  pay  social  benefits  to  their  employees  as  their  entitlement
arises. However, imputed social contributions are not based on actual transactions and the method for imputation
may  involve  estimation  errors.  Ultimately  it  is  found  that,  while  including  imputed  social  contributions  in  the
definition of total taxes would result in a non-negligible level shift, yielding an increase of the tax ratio for the EU-27
average by around three quarters of a percentage point and for the EA-16 average by around one percentage point
(see Graph B-1.1), the development of the ratios over time would not be affected (see European Commission, 2004,
pp. 99–100, for a comparison of the time trend).

Graph B-1.1 Sensitivity analysis: role of imputed social contributions

2007, in %

<@>gb_1.gif

Source:  Commission services

338

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Methodology and explanatory notes

Annex B

Box B.1: Indicators on general government and European Union levies

<@>b_b1.pdf

In 2001, the Eurostat National Accounts Working Group defined four taxation indicators for 
general government and European Union levies, progressing from a narrower to a broader 
definition:

Taxes on production and imports (D.2)

+

Current taxes on income, wealth, etc (D.5)

+ Capital taxes (D.91)
[-

Capital transfers from general government to relevant sectors representing taxes and social 
contributions assessed but unlikely to be collected (D.995)]

+

=

+

=

+
=

+

Compulsory actual social contributions payable to the social security funds sub-sector 
(S.1314) (D.61111 + D.61121 + D.61131, when payable to S.1314)

INDICATOR 1 (Total taxes and compulsory social security contributions)
Compulsory actual social contributions payable to the central government (S.1311), state 
government (S.1312), and local government (S.1313) sub-sectors as employers (D.61111 + 
D.61121 + D.61131, when payable to S.1311, S.1312 and S.1313)

INDICATOR 2 (Total taxes and compulsory actual social contributions payable to general 
government, including those for government as an employer)

Imputed social contributions (D.612) payable to general government as an employer
INDICATOR 3 (Total taxes and compulsory social contributions payable to general 
government, including those for government as an employer)

Voluntary actual social contributions payable to the general government sector (S.13) 
(D.61112 + D.61122 + D.61132)

= INDICATOR 4 (Total taxes and social contributions payable to general government, 

including those for government as an employer)

Taxation trends in the European Union                 339

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Annex B

Methodology and explanatory notes

Box  B.2  shows  a  breakdown  of  taxes  that  Member  States  provide  on  a  harmonised  basis  in  the  framework  of
European System of Accounts 95 (ESA95) Transmission Programme as well as the codes used in ESA95. 

Box B.2: Scheme of ESA95 classification of taxes and social contributions

<@><@p1@>b_b2.pdf

d2
       d21
            d211
            d212
                d2121
                d2122
                    d2122a
                    d2122b
                    d2122c
                    d2122d
                    d2122e
                    d2122f
         d214
                d214a
                d214b
                d214c
                d214d
                d214e
                d214f
                d214g
                d214h
                d214i 
                d214j 
                d214k
                d214l
       d29
            d29a
            d29b
            d29c
            d29d
            d29e
            d29f
            d29g
            d29h

d5
       d51
            d51a+d51c1
            d51b+d51c2
            d51c3
            d51d
            d51e
       d59
            d59a
            d59b
            d59c
            d59d
            d59e
            d59f

Taxes on Production and Imports
     Taxes on Products
          Value added type taxes
          Taxes and duties on imports excluding VAT
                Import duties
                Taxes on imports, excluding VAT and import duties
                       Levies on imported agricultural products
                       Monetary compensatory amounts on imports
                       Excise duties
                       General sales taxes
                       Taxes on specific services
                       Profits of import monopolies
          Taxes on products, except VAT and import taxes
                  Excise duties and consumption taxes
                  Stamp taxes
                  Taxes on financial and capital transactions
                  Car registration taxes
                  Taxes on entertainment
                  Taxes on lotteries, gambling and betting
                  Taxes on insurance premiums
                  Other taxes on specific services
                  General sales or turnover taxes
                  Profits of fiscal monopolies
                  Export duties and monetary comp. amounts on exports
                  Other taxes on products n.e.c.
     Other taxes on production
          Taxes on land, buildings and other structures
          Taxes on the use of fixed assets
          Total wage bill and payroll taxes
          Taxes on international transactions
          Business and professional licences
          Taxes on pollution
          Under-compensation of VAT (flat rate system)
          Other taxes on production n.e.c.

Current taxes on income, wealth, etc.
     Taxes on income
          Taxes on individual or household income incl. holding gains
         Taxes on the income or profits of corporations incl. holding gains
          Other taxes on holding gains
          Taxes on winnings from lottery or gambling
          Other taxes on income n.e.c.
     Other current taxes
          Current taxes on capital
          Poll taxes
          Expenditure taxes
          Payments by households for licences
          Taxes on international transactions
          Other current taxes n.e.c.

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Methodology and explanatory notes

Annex B

Box 2 Continued

<@><@p2@>b_b2.pdf

d91
       d91a
       d91b
       d91c

d611
       d6111
            d61111
            d61112*
       d6112
            d61121
            d61122*
       d6113
            d61131
            d61132*
d612*

Capital taxes
     Taxes on capital transfers
     Capital levies
     Other capital taxes n.e.c.

Actual social contributions
     Employers' actual social contributions
          Compulsory employers' actual social contributions
          Voluntary employers' actual social contributions*
     Employees'  social contributions
          Compulsory employees'  social contributions
          Voluntary employees'  social contributions*
     Social contributions by self- and non-employed persons
          Compulsory contributions self- and non-employed persons
          Voluntary contributions by self and non-employed persons*
Imputed social contributions*

Note:

* Not included in the 'Taxation trends' definition of total taxes (incl. SSC)

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Annex B

Methodology and explanatory notes

Part B:

Tax structure by level of government 

Data sources: same as in Part A.

Definitions of the aggregates: total taxes received by the general government (institutional sector S13 in ESA95) are
broken down as taxes received by:

• central government (S1311)

• state (region) government for federal states (S1312)

• local government (S1313)

• social security funds (S1314)

• the EC institutions (S212).

The  taxes  that  are  reported  under  these  headings  represent  'ultimately  received'  tax  revenues.  This  means,  for
example, that not only the 'own' taxes are included, but also the part of the tax revenue that is automatically and
unconditionally 'shared' between the government sub-sectors, even if these government sub-sectors have no power
to vary the rate or the base of those particular taxes. Additional information was used for the classification of taxes
for Belgium. Furthermore, Denmark treats the VAT revenues (D211) paid to the EU institutions in a different way
from other Member States. They are recorded under S1311 instead of under S212; subsequently, a current transfer
from S13 to S212 (under ESA95 code: D7PAY) is booked. This treatment affects also D21 and D2 for S1311 (central
government) and S13 (general government); compared to the other Member States, this results in a higher estimate
of central government revenue and a lower estimate of the revenue at the level of the EU institutions.

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Methodology and explanatory notes

Annex B

Part C:

Tax structure by economic function

The  calculation  of  Part  C  ratios  is  done  on  the  basis  of  more  detailed  revenue  data  than  the  one  published  by
Eurostat. The Eurostat database is therefore supplemented by a so-called National List of Taxes supplied by Member
States. The economic allocation of taxes published in this report is applied to each tax contained in the National List
of Taxes. Furthermore, a split of the personal income tax by economic function is used.

• The availability of detailed revenue data and the economic allocation for each country and each tax is available
on the homepage of the Directorate-General for Taxation and Customs Union (http://ec.europa.eu/taxtrends). 

•  Compulsory  social  contributions  of  self-employed  and  non-employed  (d61131)  needed  to  be  split  between
non-employed (considered as part of labour) and self-employed (considered as part of capital). The split is not
available  from  the  Eurostat  public  database  (formerly  NewCronos),  although  some  national  sources  of
national  accounts  make  it  available.  The  split  has  been  computed  by  applying  to  d61131  the  share  of  non-
employed  and  self-employed  as  reported  by  the  Member  States  as  part  of  the  social  protection  data  in  the
Eurostat public database, the so-called ESSPROS module of Eurostat2); where no statistics were available the
share paid by the non-employed was assumed to be negligible. The data used in the report covers the period
up to 2006. For Belgium more detailed national accounts data on the separate contribution of self-employed,
and non-employed have been used instead.

Methodology and the allocation of taxes to economic functions

Taxes  on  consumption,  labour  and  capital  add  up  to  the  total  of  taxes  received  by  general  government.  The
separation of taxes into three economic functions and the identification of an environmental tax category inevitably
lead to simplifications and somewhat hybrid categories. The exercise is currently complicated by the fact that the
harmonised classification of taxes in ESA95 is not always consistently applied at the detailed level of individual taxes
across Member States. A number of borderline cases and approximations had to be taken into account to arrive at a
final  classification  of  taxes.  Tax  data  are  not  always  recorded  in  sufficient  detail  to  identify  individual  taxes  and
allocate  them  to  the  corresponding  economic  categories.  In  addition,  some  specific  national  features  required  a
special treatment. The degree of decomposition provided by national statistical offices makes it sometimes difficult
to identify sub-categories. General guidelines for the allocation of the taxes are given in the following Boxes B.5 to
B.9. However, exceptions are made if necessary to reflect the true nature of a tax. Borderline cases, which mainly
regard the split between taxes on stocks of capital and on consumption, are discussed with Member States. 

A key methodological problem for classifying tax revenues across the economic functions is that some taxes relate to
multiple sources of economic income. This holds most notably for the personal income tax. Therefore, a method was
developed  to  break  down  personal  income  tax  revenue,  in  most  cases  using  unpublished  data  supplied  by  the
national tax administrations. A breakdown of the personal income tax according to four sources of taxable income
(labour,  capital,  self-employment  income,  and  social  transfers  and  pensions)  is  carried  out  by  Member  States
authorities  according  to  a  country  specific  methodology  (so-called  PIT  split).  Member  States  use  data  sets  of
individual  taxpayers  (Belgium,  Denmark,  Germany,  France,  Ireland,  Luxembourg,  Latvia,  Malta,    Netherlands,
Poland, Finland, Sweden, Slovenia and  United Kingdom) or income class data based on the data set of individual
taxpayers  (Cyprus,  Greece,  Spain,  Italy,  Lithuania,  Bulgaria)  or  tax  receipts  from  withholding  and  income  tax
statistics with certain corrections (Austria, Estonia, Czech Republic, Hungary, Portugal, Romania)3). 

Several Member States were not able to provide full time-series coverage for all calendar years. In these cases a trend
has been assumed using simple linear interpolations or the fractions were assumed to remain constant, i.e. the 2007

2)

3)

Eurostat (1996).

The methodology utilised by Member States to arrive at the PIT split is described in more detail in a separate section of this annex (see
'Methods used to split the revenue from personal income tax' in Part D).

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Annex B

Methodology and explanatory notes

split was considered equal to that of 2006. Tables B.2 to B.5 give all the details on the PIT-split provided by each
Member State. In some cases the number of estimates for the PIT split still falls short of the ideal, which to a limited
extent affects the accuracy of the allocation of taxes to economic function and, therefore, of the implicit tax rates
(ITRs). Additional details are given in a later section of this methodological note. 

Although, as a rule, taxes are classified under one single economic function, in some specific cases a breakdown of
revenue  has  been  carried  out  also  for  taxes  other  than  the  PIT.  In  those  cases,  examples  of  which  are  mentioned
below, estimates from Member States have been used to distribute their revenue across the economic functions. 

•  The  revenue  from  the  French  tax  on  accommodations  (so-called  Taxe  d'habitation),  for  example,  has  been
distributed  among  the  categories  'consumption'  and  '(stocks  of)  capital',  using  estimates  from  the  national
administration. 

• Also, the revenue from the French generalised social contribution and from the contribution for the reduction
of  social  security  institutions  debt  (commonly  abbreviated  to  'CSG'  and  'CRDS',  respectively)  has  been
distributed over the categories 'labour' and 'capital (income of households)'. 

•  Local  business  taxes  often  relate  to  one  or  more  sources  of  economic  income  and  are  allocated  over  the
economic  functions  where  possible.  The  revenue  from  the  Italian  Regional  tax  on  Productive  Activities
(IRAP), for example, has been distributed among the categories 'labour' and 'capital (income of corporations)',
using revenue data from the public administration. The German local business tax (Gewerbesteuer), on the
other hand, was fully allocated to the category 'capital income (of corporations)', as the part on business capital
stocks  is  not  applied  in  recent  years.  The  French  local  business  tax  (Taxe  professionnelle)  has  been  fully
allocated to the category 'Stocks (wealth) of capital', as it is mostly levied on buildings and real estate, and the
French government is reforming the tax with phasing out the payroll component from the tax base. 

• In Italy, the earnings and the compulsory social contributions paid by self-employed persons working under
the so called ‘co.co.co’ regime (coordinated and continuous collaboration, special work regime now abolished
and substituted by project collaboration) are transferred from the category 'capital (income of self-employed)'
to 'labour' (partly to employers and employees).

Taxes on consumption

Taxes on consumption are defined as taxes levied on transactions between final consumers and producers and on the
final consumption goods. In the new ESA classification these can be identified as the following categories (see Box
B.3).

• Value added-type taxes (d211).

• Taxes and duties on imports excluding VAT (d212).

•  Taxes  on  products  except  VAT  and  import  duties  (d214),  which  include  excise  duties.  Those  taxes  paid  by
companies  on  products  used  for  production  have  been  excluded  from  the  category  of  consumption  taxes,
whenever  the  level  of  detail  enabled  their  identification4).  But  national  accounts  tax  revenues  do  not  allow
such a split for excise duties, which are paid for a substantial part by companies. Moreover, some categories
have been allocated to capital such as the stamp taxes (d214b), when they could be identified as related to the
stock exchange market or real estate investment. Taxes on financial and capital transactions (d214c) as well as
export  duties  and  monetary  compensatory  amounts  on  exports  (d214k)  have  also  been  recorded  as  capital
taxes.

4) A possible breakdown of car registration taxes between those paid by companies and those paid by households would only be available for
some countries. Hence, to avoid a different treatment in different Member States, all revenue from car registration taxes has been attributed
to consumption. 

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Methodology and explanatory notes

Annex B

• Other taxes on production (d29). These are a typical border case since this category includes several taxes or
professional licences paid by companies 'as a result of engaging in production': total wage bill and payroll taxes
(d29c) have been classified as a tax on labour, taxes on land, building and other structures (d29a) have, e.g.
been classified as taxes on the stock of capital. However, taxes on international transactions (d29d), taxes on
pollution  (d29f)  and  the  under-compensation  of  VAT  (flat-rate  system)  (d29g)  have  been  considered  as
consumption taxes.

•  Some  taxes  defined  as  current  taxes  (d5)  in  ESA95  such  as  poll  taxes,  expenditure  taxes,  or  payments  by
households for licences have been attributed to consumption since they are expenditures made by households
to obtain specific goods and services.

Box B.3: Definition of taxes on consumption

<@>b_b3.pdf

d211 Value added type taxes
d212 Taxes and duties on imports excluding VAT
d214 Taxes on products except VAT and import duties less

d214b Stamp taxes
d214c Taxes on financial and capital transactions
d214k Export duties and monetary compensatory amounts on exports

From d29 Other taxes on production:

d29d Taxes on international transactions
d29f Taxes on pollution
d29g Under-compensation of VAT (flat rate system)

From d59 Other current taxes:
d59b  Poll taxes
d59c  Expenditure taxes
d59d Payments by households for licences

Starting from the current edition, a breakdown of the ITR on consumption according to four categories has been
introduced. Only the numerator is broken down — the denominator remains the same for each subcategory. The
categories are the following.

• VAT: the share of the ITR on consumption relating to VAT (d211-type taxes). 

• Energy: this subcategory includes all consumption taxes on energy listed in the National List of Taxes; these
are mainly represented by excise duties on mineral oils, duties on electricity or similar taxes; this definition
may differ slightly from the one utilised for tables C.4.1_G and C.4.1_T, notably as the latter may include also
energy taxes levied on capital or labour.

• Tobacco and alcohol: these include all excise duties on alcohol and tobacco products listed in the National List

of Taxes. For Italy, the revenues from stamp duties are included.

• Residual: all remaining consumption taxes are booked in this subcategory; they are obtained as a difference

from the total.

The identification of the revenue is done on the basis of the National List of Taxes. 

VAT reduced rate and base indicator

For each country, this indicator is calculated as defined in Box B.4:

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Annex B

Methodology and explanatory notes

Box B.4: Definition of VAT reduced rate and base indicator

<@>b_b4.pdf

VAT reduced rate and base indicator = standard VAT rate - VAT component of the ITR on consumption

Taxes on labour

Taxes on employed labour income

Taxes  on  employed  labour  comprise  all  taxes,  directly  linked  to  wages  and  mostly  withheld  at  source,  paid  by
employers and employees, including actual compulsory social contributions (see Box B.5). They include compulsory
actual employers' social contributions (d61111) and payroll taxes (d29c), compulsory social contributions paid by
employees  (d61121)  and  the  part  of  personal  income  tax  (d51a)  that  is  related  to  earned  income.  The  personal
income  tax  is  typically  levied  on  different  sources  of  income,  labour  income,  but  also  social  benefits,  including
pensions, dividend and interest income and self-employment income. The next section explains how taxpayers' data
have been used to allocate the personal income tax revenue across different sources of income.

Under the definition of taxes on employed labour income adopted in this report, the categories 'personal income tax'
and 'social security contributions' are used in a wide sense including all other taxes that are susceptible of increasing
the cost of labour. Therefore, the recorded amount of 'personal income tax' in the Nordic countries does not only
consist of central government income tax, but also includes the state income tax, or municipality income tax and
sometimes  also  church  tax.  In  France,  the  generalised  social  contribution  (CSG)  and  the  contribution  for  the
reduction in the debt of the social security institutions (CRDS) are partially booked as income tax on labour income.
In Austria, the 'contributions to chambers' and the 'promotion residential building' are also partially booked as tax
on  labour  income  (and  booked  as  'personal  income  tax'  and  'employers'  SSC  and  payroll  tax',  respectively).  In
Hungary, the communal tax on enterprises is allocated to labour as 'employers' SSC and payroll tax'. In Portugal, the
stamp duty on wages and salaries is allocated to 'employers' SSC and payroll taxes'. In Italy, part of the revenue from
the  IRAP  tax,  which  is  levied  on  a  measure  of  value  added  by  enterprises,  has  been  allocated  to  labour  and
'employers' social contributions' in particular (and also included in the denominator of the tax ratio). 

Taxes on non-employed labour income

The category labour — non-employed comprises all taxes and compulsory social contributions raised on transfer
income  of  non-employed  persons,  where  these could  be  identified.  This  transfer  income  includes  social transfers
that are paid by the state (e.g. unemployment, invalidity and health care benefits) and benefits from old-age pension
schemes (both state and occupational pension schemes). Most of these benefits paid to non-employed persons are in
some way or the other linked to employment; contributions for current unemployment and State pension benefits
are, for example, for the most part, paid by the active labour force, while occupational pension schemes are mostly
funded while being employed. The calculation of the implicit tax rate on labour is, however, limited to the category
employed labour.

• In some Member States social transfer payments by the State are subject to personal income taxation. In this
case, part of what is paid by the State is immediately refunded to the budget (but not necessarily at the same
level) in the form of taxes. In many instances, however (e.g. for social assistance), the taxes raised on social
transfers  are  more  of  an  accounting  convention  than  taxes  in  a  proper  sense,  a  means  employed  to  yield  a
certain net transfer. Where such taxes could be identified they have been separated from other taxes and social
contributions.

• Pension arrangements and their tax treatment vary considerably between, and in some cases within, Member
States. Where there is up-front tax relief for contributions to funded pensions, this often tends to be given as
an exemption from tax on labour income and estimates are not easy to make. The tax revenue collected on

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Methodology and explanatory notes

Annex B

pension  benefit  payments  is  usually  easier  to  estimate,  but  there  is  a  conceptual  and  practical  issue  over
whether  to  regard  it  as  capital  income  (because  pensions  can  be  privately  funded),  deferred  labour  income
(because they are actually taxed in this way) or a social transfer payment (because they are classified as such in
national accounts or because they are guaranteed by the state). For state (first pillar) pensions, the solution is
to  treat  them  in  the  same  way  as  social  transfer  payments  but  for  occupational  (second  pillar)  and  private
(third pillar) pensions the issue is more difficult, because they are generally privately funded and the benefits
are  not  guaranteed  by  the  state.  The  compromise  solution  adopted  in  this  report  classifies  income  tax  on
occupational  pensions  under  the  labour  —  non-employed  category  and  does  not  include  them  in  capital
income.  An  important  reason  for  doing  this  is  that  both  state  and  occupational  pension  benefits  are  often
treated  as  (deferred)  labour  income  in  the  income  tax,  as  they  are  directly  linked  to  employment  or  the
exercise of a profession. Another important argument is that occupational pension benefits are considered as
(privately  funded)  social  benefits  in  national  accounts.  In  the  United  Kingdom,  however,  occupational
pensions  and  also  private  pensions  are  allocated  to  capital  giving  an  upward  bias  to  the  ITR  on  capital
compared to other Member States.

•  Private  (third  pillar)  pensions  may  be  used  as  a  supplement  for  state  or  occupational  pensions.  They  have
many  of  the  characteristics  of  occupational  pensions,  although  participation  is  often  not  directly  related  to
employment or the exercise of a profession, and is arranged individually by contract directly with a product
provider (e.g. a life insurance company). It could therefore be argued that the taxes raised on private pension
benefits should be allocated to capital income. It should however be noted that the statistical identification of
private  pension  benefits  is  often  complicated,  and  the  amount  of  this  type  of  income  is  so  far  not  very
significant in the majority of Member States (notable exceptions in this respect are Denmark, Belgium, the
Netherlands and the United Kingdom).

Taxes on income of the self-employed

The question arose whether part of the self-employed income should be treated as a remuneration of labour and
whether the related taxes should be included in taxes on labour. The best compromise between economic rationale
and  data  availability  was  to  consider  self-employment  income  as  income  from  capital:  self-employed  income  is
genuinely  an  entrepreneurial  income  and  self-employed  take  the  risk  of  incurring  losses  when  exercising  their
activity. Personal income taxes as well as social contributions of self-employed are, therefore, allocated to the capital
income subcategory for self-employed. This assumption includes the part of self-employment income equivalent to
the  remuneration  of  self-employment  own  labour.  For  some  Member  States,  this  assumption  does  not  reflect  the
situation of some self-employed, whose economic status or income does not significantly differ from those of wage
earners. In Italy, for example, the Central Statistical Office (ISTAT) provides official estimates of the percentages of
'mixed income' that can be attributed to labour and capital.

Box B.5: Definition of taxes on labour

<@>b_b5.pdf

Employed labour
From d51 Taxes on income:

d51a+d51c1 Taxes on individual or household income including holding gains (part raised on 
labour income)

From d29 Other current taxes:

d29c Total wage bill and payroll taxes

From d611  Actual social contributions:

d61111 Compulsory employers' actual social contributions
d61121 Compulsory employees' social contributions

Non-employed labour
From d51 Taxes on income:

d51a+d51c1 Taxes on individual or household income including holding gains (part raised on 
social transfers and pensions)

From d611 Actual contributions:

d61131 Compulsory social contributions by self- and non-employed persons (part paid by social 
transfer recipients)

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Annex B

Methodology and explanatory notes

Taxes on capital

Capital is defined broadly, including physical capital, intangibles and financial investment and savings (see Box B.6).
Capital taxes include taxes on business income in a broad sense: not only taxes on profits but also taxes and levies
that could be regarded as a prerequisite for earning profit, such as the real estate tax or the motor vehicle tax paid by
enterprises.  In  their  empirical  study  Desai  and  Hines  (2001)  confirmed  that  these  indirect  taxes  also  influence
investment decisions of American multinational firms. They also include taxes on capital stocks of households or
their transaction (e.g. on real estate). A distinction is drawn between taxes on capital and business income and taxes
on capital stock:

Box B.6:  Definition of taxes on capital

<@>b_b6.pdf

Capital and business income taxes:

From d51- Taxes on income:

d51a+d51c1 Taxes on individual or household income including holding gains (part paid on 
capital and self-employed income)
d51b+d51c2 Taxes on the income or profits of corporations including holding gains
d51c3 Other taxes on holding gains
d51d Taxes on winnings from lottery and gambling
d51e Other taxes on income n.e.c.

From d611- Actual social contributions:

d61131 Compulsory social contributions by self- and non-employed persons (part paid by 
self-employed)

Taxes on stocks (wealth):

From d214- Taxes on products, except VAT and import taxes:

d214b Stamp taxes
d214c Taxes on financial and capital transactions
d214k Export duties and monetary compensatory amounts on exports

From d29- Other taxes on production:

d29a Taxes on land, buildings or other structures
d29b  Taxes on the use of fixed assets
d29e Business and professional licences
d29h Other taxes on production n.e.c.

From d59- Other current taxes:

d59a Current taxes on capital
d59f Other current taxes on capital n.e.c.
d91 Capital taxes

'Taxes on capital and business income' that economic agents earn or receive from domestic resources or from abroad
includes taxes on income or profits of corporations (Box B.7), taxes on income and social contributions of the self-
employed, plus personal income tax raised on the capital income of households (rents, dividends and other property
income) (Box B.8). In practice this is mainly the personal income tax paid on dividend, interest and entrepreneurial
activity (part of d51a  + d51c1) and corporate income tax (d51b + d51c2) as well as other taxes on holding gains
(d51c3). This metric is further subdivided into the 'Taxes on the income of corporations' (using the ‘Taxes on the
income or profits of corporations including holding gains’ as a numerator) and 'Taxes on the income of households',
which uses the residual of 'Capital and business income taxes'.

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Methodology and explanatory notes

Annex B

Box B.7: Definition of taxes on the income of corporations

<@>b_b7.pdf

Taxes on the income of corporations
From d51-Taxes on income:

d51b+d51c2 Taxes on the income or profits of corporations including holding gains

Box B.8: Definition of taxes on the capital and business income of households

<@>b_b8.pdf

Taxes on capital and business income of households:
From d51 Taxes on income:

d51a+d51c1 Taxes on individual or household income including holding gains (part 
paid on capital and self-employed income)
d51c3 Other taxes on holding gains
d51d Taxes on winnings from lottery and gambling
d51e Other taxes on income n.e.c.

From d611 Actual social contributions:

d61131 Compulsory social contributions by self- and non-employed persons 
(part paid by self-employed)

'Taxes on capital stock' include the wealth tax (d59a), capital taxes (d91) including the inheritance tax (d91a), the real
estate tax (d29a) or taxes on the use of fixed assets (d29b), professional and business licences (d29e), and some taxes
on products (from the category d214).

Environmental taxes 

Environmental  taxes  include  energy  taxes,  transport  taxes  (including  registration  and  circulation  car  taxes),  and
pollution taxes. This is a subcategory of indirect taxes or consumption taxes. The taxes included for each Member
State  are  listed  on  the  homepage  of  the  Taxations  and  Customs  Union  Directorate  General  (http://ec.europa.eu/
taxtrends)5). 

The definition of an environmental tax that is commonly used by the European Commission, the OECD and the
International Energy Agency (IEA) refers to a tax 'whose tax base is a physical unit (or a proxy of it) of something
that has a proven, specific negative impact on the environment' (European Commission 2001b). It was decided to
include all taxes on energy and transport in the definition and to exclude value added-type taxes from it. This means
that  the  motivation  for  introducing  the  taxes  —  fiscal  or  environmental  —  is  not  decisive  for  the  classification.
Therefore the OECD uses the more precise term 'environmentally related taxes'.

In this publication environmental taxes are divided in three groups.

•  Energy  taxes  include  taxes  on  energy  products  used  for  both  transport  and  stationary  purposes.  The  most
important energy products for transport purposes are petrol and diesel. Energy products for stationary use
include fuel oils, natural gas, coal and electricity. The CO2 taxes are included under energy taxes rather than
under pollution taxes. There are several reasons for this. First of all, it is often not possible to identify CO2
taxes separately in tax statistics, because they are a component of energy taxes. In addition, the revenue from
these taxes is often large compared to the one from the pollution taxes. This means that including CO2 taxes in
pollution taxes rather than energy taxes would distort international comparisons.

•  Transport  taxes  mainly  include  taxes  related  to  the  ownership  and  use  of  motor  vehicles.  Taxes  on  other
transport equipment (e.g. planes), and related transport services (e.g. duties on charter or schedule flights) are

5)

For  a  full  description  of  the  methodology  utilised  in  compiling  the  environmental  statistics  contained  in  this  publication,  see  European
Commission (2001b) and European Communities (2003). 

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Annex B

Methodology and explanatory notes

also included here, when they conform to the general definition of environmental taxes. The transport taxes
may be one-off taxes related to imports or sales of the equipment or recurrent taxes such as an annual road tax.
The title 'transport taxes' might be somewhat misleading because the most important part, taxes on petrol,
diesel and other transport fuels, are included under energy taxes. In this respect, one alternative name for this
tax category might be 'taxes on vehicles'.

• The last group of pollution/resource taxes includes two groups of taxes. The first are taxes on measured or
estimated emissions to air and water, management of solid waste and noise — with the exception is the CO2
taxes, which, as discussed above, are included under energy taxes. The second group includes any tax linked to
extraction or use of a natural resource. Note that taxes on the extraction of oil or gas are booked as a resource
rather than an energy tax; only payments linked to the use of the energy source are classified as energy taxes.

For  Slovenia,  the  data  for  energy  tax  revenues  before  the  introduction  of  VAT  in  July  1999  are  obtained  from  a
breakdown of turnover tax revenues by type of goods, supplied courtesy of the Slovenian Statistical Office. It should
be noted  that the reduction in energy  taxes from  1998  to 2000 is  essentially  a statistical artefact. Up  to 1998, the
excise duty represented all taxation of mineral oils, because no general sales tax such as VAT existed; when VAT was
adopted, it was levied on mineral oils, too, as is typical of any general consumption tax. The Slovenian authorities
hence  reduced  the  excise  duty  rate  in  order  to  leave  the  final  sale  price  broadly  unchanged.  Our  methodology,
however,  counts  only  excise  duties  as  energy  taxes.  Hence,  the  apparent  decline  in  energy  taxation  was  in  fact  a
substitution of one tax for another, which left constant the tax burden for the final consumer.

Transport fuel taxes

Transport fuel taxes are defined as taxes on energy products used for transport purposes only. This category aims at
representing the tax burden falling on transport energy products, i.e. transport fuels.

Data sources

Sixteen Member States (Belgium, Denmark, Germany, Estonia, Ireland, Spain, Italy, Latvia, Lithuania, Netherlands,
Austria, Romania, Slovenia, Finland, Sweden, and United Kingdom) and Norway made ready-to-use data available.
For 10 Member States Commission services estimated the transport fuel taxes applying the methodology described
below. For Bulgaria, limitations in data availability prevented the calculation of transport fuel taxes. The following
data sources were used for the estimation.

• National List of Taxes (NTL). 

•  The  Taxation  and  Customs  Union  Excise  Duty  data  (ED)6)  collects  information  on  'revenue  from  taxes  on
consumption  (excise  duties  and  similar  charges)  other  than  VAT  on  energy  products  and  electricity'.  This
information is supplied by the EU-27 national authorities, but not necessarily following ESA95 methodology.
The  data  provides  information  on  tax  revenue  on  energy  products  according  to  eight  different  product
categories and two summary categories:

I)

II)

III)

IV)

V)

VI)

Leaded petrol/lead-substitute petrol 

Unleaded petrol 

Diesel 

LPG and methane

Heavy fuel oil 

Sum of (i)–(iv): Total revenues from all mineral oils 

VII)

VIII)

Natural gas 

Coal and Coke 

6)

http://ec.europa.eu/taxation_customs/resources/documents/taxation/excise_duties/energy_products/rates/
excise_duties_energy_products_en.pdf

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Methodology and explanatory notes

Annex B

IX)

X)

Electricity 

Overall sum: Total revenues from all energy products & electricity.

• Eurostat public database: the Eurostat public database provides data on environment and energy7). It contains
information  on  final  energy  consumption  volumes  for  transport  use.  It  allows  to  separate  final  energy
consumption  volumes  for  different  energy  products  (e.g.  tonnes  of  petrol  used  for  transport  purposes).
According  to  this  sector  categorisation  final  energy  consumption  for  transport  covers  all  transport  sectors
(rail, air and water) for all transport use (business, private) for different product categories.

Time span covered

Transport fuel tax revenues were calculated for the years 2003–2007 for the old Member States and for 2004–2007 for
new Member States due to limitations in data availability. For 2007 no data on final energy consumption volumes
was available. The stability of the transport shares in final energy consumption, however, allows assuming constancy
of the shares of transport use of fuels. Hence, for revenue estimations of the categories of mixed use for transport and
stationary purpose the 2006 constant transport shares where applied to the 2007 tax rates. The data provided by the
Member States covers different time spans.

Methodology

Energy taxes were split into transport fuel taxes and the rest by applying to mineral oil taxes (as given in the National
List of Taxes) the shares of transport fuel taxes as derived from the ED data. In case of unavailability of the category
mineral oil taxes, the respective share resulting from the ED data had to be applied to energy taxes (as calculated for
this report). (See Box B.9 for the two methods).

The  shares of transport  fuel  taxes according  to the  ED  data used  to calculate  the breakdown  were  determined as
follows: 

• division of the estimated transport fuel taxes (derived as described in 'Estimating transport fuel tax revenues in

ED data' below) by (vii) Total revenues from all mineral oils; 

• in case the category mineral oil taxes was not available, the share of transport fuel taxes in overall energy taxes

was calculated by dividing transport fuel taxes by (x) Total revenues from all energy products & electricity.

Preferably the ED share of transport fuel taxes to mineral oil taxes is applied to the NTL category of mineral oil tax
revenues, as usually the concepts for mineral oil taxes as given in the NTL and in the ED data are linked closely.
Applying  the  share  instead  of  using  absolute  values  estimated  from  the  ED  data  is  imperative  as  ED  data  do  not
necessarily follow ESA95 methodology. 

Shares were  also  applied  to  data  provided  by  the  Member  States  in  case  the  data were  not  provided  according to
ESA95 methodology. In this case the split between transport fuel tax revenues and other tax revenues as provided by
the Member States — mostly in cash data — was applied to the respective ESA95 category.

Estimating transport fuel tax revenues in ED data

The ED data provides a split of revenues on energy products in revenues on (vi) Mineral oils, (vii) Natural gas, (viii)
Coal and coke and (ix) Electricity. As the energy products coal and coke, electricity and natural gas are only used to

7)

Eurostat database on energy: 

http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,45323734&_dad=portal&_schema=PORTAL&screen=welcomeref&open=/data/

envir/nrg/nrg_quant&language=en&product=EU_MAIN_TREE&root=EU_MAIN_TREE&scrollto=285

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Methodology and explanatory notes

a negligible part for transport purposes, revenues in these categories are assumed to stem from stationary energy use
only. 

To determine which part of the (vi) Tax revenues on mineral oils according to the ED data can be attributed to the
transport use of fuels, data on final energy consumption volumes provided by the Eurostat public database on final
energy consumption was used.

The public Eurostat database allows to separate final energy consumption for different energy products according to
different  sectors/usage.  In  line  with  the  product  categories  in  the  ED  data,  transport  shares  of  final  energy
consumption of corresponding product categories were calculated (namely the shares used for transport purposes of
the following products: 3220 LPG, 3230 Motor Spirit, 3260 Gas/diesel oil and 3270 Residual fuel oil). The calculated
transport shares indicate that revenues from ED categories (i) Leaded petrol/lead-substitute petrol and (ii) Unleaded
petrol can exclusively be attributed to the transport use of fuel. Revenues from (iii) Diesel and (iv) LPG and methane
stem from the mixed use of transport and stationary purpose, while (v) Heavy fuel oil is almost exclusively used for
stationary purposes.

For the mixed-use categories (iii) Diesel and (iv) LPG and methane, the tax revenues stemming from the transport
use are disentangled from non-transport tax revenues. Generally, this can be done by multiplying the amount of the
product  used  for  transport  by  the  respective  tax  rate  applied  in  the  respective  year  (see  Box  B.9).  Doing  so,  two
difficulties need to be addressed.

•  The  Eurostat  database  on  final  energy  consumption  uses  tonnes  as  a  measure  of  the  volume  of  liquid
components, whereas tax rates for petrol and diesel are usually given as EUR/litre. Hence, a conversion factor
has to be used to transform tonnes into litres before applying the tax rates. For diesel/gas oil — petrol revenues
don't have to be disentangled — a 'typical' conversion factor suggested by Eurostat of 1 185 l/1 000 kg is used. 

• Moreover, usually more than one tax rate is in place for a product category used for transport purposes. Tax
rates on transport diesel are often differentiated according to the diesel's sulphur or biodiesel content; LPG
used for public transport is often taxed at reduced rates or tax exempt altogether. In case multiple tax rates
prevented  the  application  of  the  general  formula  'tax  rate  x  amount  of  transport  fuel  in  litres',  a  different
approach  was  used.  Transport  tax  revenues  were  derived  as  the  difference  between  total  tax  revenues
according to the product category given by the ED data, namely (iii) Diesel or (iv) LPG and methane, and the
non-transport tax revenues. Calculating non-transport tax revenues by applying the general formula proved
feasible as non-transport tax rates are usually less differentiated.

Taking the sum over the tax revenues of categories (i) Leaded petrol/lead-substitute petrol and (ii) Unleaded petrol
and the derived fuel tax revenues in categories (iii) Diesel and (iv) LPG and methane gives the overall transport tax
fuels.  The  shares  of  transport  fuel  taxes  in  mineral  oil  taxes  and/or  energy  taxes  are  then  derived  by  dividing
transport fuel taxes by the respective categories. General estimation of overall transport fuel taxes and shares in ED
data

 <@>b_b9.pdf

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Methodology and explanatory notes

Annex B

Part D:

Implicit tax rates

The implicit tax rates are defined for each economic function. They are computed as the ratio of total tax revenues of
the category (consumption, labour, and capital) to a proxy of the potential tax base defined using the production and
income accounts of the national accounts.

Data sources

National accounts data used in the construction of the denominator are extracted from the Eurostat public database
(formerly NewCronos), with further national account data acquired for calculating the bases of the implicit tax rates
on capital and capital income. The numerators are taken from the ratios calculated in Part C. For a few countries
limitations in data availability, particularly in the case of the denominator of the ITR on capital, affected or prevented
the calculation of the ITR. 

Methodology

The tax revenue relative to GDP statistics presented in this survey can be described as macro backward-looking tax
burden indicators. In Part C the taxes raised on economic functions are shown as percentages of total GDP. However,
the consideration of tax revenue as a proportion of GDP provides limited information as no insight is given as to
whether, for example, a high share of capital taxes in GDP is a result of high tax rates or a large capital tax base. These
issues are tackled through the presentation of ITRs which do not suffer from this shortcoming.

ITRs measure the actual or effective average tax burden directly or indirectly levied on different types of economic
income  or  activities  that  could  potentially  be  taxed  by  Member  States.  Note,  however,  that  the  final  economic
incidence  of  the  burden  of  taxation  can  often  be  shifted  from  one  taxpayer  to  another  through  the  interplay  of
demand and supply: a typical example is when firms increase sales prices in response to a hike in corporate income
taxation; to a certain extent the firms' customers end up bearing part of the increased tax burden. The ITRs cannot
take  these  effects  into  account,  as  this  can  only  be  done  within  a  general  equilibrium  framework. Despite  this
limitation, ITRs allow the monitoring of tax burden levels over time (enabling the identification of shifts between the
taxation of different economic functions e.g. from capital to labour) and across countries. Alternative measures of
effective tax rates exist, which, using tax legislation, simulate the tax burden generated by a given tax, and can be
linked to individual behaviour. However, these 'forward-looking' effective tax rates do not allow the comparison of
the tax burden implied by different taxes; nor do they facilitate the identification of shifts in the taxation of different
economic income and activities.

The comparability of these indicators has been enhanced by the improved consistency and harmonised computation
of  ESA95  national  accounts  data.  However,  this  improvement  can  only  be  fully  exploited  by  using  the  same
denominator for all countries and not accounting for country-specific peculiarities in national tax legislation. For
capital, an average tax rate is estimated by dividing all taxes on capital by a broad approximation of the total capital
and business income both for households and corporations. For labour, an average tax rate is estimated by dividing
direct and indirect taxes on labour paid by employers and employees by the total compensation of employees. The
attractiveness of the approach lies in the fact that all elements of taxation are implicitly taken into account, such as
the  combined  effects  of  statutory  rates,  tax  deductions  and  tax  credits.  They  also  include  the  effects  due  to  the
composition of income, or companies' profit distribution policies. Further, the effects of tax planning, as well as the
tax relief available (e.g. tax bases which are exempted below a certain threshold, non-deductible interest expenses),
are also taken implicitly into account. The advantage of the ITRs in capturing a wide set of influences on taxation is
accompanied by difficulties in interpreting the trends when a complete and precise separation of the different forces
of  influence  is  not  possible8).  In  addition,  any  timing  differences  that  arise  because  of  lags  in  tax  payments  and

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Annex B

Methodology and explanatory notes

business-cycle  effects  may  give  rise  to  significant  volatility  in  these  measures.  In  short,  they  represent  a  reduced
model of all variables influencing taxation, tax rates and bases.

Implicit tax rate on consumption

The  ITR  on  consumption  is  defined  as  all  consumption  taxes  divided  by  the  final  consumption  expenditure  of
private households on the economic territory (domestic concept) (see Box B.10).

Box B.9: Definition of the implicit tax rate on consumption

<@>b_b10.pdf

Implicit tax rate on consumption

Taxes on consumption /

(ESA95)

(P31_S14dom)

Numerator:  see Box B.3 – taxes on consumption

Denominator:

P31_S14dom: Final consumption expenditure of households on the economic territory 
(domestic  concept)

This simple metric, which replaced the more complex version used prior to the 2003 edition, is considered preferable
on  a  number  of  counts.  Under  the  previous  approach  government  consumption  net  of  government  salaries  was
added to consumption of households on the economic territory to obtain the denominator9), given that some of the
'consumption taxes' are levied on these government purchases. However, the figure for 'government consumption
minus  wages  and  salaries'  was  only  ever  a  rough  approximation  of  the  intermediate  consumption  of  the
government10), 11).

Implicit tax rate on labour

The ITR on employed labour is defined as the sum of all direct and indirect taxes and employees' and employers'
social contributions levied on employed labour income divided by the total compensation of employees working in
the economic territory (see Box B.11). The ITR on labour is calculated for employed labour only (so excluding the
tax  burden  falling  on  social  transfers,  including pensions).  Direct  taxes  are  defined  as  the  revenue  from personal
income  tax  that  can  be  allocated  to  labour  income.  Indirect  taxes  on  labour  income,  currently  applied  in  some
Member States, are taxes such as payroll taxes paid by the employer. The compensation of employees is defined as
total remuneration, in cash or in kind, payable by an employer to an employee in return for work done. It consists of
gross  wages  (in  cash  or  in  kind)  and  thus  also  the  amount  paid  as  social  insurance  contributions  and  wage
withholding tax. In addition, employers' contributions to social security (including imputed social contributions) as
well as to private pensions and related schemes are included. Compensation of employees is thus a broad measure of
the gross economic income from employment before any charges are withheld.

8) OECD (2000, 2002b).

9)

In this respect, the previous approach followed the formula proposed by Mendoza, Razin and Tesar (1994).

10) An alternative solution, offered by the new availability of data on the intermediate consumption of the government under ESA95, would be

to incorporate this figure into the denominator.

11) A  detailed  analysis  of  the  VAT  on  intermediate  government  consumption  is  contained  in  Annex  C  of  the  2007  edition  of  this  report

(European Commission, 2007).

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Methodology and explanatory notes

Annex B

Box B.10: Definition of the implicit tax rate on labour

<@>b_b11.pdf

Implicit tax rate on employed 
labour (ESA95)

Direct taxes, indirect taxes and compulsory actual social 
contributions paid by employers and employees, on 
employed labour income/ (D1 + D29C)

Numerator:  see Box B.5 – employed labour

Denominator:

D1  Compensation of employees

D29C Wage bill and payroll taxes

The fundamental methodological problem in calculating the ITR on labour and capital is that the personal income
tax is typically broad-based and relates to multiple sources of income (i.e. employed labour, self-employed labour,
income from capital and income in the form of social benefits and pensions received). The note on the PIT split
explains the calculations for estimating the part of the revenue from personal income tax that can be attributed to
labour income and other income sources.

The resulting ITR on labour should be seen as a summary measure that approximates an average effective tax burden
on labour income in the economy. It must be recognised that the tax ratio may hide important variation in effective
tax  rates  across  different  household  types  or  at  different  wage  levels12).  For  example,  cuts  in  taxes  or  social
contribution rates that are targeted on low-wage, low-skill workers or families with children may have a small impact
on the overall ITR and yet be effective in raising take-home pay for the beneficiaries. The decomposition of total tax
wedges, for example, may be quite different at relatively low or relatively high wage levels. Also, in some Member
States the recent fiscal reforms may have had more pronounced effects on low-wage, low-qualified workers or on
families with children. 

When interpreting the time-series comparisons, it should be borne in mind that the evolution refers to an ex post
trend, which does not disentangle cyclical, structural and policy elements. This implies that the observed changes
may only partially reflect discretionary tax policy measures. In some Member States, for example, strong economic
growth may have decreased the importance of allowances and tax credits and, therefore increased the average tax
rate or have moved taxpayers into higher personal income tax brackets resulting in higher real tax payments (bracket
creep). Moreover, taxpayers at the top of the pay scale may have witnessed relatively high increases in incomes, and
such changes may have induced a cyclical swing in the ITR on labour that may to some extent offset the (ex ante)
expected fall driven by the tax reforms (aimed at reducing the tax burden at the bottom to the middle end of the
distribution, say). Even in the absence of strong economic growth but in the case of inflation, the described 'bracket
creep' can operate if tax brackets are not adjusted taking inflation into account.

In addition, it should be noted that the figures in the national accounts often do not follow a real accrual principle.
According to the ESA95 rules for the national accounts, taxes  should normally  be  recorded  when the underlying
economic event/transaction takes place rather than then when the actual tax payment is made. The personal income
tax, for example, is often levied on incomes accrued one year prior to actual collection. However, ESA95 allows for
considerable flexibility in interpreting the accrual time of recording, depending on the type of taxes. Most statistical
offices  in  fact  use  'time-adjusted'  cash  figures  for  a  few  months,  which  are  allowed  following  an  amendment  of
ESA95. This means that the effects of tax reforms may be reflected in the figures with some delay, even when time-
shifted cash figures are used. In contrast, tax policy changes are by definition immediately visible in the tax wedge
indicators.

12) See also Clark (2002).

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Annex B

Methodology and explanatory notes

In the chapter analysing the trends in the ITR on labour, the ITR on labour is compared with the tax wedge for a
single worker at two thirds of average earnings. In the 2004 edition of this publication a comparison between the ITR
on labour and the tax wedge for a single worker without children at average earnings was computed for the EU-15.
The ITR on labour was lower than the tax wedge at average earnings in all but three Member States. The difference
amounted to a maximum of well above 10 percentage points and to eight percentage points on the weighted EU-15
average.  Somewhat  surprisingly  then  the  ITR  on  labour  was  closer  to  the  tax  wedge  at  two  thirds  of  the  average
earnings than the one at average earnings. This can be due to the fact that employees at the lower end of the pay scale
are  generally  subject  to  relatively  lower  taxation  or  even  no  taxation  at  all  and  have  a  substantial  weight  in  the
calculation of the ITR on labour. Another explanation for the lower level of the ITR on labour with respect to the tax
wedge  for  a  single  worker  without  children  at  average  earnings  is  the  fact  that  the  former  takes  account  of  non-
standard tax reliefs (e.g. medical expenses) which are not considered by the latter. See European Commission (2004,
pp. 101–104).

Implicit tax rates on capital

Properties of the implicit tax rate on capital

The overall implicit tax rate on capital is computed as the ratio between revenue from all capital taxes, and all (in
principle) potentially taxable capital and business income in the economy. It aims at representing the average tax
burden falling on capital income. 

Our  definition  of  taxes  on  capital  does  not  stop  at  taxes  levied  on  capital  income  streams,  such  as  the  corporate
income  tax,  but  includes  taxes  on  stocks  of  wealth  or  capital  assets,  stemming  from  savings  and  private  sector
investments in previous periods; as well as taxes on asset transactions. In other words not only taxes on profits are
included but also, for instance, taxes and levies that could be regarded as a prerequisite to earn them, like the real
estate  tax  or  the  motor  vehicle  tax  paid  by  enterprises;  this  kind  of  taxes  have  to  be  paid  also  by  non-profitable
entities, and, therefore, cannot properly be treated as taxes on income streams. Given that national accounts do not
provide  any  indicator  for  the  tax  base  of  taxes  levied  on  capital  stocks  or  their  transactions  (e.g.  a  harmonised
measure  of the  stock  of  capital  or  of  asset  transactions),  the  overall  ITR  on  capital  simply  uses  as  a  denominator
potential  capital  and  business  income;  however,  this  publication  also  includes  a  more  narrowly  defined  ITR  on
capital and business income which excludes taxes on wealth or the capital stock but simply measures the average
effective tax burden on private sector investment and saving, as a ratio between taxes paid on capital income streams
and the aggregate of capital and business income.

Of the various implicit tax rates, the ITR on capital is the most complex13). Its trend can reflect a very wide range of
factors, which can also vary for different Member States. In particular, three main factors may distort the ITR on
capital and business income in the short and medium run. 

• Time lags: theoretical considerations as well as empirical evidence suggest that the ITR on capital income is
sensitive  to  the  business  cycle.  Unlike  other  taxes  the  corporate  income  tax  is  characterised  by  long  and
variable  lags  between  the  emergence  of  income  and  its  taxation,  due  notably  to  the  possibilities  to  defer
taxation because of previously incurred losses or group taxation.

• Capital gains: the expansionary phase in the late 1990s was accompanied by booming stock markets all over
the EU. As a result, capital gains and the corresponding tax revenues had risen substantially. However, given
that capital gains are not included in the denominator of any ITR on capital, this development clearly leads to
an overestimation of the average effective tax burden on capital and business income, and partly explains the
rise in the ITR for some Member States.

13) The construction of this indicator and its possible sources of bias in measuring the effective tax burden on capital are explained in detail in

European Commission (2004a).

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Annex B

• Structural changes in the financing of companies: national accounts data show that from 1995 to 2002, in most
Member States a relative shift in financing from debt to equity occurred such that capital income consists less
of  interest  and  more  of  dividend  payments.  This  happened  against  the  background  of  falling  interest  rates.
Most tax systems in the EU are not neutral concerning financing and allow interest payments to be deducted
from  the  tax  base.  The  shift  towards  higher  dividend  distributions  results  in  an  increase  in  the  measured
average tax burden14) at unchanged legislation.

Furthermore it is important to note that a cut in the statutory rate that is offset by an equivalent widening of the tax
base will leave the ITR on capital unchanged. This is not a limitation of the indicator, but rather an advantage given
that the ITR aims at measuring the effective tax burden. This property of the indicator may contribute to explain the
relatively  limited  fall  in  the  ITR  on  capital  in  the  last  years  despite  significant  EU  wide  reductions  in  statutory
corporate tax rates.

Interpreting the ITRs on capital one should bear in mind that the bases used for the computation are, particularly in
the new Member States, not only narrower but also more volatile than GDP as a whole, and thus subject to wide
swings.  Hence,  the  overall  volatility  of  this  ratio  is  significantly  higher  than  that  of  the  other  ITRs.  A  degree  of
caution is, therefore, advisable when making cross-country comparisons or comparisons of one Member State with
the EU averages. 

Large changes in backward-looking measures of the tax rate on capital are not unusual and not limited to macro
indicators. Tests on Belgium and Sweden15) report annual changes of several percentage points for effective tax rates
derived both from national accounts data or tax statistics using micro data for companies. The calculations presented
here have similar features.

Moreover,  statistical  issues  related  to  the  sectoral  data  used  to  compute  the  denominator  of  the  ITRs  might  also
influence  the  results.  National  accounting  data  are  in  fact  regularly  revised.  In  2006,  complying  with  the  EU
legislation16),  the  Member  States  were  required  to  introduce  a  number  of  important  methodological  revisions  in
their  national  accounts  in  order  to  improve  the  measurement  of  GDP.  In  particular,  the  main  change,  as  for  the
sectoral accounts, was the allocation of the Financial Intermediation Services Indirectly Measured (FISIM17)) to user
sectors/industries, instead of intermediate consumption. Imports of FISIM have also been recorded. At the moment
several  Member  States  have  not  entirely  conformed  to  the  current  methodological  regulations.  It  is,  therefore,
possible that statistical artefacts influence the time series, particularly in those points where data compiled according
to a new methodology are joined with old-series data.

The implicit tax rate on capital and the ITR on capital and business income

The implicit tax rate is calculated for total capital taxes and for the subcategory of taxes on capital income (which
differs from capital taxes overall because it excludes taxes on the stock of capital)18). Both indicators have the same

14) European Commission (2001a).

15) Valenduc (2001), Clarc (2002).

16) The  legal  reference  for  the  definition,  calculation  and  allocation  of  FISIM  are  Council  Regulation  (EC) No  448/98  of  16  February  1998
completing  and  amending  Regulation  (EC) No  2223/96  with  respect  to  the  allocation  of  Financial  Intermediation  Services  Indirectly
Measured (FISIM) within the European system of national and regional accounts (ESA) and Commission Regulation (EC) No 1889/2002 of
23 October 2002 on the implementation of Council Regulation (EC) No 448/98 completing and amending Regulation (EC) No 2223/96 with
respect  to  the  allocation  of  Financial  Intermediation  Services  Indirectly  Measured  (FISIM)  within  the  European  System  of  national  and
regional Accounts (ESA). 

17) Financial intermediaries provide services for which no explicit charges are made. The estimate of this latter is known in national accounts as
the Financial Intermediation Services Indirectly Measured (FISIM) and it is fixed by convention. Up to now FISIM has been recorded as
intermediate consumption of a notional industry, for want of relative observable variables. (See http://europa.eu.int/estatref/info/sdds/en/
na/na_changes2005.pdf for details).

18) The methodology is described in: European Commission (2004a).

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Annex B

Methodology and explanatory notes

denominator, i.e. total profit and property income from both corporations and households. In the case of taxes on
capital income, the denominator does not correspond to the actual tax base; it is in some ways narrower (omitting
capital  gains)  and  in  other  ways  broader  (excluding  some  deductions  from  the  tax  base).  As  for  'capital  taxes  on
stocks and wealth', the denominator does not take into account any asset or wealth on which the tax is levied. In
addition, two additional disaggregated ITRs, on corporate income and on capital and business income of households
are computed. These do not add up to the ITR on capital and business income.

The computation of the ITRs for the whole 1995–2007 period is not possible for four (Bulgaria, Luxembourg, Malta
and Romania) out of the 27 Member States and only partly possible, covering the last couple of years for another five
Member  States  (Ireland,  Greece,  Spain,  Hungary  and  Slovenia),  mainly  because  of  lack  of  data  availability  in  the
sectoral accounts. In order to obtain EU averages as accurate as possible, the missing values for Greece and Spain
were replaced with the figures available in the last publication of the report. In the case of Luxembourg, following the
methodological  changes  in  national  accounts  regarding  the  FISIM  and  given  the  sizeable  weight  of  the  financial
sector in this country, it no longer seems appropriate to employ a simplified methodology to compute the ITRs on
capital  as  done  until  the  2007  publication  of  the  report.  The  ITRs  will  be  published  as  soon  as  a  complete  set  of
sectoral accounts is available. Until the last edition of the report, the ITR was computed with reference to a simplified
set of data for Ireland. Currently, a full sectoral accounts dataset is available and the use of it resulted in a downward
revision of the ITR. 

Of the various implicit tax rates, the ITRs on capital are by far the most complex and given their limitations should
be  interpreted  very  carefully. A  first  problem  is  that  as  indicated  below,  the  ITR  on  capital  is  broadly  based  and,
therefore, reflects a wide range of factors. In particular, the definitions of the ITR denominators can only roughly
approximate the worldwide capital income of a country's residents for domestic tax purposes. This does not mean
that on the side of companies' profits of foreign affiliates are consolidated within the (domestic) parent company.
National  accounts  disregard  the  foreign  ownership  of  subsidiaries  located  on  the  economic  territory  when  the
generation of profits is recorded. They are simply treated as domestic companies19). However, the base of the ITR
does not measure the actual base of tax legislation, which drives tax revenues. So in practice it is not easy to link
developments in the overall ITR on capital and business income to the various statutory tax rates and other policy
changes.

Capital and business income according to national accounts is defined as profits and property income. Profits are
defined as net operating surplus (B2n) of the private sector including corporations (and quasi-corporations), private
households, and non-profit institutions and mixed income (B3n) of the self-employed. The net operating surplus of
the government sector is excluded, because losses or profits of the government are not subject to taxation.

There is no simple way of approximating the tax base for property income (mainly interest and dividends) for the
whole private sector. Compared to the reports based on ESA79 data, we switched from net interest payments of the
government to a specifically defined balance of property income of the private sector (received minus paid). The
objective for the definition of this balance was to approximate the potentially taxable profit of a company and the
taxable capital income of private households.

Taxable profits of companies consist of net operating profit and property income received (financial income) less
certain deductible elements of property income paid. The property income deductible from the tax base includes

19) The profits of foreign affiliates are recorded in the distribution of income as 'reinvested earnings on foreign direct investment' (d43) between
the parent and subsidiary company. The flow d43 paid in national accounts means that subsidiaries in the host country have retained profits
and this is attributed to the parents abroad in national accounts. The flow d43 received consists of retained profits of subsidiaries abroad
attributed to the parent companies in the investigated country. Both flows can have a negative sign in the case of losses of the subsidiaries.
The solution for the ITR tax base is not taking reinvested earnings on foreign direct investments into account. On the one hand the profit (or
loss) of a parent earned abroad is not counted. On the other hand the retained profits (or losses) of foreign subsidiaries in the home country
is not deducted from the ITR tax base.

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Methodology and explanatory notes

Annex B

interest (d41), property income attributed to insurance policyholders (d44) and rents on land (d45). Dividends (part
of  distributed  income  of  corporations  —  d42)  are  part  of  the  financial  income  but  they  cannot  be  deducted  to
calculate the taxable base in national tax legislation20). For private households, the taxable capital income consists
almost completely of interest and dividend payments received and of property income attributed to policyholders
received from insurance companies and pension funds.

The  balance  of  d44  received  minus  paid  usually  nets  off  for  the  whole  private  sector.  The  definition  takes  into
account  the  received  property  income  from  abroad  and  improves  the  measurement  of  profits  from  banks  and
insurance companies. However, for the ITR on capital several sources of bias compared to taxable profits remain.

• Since the calculation of depreciation of fixed capital in national accounts uses prices of the current period, it
differs a lot from methods used in profit and loss accounts. Additionally, the calculation of consumption of
fixed capital is not comparable across countries. This could lead to additional biases in measuring the effective
tax burden on capital.

• Capital gains are not part of profits in national accounts because they are not related to the production process.
This important part of taxable profits of (financial) companies is disregarded in calculating the denominator
and leads to an overestimation of the ITR on capital and business income as far as capital gains are taxed. The
same  is  true  as  regards  the  capital  gains  of  private  households,  which  are  often  taxed  under  the  personal
income tax. All this is likely to affect international comparability, as some countries have a greater share of
financial company profits including gains.

• Central banks are part of the financial corporations sector in national accounts. The inclusion of their (non-
taxable) profits in the denominator leads to an underestimation of the ITR on capital and business income.

•  For  taxable  third-pillar  private  pension  benefits,  treated  as  income  from  capital  in  the  split  of  the  personal
income tax (PIT), no corresponding income flow is recorded in national accounts. Ignoring these benefits in
the potentially taxable capital and business income in the denominator leads to an overestimation of the ITR.

• In the Eurostat data of national accounts for the EU Member States, interest payments by private households
and  self-employed  are  not  available  separately.  Taking  the  total  net  interest  as  part  of  the  denominator
accounts for tax deductible interest payments of self-employed but leads to an overestimation of the ITR on
capital because interest payments for mortgage and consumer loans are not tax deductible in most Member
States.

• Unlike net operating surplus, taxable profits and tax revenues are reduced by losses carried forward, causing a
cyclical mismatch with the base and cyclical fluctuation in the ITR, which sometimes makes the trend difficult
to interpret. This may also distort international comparisons. In addition, the difference in the measurement
of imputed rents on owner-occupied dwellings between national accounts and tax legislation is another source
of bias.

20) The ITRs for the whole private sector avoid double counting of dividends that are distributed by domestic companies out of their operating
profits by deducting dividends paid to domestic private households or other domestic companies from the capital ITR tax base. For more
details on this issue see European Commission (2004a).

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Annex B

Methodology and explanatory notes

Box B.11: Definition of the implicit tax rate on capital (income)

<@>b_b12.pdf

Implicit tax rate
on capital (income)

Numerator:

Denominator:

B2n_S11-12

B2n_S14-15

B3n_S14 
d41_S11-12rec 
d41_S11-12pay
d44_S11-12rec 

d44_S11-12pay

Capital (income) taxes/
B2n_S11-12 + B2n_S14-15 + B3n_S14 +
d41_S11-12rec - d41_S11-12pay + d44_S11-12rec - d44_S11-12pay +
d45_S11-12rec - d45_S11-12pay +
d42_S11-12rec - d42_S11-12pay + d42_S13rec + d42_S2rec +
d41_S14-15rec - d41_S14-15pay + d45_S14-15rec - d45_S14-15pay +
d42_S14-15rec + d44_S14-15rec

see Box B.6 – taxes on capital

Net operating surplus of non-financial and financial corporations (incl. quasi-
corporations)

Imputed rents of private households and net operating surplus of non-profit 
institutions

Net mixed income of self-employed
Interest received by non-financial and financial corporations
Interest paid by non-financial and financial corporations
Insurance property income attributed to policy holders received by non-
financial and financial corporations

Insurance property income attributed to policy holders paid by non-financial 
and financial corporations

d45_S11-12rec

Rents on land received by non-financial and financial corporations

d45_S11-12pay
d42_S11-12rec
d42_S11-12pay
d42_S13rec
d42_S2rec
d41_S14-S15rec

Rents on land paid by non-financial and financial corporations
Dividends received by non-financial and financial corporations
Dividends paid by non-financial and financial corporations
Dividends received by general government
Dividends received by rest of the world
Interest received by households, self-employed and non-profit organisations

d41_S14-S15pay

Interest paid by households, self employed and non-profit organisations

d45_S14-S15rec

Rents on land received by households, self employed and non-profit 
organisations

d45_S14-S15pay 

Rents on land paid by households, self employed and non-profit organisations

d42_S14-15rec 

d44_S14-15rec

Dividends received by private households, self-employed and non-profit 
organisations

Insurance property income attributed to policyholders received by private 
households, self-employed and non-profit organisations

The  overall  ITR  on  capital  and  business  income  for  corporations  and  households  is  influenced  through  various
channels. Therefore, developments of this indicator are sometimes difficult to explain. 

The ITR on capital income of corporations and the ITR on capital income of household and self-employed

The interpretation of the overall ITR on capital and business income of corporations and households is complicated
by  the  overlapping  effects  of  the  various  channels  previously  described.  Although  difficulties  of  interpretation
stemming from the backward-looking character of the indicator remain, the reading of the ratios is in fact simplified
when splitting the ITR between an ITR for the corporate sector and another ITR for the households sector. However
the breakdown is not perfect as the denominator of the two indicators are partly overlapping.

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Methodology and explanatory notes

Annex B

The numerator of the overall ITR can be split using the allocation of taxes to the category 'income corporations',
'(capital)  income  households'  and  'income  self-employed'21).  In  most  countries,  tax  revenues  raised  on  corporate
income equal the aggregate d51b + d51c2 'Taxes on the income or profits of corporations including holding gains'
(Box B.13). For countries like Germany, Italy and Austria revenues from local or regional business taxes are added.
In general, the other tax categories of the overall ITR numerator are allocated to the households sector (Box B.14).
The other two categories ('(capital) income households' and 'income self-employed') are taken as numerator of the
ITR on capital and business income for households. This includes mainly taxes on holding gains of households, the
share of personal income tax on capital and on the self-employed and the social contributions paid by the latter. 

The  denominator  includes  the  mixed  income  of  the  self-employed,  the  net  operating  surplus  of  households,
dividends and attributed insurance property income received and the difference between received and paid interest
and  rents22).  The  denominator  for  corporations  consists  of  their  net  operating  surplus,  the  difference  between
received and paid interest and rents and a specific definition of dividends minus property income from insurance
companies and pension funds attributed to policyholders23). 

When splitting the ITR on capital income for (non-financial and financial) corporations and households, the flows
of property income between these two sectors are of particular importance. A clear split can be made for the national
accounts categories interest payments (d41) and rents (d45). 

In principle, dividends are part of the taxable financial income of a company. They are subject to double taxation
because corporate taxes have been levied on the profit at the level of the distributing company. In order to limit or
offset the double taxation at the level of the shareholder (corporation or individual) Member States apply different
taxation schemes. However, most countries do not offset fully the double taxation24). If the dividends received are
part of the potentially taxable base, the ITR on corporate income will be lower in those countries which give greater
relief for the double taxation of dividends compared to a country that fully applies the classical system.

21) A detailed classification of taxes to the different categories for each Member State is available on the homepage of the Directorate-General

for Taxation and Customs Union (http://ec.europa.eu/taxtrends).

22) Note that as far as rent income is concerned, the definition adopted here departs from the customary tax treatment of property income,

which in most cases is based on gross property income (possibly with some deduction of interest expenses).

23) Strictly  speaking,  it  is  the  balance  of  attributed  property  income  (d44)  paid  mainly  to  private  households  and  received  property  income

attributed to insurance policyholders because also corporations and quasi- corporations can be insurance policyholders too.

24) For an overview of the schemes that apply for the individual shareholder see European Commission (2003b).

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Annex B

Methodology and explanatory notes

Box B.12: Definition of the implicit tax rate on corporate income

<@>b_b13.pdf

Implicit tax rate
on corporate income

Numerator :
d51b+d51c2 

Denominator :
B2n_S11-12 

d41_S11-12rec 
d41_S11-12pay 
d45_S11-12rec 

d45_S11-12pay 
d42_S11-12rec 
d42_S11-12pay 
d42_S13rec 
d42_S2rec 
d42_S14-15rec 

d44_S11-12rec 

d44_S11-12pay 

Taxes on corporate income/
B2n_S11-12 +
d41_S11-12rec - d41_S11-S12pay +
d45_S11-12rec - d45_S11-12pay +
d42_S11-12rec - d42_S11-12pay +
d42rec. by S13 + d42rec. by S2 + d42rec. by S14-15 +
d44_S11-12rec – d44_S11-12pay

Taxes on the income or profits of corporations including holding 
gains

Net operating surplus of non-financial and financial corporations 
(incl. quasi-corporations)

Interest received by non-financial and financial corporations
Interest paid by non-financial and financial corporations
Rents on land received by non-financial and financial 
corporations
Rents on land paid by non-financial and financial corporations
Dividends received by non-financial and financial corporations
Dividends paid by non-financial and financial corporations
Dividends received by general government
Dividends received by rest of the world
Dividends received by households, self-employed and non-profit 
institutions

Insurance property income attributed to policyholders received by 
non-financial and financial corporations

Insurance property income attributed to policyholders paid by non-
financial and financial corporations

However, it would be deceptive to count only the dividends received by financial and non-financial corporations.
Because  the  net  operating  surplus  out  of  which  dividends  are  distributed  is  already  part  of  the  denominator  the
dividends would be partly counted twice. Dividends distributed by a company belonging to the sector for financial
or non-financial  corporations should not be  counted.  Only  dividends  received  from  abroad should be  taken  into
account when constructing the ITR for all corporations.

Unfortunately,  information  on  dividends  distributed  from  the  rest  of  the  world  to  domestic  corporations  is  not
available  in  the  Eurostat  database  of  national  accounts.  For  dividends  (and  nearly  all  other  flows  in  national
accounts) we only know what a specific sector receives from all other sectors and what it pays to all other sectors.
However, this information can be used to approximate the dividends received by corporations from abroad. From
the  total  sum  of  dividends  received  by  corporations  (d42rec_S11-12)  we  deduct  the  dividends  distributed  by
domestic corporations (d42pay_S11-S12) in order to avoid double counting. However, this deduction is too large, as
only the dividends distributed to domestic corporations should be subtracted. Therefore, dividends received by the
government  (d42rec_S13),  the  rest  of  the  world  (d42rec_S2)  and  households  (d42rec_S14-15)  are  added  to  the
denominator. This approximation is only fully correct under the assumption that the government and households do
not  receive  dividends  directly  from  abroad  but  through  domestic  banks  and  insurance  companies.  While  this
assumption seems reasonable for the government, for households it can be expected that they receive a certain part
of dividends from abroad, meaning that the dividends included in the denominator are overestimated.

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Methodology and explanatory notes

Annex B

Box B.13: Definition of the implicit tax rate on capital and business income of households and 
self-employed

<@>b_b14.pdf

Implicit tax rate on 

Taxes on capital and business income of households/

(incl. self-employed)

d b i

it

l

Numerator : 

Denominator :
B2n_S14-15 

B3n_S14 
d41_S14-S15rec 

d41_S14-S15pay 

d45_S14-S15rec 

d45_S14-S15pay 

d42_S14-15rec 

d44_S14-15rec 

B2n_S14-15 + B3n_S14 +
d41_S14-15rec - d41_S14-15pay +
d45_S14-15rec - d45_S14-15pay +
d42_S14-15rec + d44_S14-15rec +

see Box B.8 - taxes on the capital and business income of 
households

Imputed rents of private households and net operating surplus of 
non-profit institutions

Net mixed income of self-employed
Interest received by households, self employed and non-profit 
organisations

Interest paid by households, self employed and non-profit 
organisations

Rents on land received by households, self employed and non-
profit  organisations

Rents on land paid by households, self employed and non-profit  
organisations

Dividends received by private households, self-employed and non
profit  organisations

Insurance property income attributed to policyholders received by 
private households, self-employed and non-profit organisations

Due to the double taxation of dividends at the company level and at the shareholder level these payments (or the
underlying  profits)  need  to  be  included  in  both  indicators,  for  corporations  and  for  households.  With  these
definitions the ITRs on capital and business income for households and on corporate income do not sum up to the
overall  ITR.  For  the  overall  implicit  tax  rate  on  business  and  capital  income  the  dividend  payments  between  the
corporations and the households' sector need to be consolidated.

But  with  the  'property  income  attributed  to  insurance  policyholders  (d44)'  there  exists  another  income  flow  for
distributing profits from financial corporations to private households25). Insurance companies and pension funds
collect contributions from their insurance policies or schemes, and after deducting their operating costs they invest
them in the capital market or in other assets. From this (financial) investment they receive property income in the
form  of  interest,  dividends  or  rents  as  well  as  capital  gains  through  trading  stocks,  bonds  etc.  This  return  on
investment constitutes partly the profit of the insurance companies and partly belongs to the insurance policyholder
as  laid  down  in  the  insurance  contract.  It  is  that  part  attributed  to  the  policyholders  (excluding  capital  gains)26),
which, in national accounts, is transferred via the d44 mainly to private households in the period when this property
income accrued.

In principle, most EU Member States provide a tax exemption of this income in the hands of the financial institution.
Several methods are used. In some cases, the institution is tax exempt (certain pension funds); in other cases income
is  exempt  or  neutralised  in  the  profit  calculation  by  deducting  an  insurance  technical  reserve.  However,  some

25) For the private sector as a whole, including or excluding d44 (received minus paid) from the tax base has no major empirical impact on the
ITR on capital income since the net d44 is close to zero and represents nearly exclusively a flow from financial corporations to households. 

26) The capital gains are not recorded in the generation and distribution of income accounts. Some information can be found in the revaluation

accounts. Up to now we have not tested whether these data could be used for our purposes.

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Annex B

Methodology and explanatory notes

Member States levy a withholding/capital yield tax on this income which is not always neutralised on the level of the
company.

The preliminary split of the ITR on capital income for corporations and households presented in the last edition of
the  Structures  of  the  taxation  systems  did  not  take  the  flow  d44  into  account.  This  means  that  the  return  on
investment  was  fully  allocated  to  financial  corporations.  It  was  based  on  the  fact  that  there  is  no  actual  flow  of
income in the period in which insurance companies earn income on behalf of policyholders. In national accounts,
income received by insurance companies or pension funds by investing their technical reserves in financial assets or
buildings  is  only  'attributed'  to  insurance  policyholders.  It  is  're-collected'  afterwards  through  imputed  higher
insurance contributions. Because these flows are purely imputed within national accounts, no taxes — at this stage —
are raised on the level of the insurance policyholder.

However, it seems that the tax exemption of such earnings is the dominant regime for the taxation of pension funds
and insurance companies in Europe. It means that d44 paid by financial corporations has to be deducted from the
ITR tax base for corporate income. In the countries where capital yield taxes are levied on these earnings and the tax
revenues are allocated to corporations, the ITR on corporations would be overestimated.

In turn, d44 is added to the ITR tax base for the capital income of the households sector. In most countries, private
households  are  taxed  on  the  benefits  or  distributions  by  pension  funds  or  insurance  companies  when  the  payoff
period starts. This can be an amount of capital or an annuity. For the definition of an ITR on capital income for
households this means that we encounter a problem of periodicity. With the property income earned on behalf of the
policyholder period by period, insurance companies build up reserves (liabilities) in order to pay the benefits in later
periods. However, d44 could be regarded as proxy for the taxable part of pension benefits and insurance payoffs,
which would not include the initial contributions or premiums.

The corporations sector in national accounts also comprises partly unincorporated enterprises, the so-called quasi-
corporations. In many countries, these quasi-corporations also have to pay corporate income tax. However, there are
some  important  exceptions.  In  Germany,  partnerships  (Personengesellschaften)  constitute  a  large  number  of  the
country's companies and these are treated as quasi-corporations. Their production and profits etc. are recorded in
the corporations sector in national accounts. Because they do not have an independent legal status, their owners are
taxed  under  the  PIT  scheme.  The  related  tax  payments  are  recorded  within  the  households  sector  in  national
accounts27). In the classification adopted in this publication, they are reported within 'taxes on self-employed'. This
means that tax revenues are booked in a different sector than the underlying business income. Ignoring this booking
principle by calculating ITRs on capital income for corporations or households (including self-employed), using the
sector information of national accounts without corrections would lead to biased ITRs. Similar problems exist for
Luxembourg, Austria, Finland and Portugal.

According to information from Statistics Finland, the bias in Finland's ITRs is of minor importance. For Austria and
Portugal a correction of the ITR on corporations has been introduced. A fraction of PIT for owners of these quasi-
corporations is not available. Therefore, the part of PIT from self-employed that includes the taxation of profits from
partnerships is extracted from the ITR on households and allocated to the corporations sector. At the same time, the
approximation  of  the  tax  base  for  self-employed  is  also  assigned  to  the  corporations  sector,  consisting  of  mixed
income.

For Austria and Portugal the adjusted ITR represents the tax burden on all companies including the self-employed.
For  Germany,  where  partnerships  are  an  important  part  of  companies,  it  would  be  possible  to  employ  a  similar
adjustment. However, the German authorities expressed doubts on whether this adjustment would lead to results
that are fully comparable with other countries. The ITR on corporate income is generally lower than the statutory

27) PIT revenues are also recorded in the government sector which receives the payments.

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Methodology and explanatory notes

Annex B

corporate tax rate. This can be explained by the fact that the ITR incorporates the effect of reduced rates (e.g. for
certain  assets,  sectors  or  small  profits),  tax  deductions  affecting  the  base  and  the  effects  of  tax  planning  by
corporations in order to minimise their tax payments. It should furthermore be noted that the financial corporations
described in national accounts include central banks and pension funds, while their profits, which are included in
the denominator of the ITR, are not always subject to taxation. This is another element that explains the relatively
low level of the ITRs. Making a comparison with an ITR using micro data from tax statistics, Valenduc (2001) finds
that the ITR based on macro data tends to underestimate the effective taxation on company profits. 

It is, however, possible that the ITR on corporate income exceeds the statutory corporate tax rate. This may depend,
for instance, on the payment by corporation of taxes referring to profits earned earlier, or on taxes paid on capital
gains  (which  are  not  included  in  our  ITR  denominator  owing  to  a  lack  of  statistics).  A  less  straightforward  but
probably important effect is due to the impact of loss-making companies which not only individually display a zero
ITR but curiously drive up the ITR for all profit-making companies; their own negative net operating surplus in fact
offsets an equivalent but positive NOS realised by other businesses which turn a profit and pay taxes on it.

The  sensitivity to  the  business cycle  is  a  general  feature of backward-looking  indicators  that measure the  average
effective  tax  burden  on  economic  activities.  In  principle,  ceteris  paribus,  three  different  factors  affect  the  ITR  on
capital income in an economic recovery.

• In countries with a progressive personal income tax, the ITR should rise in an upswing. If taxable income from

capital and self-employment increases, the taxes raised on this income increase faster.

• Corporate tax schedules are generally not progressive and, therefore, the economic cycle should not affect the
ITR via that channel of influence. However, some Member States do apply lower rates for small and medium-
sized enterprises. In an ongoing upswing some of these companies will exceed the tax legislative thresholds
resulting in a higher tax burden.

• Rules on carry forward of company losses will generally result in asymmetric effects on the ITR. First, there is
an  asymmetry  with  regards  to  the  timing  of  tax  payments:  when  relying  on  aggregate  data  from  national
accounts, corporate income tax revenues appearing in the numerator of the ITR are reduced by losses incurred
in prior years, while the denominator is reduced by losses in current years. The numerator effect is caused by
so-called  loss  'carry  forward'  provisions  in  the  tax  legislation.  The  denominator  effect  results  from  the
inclusion of loss-making firms, with current losses from loss-making firms offsetting profits of profitable firms
in  the  aggregation.  Losses  are  therefore  incorporated  in  both  the  numerator  and  the  denominator,  but  the
losses  are  transmitted  in  the  ITR  asymmetrically  in  the  sense  that  they  refer  to  different  periods.  At  the
beginning of an economic upswing, more firms will make profits. Initially that the ITR on capital is reduced,
because the resulting increase in profits is immediately reflected (in the denominator) but not fully in the tax
payments (in the numerator) as losses from previous years are carried forward. However, one could expect
that  the latter  effect  diminishes  over  time,  as  loss-carry  forward provisions  are  often restricted  in  time  and
more  and  more  companies  make  profits  as  the  upswing  persists.  This  diminishing  effect  of  loss  carry-over
provisions should therefore lead to a gradual increase in the ITR on capital due to progressive increases in tax
payments. Second, a recessionary phase will generally exert an asymmetric impact on the numerator and the
denominator of the ITR: the denominator will show the full amount of the decrease in aggregate corporate
profits  whereas  the  numerator  will  not  reflect  the  full  extent  of  the  deterioration  as  a  portion  of  taxpaying
companies would have shown zero profits already in the preceding year and further deterioration is not taken
into  account  (hence  a  greater  effect  on  the  denominator  than  on  the  numerator  resulting  in  a  slight  anti-
cyclical bias).

All in all, these effects are likely to offset each other to a certain extent in the initial phases of the cycle. However, in a
long-lasting economic upturn these channels of influence will point most likely to an increase in the implicit tax rate
on capital with a certain time lag. 

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Annex B

Methodology and explanatory notes

Structural factors affecting the development of capital ITR

Beyond  the  effects  of  the  business  cycle,  the  changes  in  the  ITRs  might  also  reflect  more  structural  changes,  in
particular in the composition of income. For example, given the increase in stock market capitalisation in the years
1995–2000, it is likely that significant capital gains were achieved by both companies and households, resulting in an
increase  in  financial  income.  This  change  in  the  composition  of  income  is  not  clearly  discernible  from  national
accounts income data, nor is it included in the tax base of the ITR. The additional tax revenues related to this kind of
income  could  therefore  have  induced  a  rise  in  the  ITRs  on  capital  income,  leading  to  an  overestimation  of  the
effective tax burden on capital income of the private sector. Following the same line of reasoning, the subsequent
downturn in stock markets could be an important element in explaining the reduction in the ITR on capital income
in 2001.

Moreover, different tax provisions for different sources of income offer an additional explanation for the increase in
the ITR on corporate income. Specific tax rates or special types of tax relief apply to different sources of income or
expenditure.  A  common  feature  of  corporate  tax  systems,  for  instance,  is  to  favour  debt  finance  relative  to  the
financing  of  new  investments  by  issuing  new  equity.  For  the  ITR,  dividend  and  interest  payments  are  aggregated
within the tax base. If financial markets induced a shift from interest to dividend payments, the taxable base would
increase.  In  this  case,  companies  will  pay  more  taxes  on  capital  since  the  deduction  of  interest  expenditure  for
determining taxable profits is phased out. At the same time, however, the aggregate and consolidated tax base of the
ITR will net off all flows of dividend distributions or interest payments between different companies (for instance
between  non-financial  companies  as  borrower  and  banks  or  insurance  companies  as  creditor)  and  private
households. If a shift occurs from interest to dividend payments, it will not show up in the denominators, and hence
the capital ITR will remain constant. The overall result of the higher tax revenues would be an increase in the ITR
reflecting a higher effective tax burden that is caused by the effects of the tax legislation28).

Implicit tax rate on energy

The  nominal  ITR  on  energy  is  calculated  as  the  ratio  between  total  energy  tax  revenues  and  final  energy
consumption,  as  calculated  by  Eurostat  aggregating  different  energy  sources  on  the  basic  of  each  source's  net
calorific  value.  Although  out  of  analogy  with  the  ITRs  on  labour,  consumption,  and  capital  the  name  ITR  is
employed, it should be noted that the former three are dimensional numbers while the ITR on energy is expressed in
euro per tonne of oil equivalent.

The real ITR on energy differs from the nominal in the sense that the nominal euro amount in the numerator of the
ratio is deflated with the cumulative percentage change in the final demand deflator from 2000. 

Methods used to split the revenue from personal income tax:

The sources of personal income tax

Apart from the aggregate data in national accounts, additional data made available by Member States has been used
to  split  recorded  tax  revenues  into  more  detailed  categories.  This  is  of  particular  importance  for  the  recorded
personal income tax, which is typically broad-based, and relates to multiple sources of income. A method had to be
developed  to  break  down  revenue  from  the  personal  income  tax  by  economic  function  (i.e.  labour,  capital  and
consumption). This section describes the methods used by the Member States to generate estimates of this split of

28) However, the tendency for the ITR to increase can be offset to some extent by the fact that interest is often more highly taxed than dividends
in the hands of personal investors. Only countries with classical tax systems tax interest as much as dividends at the personal level. Others
have  some  form  of  relief  for  double  taxation  of  dividends.  So  there  could  be  more  personal  income  tax  on  interest  than  on  dividends,
offsetting some of the effect mentioned.

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Methodology and explanatory notes

Annex B

the  personal  income  tax  from  tax  return  data.  The  methods  attribute  personal  income  tax  to  four  main  taxable
income sources (see Box B.15):

Box B.14: Broad definition of the selected income sources

<@>b_b15.pdf

Income source

Type of taxable income components included

Employed labour

Self-employed labour

Capital

Transfers and pensions

Wages and salaries

Fringe benefits in kind

Directors' remuneration

Foreign source earned income

Financial participation schemes (e.g. stock options)

Deemed income from private uses of company cars

Income from unincorporated businesses

Profits from trade or business and proceeds from independent 
professional services (e.g. dividend distributions from closely held 
companies)

Income from movable property (e.g. dividends, interest, 
distributions, royalties)

Income from immovable property (rents earned on letting a 
private dwelling, etc.)

Periodic transfers and private pensions

Taxable capital gains for some Member States

Other (e.g. rental value owner-occupied housing)

Taxable social benefits (e.g. unemployment, health care and 
social assistance benefits)

State pension benefits

Occupational pension benefits

The resulting estimates of the personal income tax revenue that could be attributed to these taxable income sources
are  used  in  the  numerators  for  the  implicit  tax  rates  on  labour  and  capital  (using  relevant  aggregate  economic
incomes as denominators) and in the breakdown of taxes across the economic functions (i.e. taxes on consumption,
labour and capital, as a percentage of GDP).

The flaws of aggregate data and advantages of micro data

Under an approach using only aggregate data, total personal income tax raised in respect of labour (capital) income
is often estimated as the proportion of aggregate labour (capital) income in the aggregate taxpayer income. Another
approach is to estimate a single average effective income tax rate on the basis of aggregate data. The total personal
income tax revenue data is divided by the aggregate approximation of labour and capital income in the economy to
get the overall effective personal income tax rate, which can subsequently be applied to the labour (capital) income
in order to estimate the income tax levied from labour (capital) income29). This ignores the fact that effective rates
on personal income tax vary across different taxable income components and groups of taxpayers. Even where, for
example, labour and capital income are pooled together for tax purposes at the individual level, such an approach
may  be  criticised  where  aggregate  labour  income  is  believed  to  be  subject,  on  average  across  taxpayers,  to  a

29) This approach has been introduced by Mendoza, Razin and Tesar (1994) and was used in internal studies by the Economics and Financial
Affairs Departments of both the European Commission and the OECD. See Martinez-Mongay (2000) and Carey and Rabesona (2002) for
more details. 

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Annex B

Methodology and explanatory notes

significantly different average effective tax burden than capital income30). A main concern associated with average
effective  (implicit)  tax  rate  analysis  is  the  manner  in  which  estimates  are  derived  for  the  aggregate  amount  of
personal income tax revenue raised from different types of income included in a given country's personal income tax
base. Under an approach using only aggregate data from national accounts, for example, total personal income tax
raised  in  respect  of  labour  (or  capital  or  other  forms  of  personal  taxable  income,  for  example  social  transfer  or
pension  income)  is  often  estimated  as  the  proportion  of  aggregate  labour  (or  capital)  income  in  the  aggregate
taxpayer  personal  income.  This  approach  implicitly  assumes  that  labour  and  capital  income  (or  other  forms  of
taxable income) is subject to one (common) average effective tax rate31). This assumption is generally unrealistic,
and could be expected to lead to imprecise estimates of notional tax revenues raised in respect of different taxable
income types and, therefore, imprecise estimates of average effective tax rates by economic income source32).

Relying on micro-level data — that is, confidential tax data at the individual taxpayer level — Member States are able
to  generate  more  accurate  estimates  of  personal  income  tax  revenues  raised  on  separate  sources  of  income.
Generally, capital income will tend to be concentrated at the right side of the Lorenz curve and therefore, be subject
to  higher  marginal  and  average  tax  rates  as  compared  to  income  from  labour.  On  the  other  hand,  special  tax
concessions  may  apply  to  income  from  capital,  so  that  the  average  tax  rate  for  capital  income  might  not  be
significantly different from that for income from labour. For example, some Member States apply a so-called 'dual'
income tax system, in which capital income is usually taxed at a relatively lower (fixed) rate as compared to other
earned taxable income. Forcing the latter assumption (of special tax concessions) on the data would however be a
shortcoming  to  the  analysis.  Also,  most  Member  States  tend  to  tax  pension  benefits  or  social  benefits  more
favourably than earned income from labour, either by way of increased tax allowances or tax credits that are age-
based, or by partial exemptions from the tax base. Using micro-data sets that include separate reported figures at the
taxpayer level for the items of income on which the personal income tax is raised, it is possible to account for such
effects33). 

The methodological approaches

Most  Member  States  basically  multiply  individual  income  tax  payments  by  proportions  of  the  selected  income
sources in the total taxpayer's income (Belgium, Denmark, Germany, France, the Netherlands, Ireland, Luxembourg,
Finland  and  Sweden).  This  is  done  both  by  way  of  micro-simulation  models  relying  on  samples  from  the  total
taxpayer  population  and  by  way  of  use  of  exhaustive  tax  return  data  sets  (e.g.  Belgium  and  Ireland).  The
corresponding  estimates  obtained  at  the  taxpayer  level  are  consequently  aggregated  to  obtain  estimates  of  the
personal income tax raised in respect of the selected sources of income. For example, the total amount of personal
income tax raised in respect of labour income, PIT (labour) could be estimated as follows:

PIT

(
labour

)

=

(
/
YW
j

j

)

*

PIT

j

∑

j

∑=

j

w

j

*

PIT

j

30) See also OECD (2000, 2002b), Clark (2002) and De Haan, Sturm and Volkerink (2002).

31) This  approach  has  been  introduced  by  Mendoza,  Razin  and  Tesar  (1994)  and  was  used  in  internal  studies  by  Economics  and  Financial
Affairs departments of both the European Commission and the OECD. See Martinez-Mongay (2000) and Carey and Rabesona (2002) for
more details.

32) See also OECD (2000, 2002b) and De Haan, Sturm and Volkerink (2002).

33)

In order to illustrate the degree of precision that can be reached with using micro data rather than aggregate tax return data, the Ministries of
Finance and Taxation in the Netherlands, Finland, Denmark and Italy have performed additional calculations on the basis of only aggregate
tax return data for some years. It actually appeared that the differences for the estimated amounts of income tax raised on income from
employed labour were rather small. The reason is that employed labour income is by far the most dominant income source, which means
that the overall effective income tax rate (measured on the aggregate taxable income and across all taxpayers) is strongly influenced by the
average effective tax rate on labour income. The differences were however significant for the other selected income sources. If only aggregate
tax return data were used, generally higher fractions would be computed for capital income and income in the form of social transfers and
pensions, and generally lower fractions would be computed for income from self-employed labour.

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Methodology and explanatory notes

Annex B

where Wj  measures  the  labour income of  the  j-th  taxpayer  in  a  sample  of  individuals  (j = 1, ... n)  and  where  PITj
measures the personal income tax payment of the j-th taxpayer on his total taxable income Yj. The above equation
therefore measures the total personal income tax raised on labour income as a weighted average of each individual
taxpayer's  payment  PIT,  with  the  weights  wj =  (Wj/Yj)  attached  to  these  individual  payments  reflecting  the
distribution of total wages and salaries across taxpayers. 

Some Member States (Spain, Italy and Greece) instead use tax return data that is aggregated at the level of a number
of income classes or income tax brackets (j = 1, ... n), but essentially make the same calculations. The latter approach
is  likely  to  capture  broadly  comparable  effects  of  the  differences  in  tax  treatment  and  the  distribution  of  income
sources across different groups of taxpayers.

Some  Member  States  (Austria,  Portugal)  choose  another  approach  and  use  tax  receipts  data  from  the  wage
(withholding) tax and (final) income tax statistics and apply a number of adjustments. Wage (withholding) tax is by
its very nature designed to approximate the final income tax liability for wage earners as closely as possible, but in
some cases there are certain adjustments for income tax assessments, because the wage tax withheld is not correct
(e.g. because of different jobs or pensions during a single year). As this correction concerns only wage earners, in
some cases the net amount of the correction is deducted from the total amount of recorded wage tax and, the amount
of  personal  income  tax  is  adjusted  accordingly.  Since  wage  tax  can  also  be  levied  on  social  benefits  (e.g.
unemployment  benefits,  widower's  benefits and  invalidity  benefits)  or  old-age pensions,  the  recorded  wage  tax  is
adjusted  accordingly.  The  (adjusted)  personal  income  tax  is  further  split  between  income  from  self-employed
businesses and capital income, either using aggregate proportions or information aggregated at the level of income
classes (Austria). The latter  approach  is  also likely  to capture  broadly  comparable effects  of the  differences  in  tax
treatment and the distribution of income sources across different groups of taxpayers as outlined above. 

While in most Member States the personal income tax system is comprehensive in the sense that all subcategories of
taxable income are pooled at the individual level, and the result is taxed at ascending statutory tax rates. However,
some Member States apply a given statutory rate on a specific income category, as can occur under a 'dual income
tax' system. In the Netherlands, Finland and Sweden, for example, capital income is currently taxed at a relatively
lower statutory rate as compared to other earned income. In most cases, however, the tax receipts data are used to
isolate the amount of tax collected on that particular income category. In Slovenia, capital income is taxed according
to  a  flat  rate  while  active  income  is  taxed  according  to  a  progressive  rate.  In  the  United  Kingdom,  the  personal
income tax law actually prioritises the order of different types of income. For example, labour income is treated as
the  bottom  of  the  taxable  income  and  dividend  income  is  treated  as  the  top  slice  of  taxable  income.  Unlike  the
method used in other Member States, the United Kingdom calculation therefore does not assume that the individual
taxpayer has the same average effective income tax rate over all income sources (see also above). Instead, income
source specific income tax rates are multiplied by the selected income sources at the taxpayer level.

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Annex B

Methodology and explanatory notes

Box B.15: Overview of methods to estimate the allocation of the personal income tax

<@>b_b16.pdf

Countries
BE, DK, DE, FR, NL, 
IE, LU, LV, MT, PL, 
FI, SE, SI, NO

Data

Data set of individual 
taxpayers

Basic method

Personal income tax payments multiplied by 
fractions of net taxable income sources (as 
percentage of the total tax base) at the level of 
the individual taxpayer

UK

Data set of individual 
taxpayers

Income source specific income tax rates 
multiplied by net taxable income sources at the 
level of the individual taxpayer

BG, CY, ES, EL, IT, 
LT

Income class data based 
on data set of individual 
taxpayers

Personal income tax payments multiplied by 
fractions of net taxable income sources (as 
percentage of the total tax base) at the level of 
income classes/tax brackets

AT, CZ, EE, HU, PT, 
RO

Tax receipts data from 
withholding and income 
tax statistics

Approach using aggregate withholding tax and 
final assessment income tax data with certain 
adjustments.

Credits and deductions

Income sources are, insofar as it is possible, measured net of tax base deductions or allowances that are exclusively
earned on these income sources (e.g. allowance for savings, expenses incurred in maintaining labour income). This
is important, as tax breaks and concessions given in respect of the tax on capital income can be quite substantial,
with the result that the estimated fraction for personal income tax raised on capital income can be rather low, and in
some cases even negative (e.g. in the Netherlands and in Denmark). It is generally attempted to allocate income-
specific tax credits (e.g. an additional tax credit that is earned exclusively on income from labour) to the base for
splitting purposes to which it relates. Against this, the revenue effects of general tax base deductions and credits are
proportionately allocated across all income sources. Further complications in calculating the bases for splitting arise
due to the fact that certain income tax receipts are collected at source and certain tax breaks are granted at source,
whilst others are collected and granted in the framework of the individual taxpayer's tax return. This is particularly
an issue with certain components of capital income (interest, dividends, pensions, etc.). There are further conceptual
and practical issues with pensions and the self-employed to which there are no easy answers.

As  a result of  data set limitations and  a degree  of inconsistency between  the  approaches adopted by  the  Member
States  (which  affects  most  notably  the  allocation  of  income  tax  to  capital  and  social  transfers  and  pensions),  the
accuracy and comparability of the estimates of the ITRs on labour and capital have been somewhat compromised.
The  sources  of  these  inconsistencies  are  various.  In  some  Member  States,  for  example,  tax  return  data  are  only
available at income-class level rather than at the taxpayer level. For some countries not all the taxable benefits from
social security or old-age pension schemes could be separately identified from the tax return data. Some Member
States could not incorporate the revenue effects of tax base deductions or tax credits specifically related to the main
income sources. Inconsistency may also arise where Member States permit a joint assessment of the taxable income
of the household (e.g. in France before 2001). To give an example, the principal earner of the household may earn
labour income whereas the spouse is actually a social benefit recipient with a relatively lower income. In these cases,
however, the same effective tax rate was applied to the taxpayers jointly assessed. There are further conceptual and
practical problems with the treatment of pensions for which there are no straightforward solutions. 

Some Member States were not able to provide full time-series coverage for all calendar years. In these cases, a trend
has been assumed using simple linear interpolations, or the fractions were assumed to remain constant. In reality
changes in the fractions would reflect changes either in the distribution of income or in the tax parameters. Applying

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Methodology and explanatory notes

Annex B

linear interpolation seems a valid method only in the absence of major tax reforms. Apart from certain simplifying
assumptions and estimates of the share of personal income tax limited to specific years this new treatment of the
personal income tax is a major improvement on the methodology used prior to the 2003 edition. It is found to be
vastly better than an approach based on aggregate data in estimating the tax burden on non-wage income sources (in
particular for social transfers and pensions and self-employment income).

Individual country approaches by type of approach:

(A) Approach using micro-tax receipts data

• Belgium: The split of the personal income tax was estimated by the Ministry of Finance using detailed revenue
statistics from the national tax administration based on individual tax returns. The data set covers any assessed
income, and is exhaustive. In fact, the national tax administration already splits and allocates the aggregate
personal income tax revenue raised on the so-called 'global income' to the different income sources on a case-
by-case basis, in order to derive entitlements of individual taxpayers to certain tax credits that are related to
specific income sources. For example, the tax credits for pensions, sickness or unemployment are limited to
the income tax that relates proportionally to the corresponding net income. This allocation of the tax revenue
raised  on  the  'global  income'  is  calculated  by  multiplying  individual  tax  payments  by  proportions  of  the
income types in the total taxpayer's 'global income', as outlined above. The income types are measured net of
tax base deductions that are exclusively earned on these income types. Subsequently, the estimated fractions of
the  aggregate  personal  tax  revenue  that  is  raised  on  the  selected  income  types  depend  on  a  proportional
division  of  the  personal  income  tax  that  is  due  on  the  'global  income'  and  the  income  tax  due  on  'distinct
income'  sources  that  are  taxed  separately.  The  resulting  fractions  are  consequently  applied  to  the  sum  of
revenues  from  advance  payments  on  earnings,  advance  payments  of  tax  on  self-employed  persons  and  the
amount  of  the  final  income  tax  assessment.  The  revenue  from  withholding  tax  on  income  from  movable
capital and real estate tax is not included in the above calculations; they are directly assigned to the capital
income.

•  Denmark:  The  split  of  the  personal  income  tax  was  estimated  by  the  Ministry  of  Taxation  using  a  micro-
simulation  model  that  is  based  on  a  sample  of  micro  (taxpayer-level)  data.  The  model  incorporates  the
information of withholdings/prepayments and final income tax returns. The model is updated annually, and
used in planning the national tax policies and estimating policy alterations on tax revenues and on the income
tax  liabilities  of  taxpayers  on  different  income  levels.  The  model  also  covers  other  legislative  areas,  such  as
unemployment  benefits,  housing  subsidies,  social  assistance  and  so  on.  The  method  basically  multiplies
individual tax payments by proportions of the income types in the total taxpayer's income, as outlined above.
The income types are measured net of tax base deductions that are exclusively earned on these income types.
By including net interest payments in the tax base of capital, for example, the Ministry of Taxation has taken
into  account  the  way  the  tax  relief  for  mortgage  interest  payments  and  other  interest  payments  on  loans
reduces the tax base of capital. This explains why the estimated part of capital income may be lower than zero.
The method takes into account that from 2001 onwards negative capital income can only be deducted in the
local income taxes (and from 2007 the so-called health care contribution as a consequence of the municipal
reform)  and  that  from  1998  to  2001  the  after  tax  value  of  the  deduction  for  negative  capital  income  was
gradually eroded. The so-called share income (which is taxed separately) is allocated directly to the part on
capital  income.  As  regards  employed  labour  income,  it  should  be  recognised  that  in  1995  and  1999  wage
income was taxed as follows: on the one hand the tax base for the municipal income tax and the lower limit
central government tax was wage income less transport expenses and unemployment insurance contributions;
on the other hand the tax base for the so-called middle bracket and top bracket income tax was the part of the
wage income —without any reduction for expenses — that exceeded a certain amount. If one reduces the tax
base with deductible 'wage expenses', then the part of the mean limit and an upper limit income tax that is
attributed to wage income is too small. Whereas if it is not taken into account the part of the municipal income
tax  and  lower  limit  central  government  tax  that  is  attributed  to  wage  income  is  too  big.  The  Ministry  of
Taxation has chosen the latter approach as it is believed that the bias will be the smallest in this case.

•  Germany:  The  split  of  the  personal  income  tax  was  estimated  by  the  Federal  Ministry  of  Finance  using  a
micro-simulation model. This model is based on a representative sample of micro (taxpayer-level) tax return
data that is used for tax forecasting purposes and pre-assessing the consequences of changes in income tax

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Annex B

Methodology and explanatory notes

legislation. In addition, the model allows the assessment of the solidarity tax, child benefits, the church tax and
social contributions. The simulation model incorporates the information on withholdings/prepayments and
final income tax returns (in Germany, nearly every private household liable to income tax must file an income
tax return, employees only paying wage withholding tax are also included in the sample). The calculations do
not take into account child benefits and tax-free cash grants for acquiring or constructing new occupational
dwellings, which are credited against the income tax liability. These transfers are deemed as separate transfers
in the context of social policy programmes. Basically, personal income tax payments were multiplied by the
selected income sources at the micro level, as outlined above. The income sources are measured net of tax base
deductions that are exclusively earned on these income sources. Germany employs a comprehensive income
tax base. There are no income-specific rates such as lower flat-rates on income from capital investment as in
countries with dual income tax systems, nor does Germany grant lower tax rates or tax credits on low wages.
However, the tax base may be largely offset by income-specific allowances (such as the saving allowance), tax
incentives  or  arrangements  in  computing  income,  but  these  effects  are  captured  within  the  calculations,
because the average effective tax rate is multiplied by the net taxable income sources.

• France: The decomposition of the PIT was based on a sample of around 500 000 tax declarations (2 % of the
total). The method basically multiplies individual tax payments by proportions of the income types in the total
taxpayer's income. The income types are measured net of tax base deductions that are exclusively earned on
these income types. In addition, corrections were made for the revenue effects of tax credits that are exclusively
earned on the selected income types (e.g. the reimbursable tax credit, the prime pour l'emploi, to encourage
low-paid and low-skilled workers to resume active employment). It is worth noting that France employs a joint
assessment of the taxable income in the household. For example, the principal earner in the household may
earn labour income whereas the spouse receives social benefits, but the total amount of personal income is
jointly  assessed.  In  the  calculations  for  the  split  of  the  personal  income  tax,  however,  in  this  case  the  same
effective tax rate has been applied to the partners jointly assessed. For the period 2001–04 data provided by
French authorities also include taxes paid on transfers. For the period 1999–2000 this was only possible if the
household income included salary or self-employed labour revenues. In order to maintain comparability and
consistency in the time series the split for 1999 and 2000 has been adjusted. Assuming that the changes in the
shares from 2000 to 2001 are only due to the introduction of the category 'transfers', the absolute changes for
the other three categories have been calculated accordingly and deducted from the original values provided.

• Ireland: The split of the personal income tax was estimated by the Inland Revenue using an exhaustive data set
with micro (taxpayer-level) tax return data. The data set covers all taxpayers for which a return was received.
The  method  basically  multiplies  individual  tax  payments  by  proportions  of  the  income  types  in  the  total
taxpayer's income, as outlined above. However, because there are some taxable personal income components
that  are  taxed  at  a  flat  rate  only,  there  is  no  actual  split  of  tax  revenues  raised  on  these  particular  income
components. The tax raised on such components is directly calculated from the tax return data. At this stage,
the income types are not yet measured net of tax base deductions that are exclusively earned on these income
types. This could be done in future updates of the split of the personal income tax.

• Latvia: The split of the personal income tax was estimated by the Ministry of Finance. Latvia's calculations are
greatly simplified by the existence of one single rate of personal income tax. The calculations were based on
data from personal income tax returns, in accordance with the individual taxpayers' data. The summary of
salary  declarations  was  used  to  calculate  personal  income  tax  revenue  from  employed  labour  income.
Information on the personal income tax paid by the self-employed was derived from the Declaration of annual
income  and  from  the  advance  payment  tax  return.  Information  on  tax  on  pension  payments  was  obtained
from the State Social Insurance Agency. The lack of any records of personal income capital taxation means that
this amount was taken as the residual. A part of allowances (the non-taxable minimum and allowances for
dependants) is applied at the moment of the tax calculation. The tax is collected, taking into account applicable
allowances. Information on the applicable allowances is obtained from the tax returns. The other allowances
are obtained only after submission of declarations of annual income to the State Revenue Service. The total
PIT  revenue  is  already  shown  in  net  form  i.e.  the  PIT  repayments  made  by  the  State  Revenue  Service  are
already taken away.

•  Luxembourg:  The  split  of  the  personal  income  tax  was  estimated  by  the  National  Statistical  Office  using
detailed  revenue  statistics  from  the  national  tax  administration  (ACD)  based  on  exhaustive  household  tax
returns (in Luxembourg PIT is based on family taxation) and on withholding revenues on employed labour

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Annex B

and  transfers.  For  the  part  on  tax  returns,  the  method  basically  multiplies  individual  tax  payments  by
proportions  of  the  income  types  in  the  total  taxpayer's  income,  as  outlined  above.  Then  the  withholding
revenues were considered, because it is not mandatory to compile tax return if there is only employed labour
or pension income. Since the distinction between withheld amounts raised on labour employed and pension
income is not available, data from the social security organisations were used. When only the total amount
withheld was available from a social security organisation, the average rate of contribution was used as a proxy.

• Malta: The split of the personal income tax is based on the actual data available at the local tax authorities
through the individual returns. When returning their annual declarations, all taxpayers are obliged to correctly
indicate the exact source of their income on their individual tax form. This information is then captured at
micro level, and is used to compile the figures submitted in the national PIT questionnaire. There is no further
extrapolation on the data, except for the case of the withholding taxes on capital. Since the withholding tax is a
flat percentage, this figure has been obtained based on the revenue generated from this particular source. 

• The Netherlands: The split of the personal income tax was estimated by the Ministry of Finance using a micro-
simulation model that is based on a sample with micro (taxpayer-level) data. The information is collected by
Statistics Netherlands. The model is not updated annually, but annual projections are made for future years for
planning the national tax policies and estimating policy alterations on tax revenues. It covers the combined tax
burden  of  wage  withholding  tax,  personal  income  tax,  social  contributions  and  wealth  tax.  The  method
basically multiplies individual tax payments by proportions of the income types in the total taxpayer's income,
as  outlined  above.  In  the  Netherlands,  the  lowest  two  income  tax  rates  consist  of  personal  income  tax  and
social contributions; the highest two rates consist solely of personal income tax. The split has therefore been
computed for both personal income tax and social contributions (which are in principle levied on all taxable
personal income types). The income types are measured net of tax base deductions that are exclusively earned
on these income types. A special provision applies to the capital income of owner-occupied property. This is
taxed at a notional rental value, which represents the balance of revenue and expenses connected with the use
of the dwelling, and is assessed using statutory tables. As normal expenses are included in the notional rental
value,  no  expenses  other  than  mortgage  interest  and  ground  rent  may  be  deducted.  The  deduction  for
mortgage  interest  payments  explains  why  the  estimated  part  of  capital  income  is  lower  than  zero  for  some
years. A major tax reform was implemented in January 2001. Among a number of other important changes,
this  reform  replaced  the  wealth  tax  and  personal  income  taxation  of  interest,  dividend  and  other  capital
income by a single tax on the imputed income from wealth. A 4 % yield imputed on all assets is now taxed at a
flat rate of 30 %, which basically implies a 1.2 % tax rate on the total wealth. The tax reform also replaced the
basic employed person's tax base allowance by a non-refundable tax credit for all employees and self-employed
persons. Both measures are reflected in the estimates for 2001.

•  Poland:  The  split  of  the  personal  income  tax  was  estimated  by  the  Ministry  of  Finance.  Poland  has  a
progressive tax system, hence the estimate is obtained with a bottom-up methodology, starting from taxpayer-
level data and the aggregating the results. For taxes levied as lump sums, the method used simply multiplies
the individual tax due by proportions of the income types in total taxpayer's income. The income types are
measured  net  of  estimated  social  security  contributions.  Adjustments  were  made  for  married  couples'  tax
returns  (their  joint  income  was  used  in  the  calculations).  Owing  to  an  important  reform  in  1999,  which
introduced tax-deductible health insurance contributions, there are two different methodologies for the years
1995–1998  and  1999–2004.  For  the  years  after  1999,  the  Ministry  of  Finance  arrives  at  the  PIT  due  by
subtracting the amounts due as health insurance contributions from the total revenue and the residual then
represents the amount due for the PIT. The amounts due for the health insurance contributions are then split
across economic functions and re-introduced in the PIT split so that the final PIT split given is homogeneous
across the entire time period. 

•  Finland:  The  split  of  the  personal  income  tax  was  estimated  by  the  Ministry  of  Finance  using  a  micro-
simulation  model  that  is  based  on  a  sample  of  micro  (taxpayer-level)  data.  The  information  is  collected  by
Statistics  Finland.  The  model  is  updated  annually,  and  used  in  planning  the  national  tax  policies  and
estimating policy alterations on tax revenues and on the income tax liabilities of taxpayers on different income
levels. The method basically multiplies individual tax payments by proportions of the income types in the total
taxpayer's income, as outlined above. However, because of the dual income tax system, there is no actual split
of tax revenues raised on capital income. The tax raised on capital income is directly calculated from the tax
return data. The income types are measured net of tax base deductions that are exclusively earned on these

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Annex B

Methodology and explanatory notes

income types. The statistical information on dividend income in the model contains both dividend income of
the self-employed that is treated as the capital part of the income, and the dividend income from investors, that
is  not  income  from  self-employed  labour  but  capital  income  from  for  example  owning  shares  in  a  listed
company.  The  statistical  information  is  split  into  dividend  income  from  self-employment  and  dividend
income  from  saving  and  investments  using  an  estimate.  From  year  2002  the  method  of  splitting  dividend
income  between  dividends  from  listed  companies  and  the  dividends  of  the  self-employed  owners  has  been
improved.  Mortgage  interest  payments  are  not  deducted  from  the  capital  income,  since  no  rental  value
taxation of income from home-ownership is applied.

• Sweden: The split of the personal income tax was estimated by the Ministry of Finance using micro-simulation
models that are mainly based on administrative sample data. The models are updated annually, and mainly
used in planning the national tax policies and estimating policy alterations on tax revenues and on the income
tax liabilities of taxpayers on different income levels. The method basically multiplies individual tax payments
by proportions of the income types in the total taxpayer's income, as outlined above. However, because of the
dual income tax system, there is no actual split of tax revenues raised on capital income. The tax raised on
capital income is directly calculated from the tax return data. The income types are measured net of tax base
deductions that are exclusively earned on these income types. An alternative way to describe the method is to
say that the individual specific average effective income tax rate is calculated to split the personal income tax
across  different  taxable  income  sources.  Note,  however,  that  these  average  effective  tax  rates  are  computed
while  incorporating  the  revenue  effects  of  tax  credits  that  are  exclusively  earned  on  the  selected  income
sources.  The  revenue  effects  of  general  tax  credits  for  all  taxpayers  are  proportionally  allocated  across  all
selected income sources.

• Slovenia: The split of the personal income tax was estimated by the Ministry of Finance. The calculations were
based on data sets for individual taxpayers, except in the case of pensions. As most of the PIT from pensions is
only accounted for but not collected the PIT from pensions is subtracted. Actual PIT collected from pensions
is very close to prepayment of PIT from pensions during the year. Therefore, these prepayments are added to
PIT from the transfer and pensions category. The method multiplies PIT payments by fractions of net taxable
income sources (as a percentage of the total tax base) at the level of individual taxpayers. The allowances were
deducted at the individual level (except in the case of pensions). In 2006, major changes in the PIT system were
introduced — cedular system for capital income was introduced and tax prepayments became final payments.
This  reform  resulted  into  two  different  sets  of  data  for  2006:  accrual  individual  data  for  employed  labour
income, self-employed income and social transfers and pensions; and cash cumulative data for capital income.

•  Norway:  The  split  of  the  personal  income  tax  was  estimated  by  the  Ministry  of  Finance  using  a  micro-
simulation  model  called  LOTTE.  The  model  is  based  on  a  sample  from  the  household  income  statistics  of
Statistics  Norway.  The  personal  income  tax  system  has  two  tax  bases:  personal  income,  from  which  no
deduction may be made, and ordinary income. Ordinary income includes all types of taxable income from
labour,  transfers,  business  and  capital.  Certain  costs  and  expenses,  including  interest  paid  on  debt,  are
deductible  in  the  computation  of  ordinary  income.  Dividends  are  regarded  solely  as  capital  income  in  the
calculations. With the exception of the standard allowance, the basic allowance and the allowance for gifts to
voluntary  organisations,  all  allowances  are  entirely  allocated  to  one  income  source.  The  basic  allowance  is
calculated  as  a  certain  percentage  of  wage  and  pension  income  with  a  lower  and  upper  limit.  In  the
calculations, the basic allowance is divided according to the size of wage and pension income, respectively, for
each  individual.  Some  basic  allowance  is  reported  separately  for  spouse  supplementary  pensions,  child
alimonies  and  pensions.  These  are  allocated  to  transfer  income.  The  allowance  for  gifts  to  voluntary
organisations  is  a  general  allowance  and  is  as  such  divided  on  all  income  sources.  The  SC  and  the  central
government  income  surtax  are  separated  between  the  relevant  income  sources  (labour,  self-employed  and
transfer).  The  labour  and  transfer  component  in  gross  income  is  identified  by  the  LOTTE  model.  Self-
employed  income  is  more  difficult  to  identify  because  of  some  special  limitation  rules  for  this  category  of
income included in the personal income tax base. Actual self-employed income might therefore be higher than
the taxable self-employed income included in the gross personal income tax base. However, by hooking the
LOTTE model to total gross personal income reported in the tax statistics, it is possible to identify the self-
employed  income  in  the  tax  base  (by  subtracting  labour  and  transfer  income  from  total  gross  personal
income).

374

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Methodology and explanatory notes

Annex B

Box B.16:  Micro v Macro-data approach34)

<@>b_b17.pdf

To illustrate the properties of the 'micro data approach', consider an economy with only two taxpayers (j = 1.2). 
One can model taxpayer 1's personal income tax liability as follows:

PIT

1

=

Wt
(

−

DW

+

O

1

1

−

DO

−

A
1

)

−

C

1

1

1

−

CW

−

CO

1

1

where t(·) denotes a progressive tax rate function, W measures gross income from labour, O measures 'other' 
gross taxable income, DW measures deductible expenses incurred in earnings and maintaining labour income, 
DO measures deductible expenses incurred in earnings and maintaining 'other' taxable income, A measures a 
personal basic tax-base allowance (depending on tax filing status), C measures a basic tax credit (may also 
depend on tax filing status), CW measures a tax credit earned on labour income and CO measures a tax credit 
earned on 'other' taxable income. The portion of taxpayer 1's income tax linked to labour income can be 
estimated as:

PIT

(

labour

)

= τ
1

.(

W

1

1

−

DW

)

1

with the amount raised on 'other' taxable income given by:

PIT

(

other

)

= τ
1

.(

O

1

−

DO

)

1

1

where (cid:3)1 measures the taxpayer's 1 average effective tax rate on the aggregate of labour and 'other' taxable 
income:

PIT

1

=τ
1

W
(

1

−

DW

+

O

1

−

DO

)

1

1

This effective income tax rate, which is an increasing function of the progressive tax rate schedule, t(·), and a
decreasing function of the tax base allowances, deductions and tax liability credits, reflects taxpayer 1's position.
In fact, the average effective tax rate for taxpayer 1 will differ from that of taxpayer 2 to the extent that:

(cid:2) Taxpayer 1 and taxpayer 2 have the same amount of aggregate taxable income, but different amounts of
labour and 'other' taxable income, and the tax system treats these two types of income differently, for
example, by way of special tax credits earned on labour income or 'other' taxable income;

(cid:2) Taxpayer 1 and taxpayer 2 have different levels of total taxable income, and the personal income tax is

progressive.

In contrast to the micro data approach, when relying on macro data, the notional personal income tax allocation
and the measurement of the effective tax rate must rely on a single average effective tax rate estimate only,
computed both across all income sources and all taxpayers. By applying this single effective tax rate to estimate
the notional amount of taxes raised on the different income sources, one would omit important taxpayer- and tax
treatment variation that are implicitly caught in the micro data.

In order to illustrate the degree of precision that can be reached with using micro rather than macro data, the
Netherlands, Finland, Denmark and Italy have made additional calculations on the basis of only aggregate tax
return data for some years. It appears that the differences for the estimated amounts of personal income tax
raised on labour income were rather small. The reason is that labour income is by far the most important taxable
personal income source, which means that the overall effective income tax rate (measured on the basis of the
aggregate taxable income across all taxpayers) is strongly influenced by the average effective tax rate on labour
income. The differences are however significant for the other taxable personal income types. If only aggregate
data would be used, generally higher fractions would be computed for capital income and social transfer and
pension income, and generally lower fractions would be computed for income from unincorporated businesses.

(B) Approach using both micro and aggregate tax receipts data

The method employed in the United Kingdom is based on combining micro and aggregate tax record data. Also,
unlike the methods outlined above, the method does not assume that the individual taxpayer has the same average

34) See also Clark (2002).

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Annex B

Methodology and explanatory notes

effective  income  tax  rate  over  all  income  sources.  Instead,  income  source  specific  tax  rates  are  multiplied  by  the
selected income sources at the taxpayer level.

• The United Kingdom: The split of the personal income tax was estimated by the Inland Revenue using a micro-
simulation model and aggregate tax receipt data. The micro- simulation model incorporates the information
of  withholding  taxes  (PAYE),  self-assessment  tax  returns  and  claims  by  non-taxpayers  for  overpaid  tax
deducted at sources. The method does not assume that the individual taxpayer has the same average income
tax rate over all selected income sources. Instead, income-source specific tax rates are computed, because the
personal income tax law prioritises the order of different types of income. For example, labour income is at the
bottom of the taxable income and dividend income is treated as the top slice of the taxable income. The total
tax  liability  that  results  from  the  micro-simulation  model,  grossed  up  to  the  total  taxpayer  population  for
sampling, does not exactly correspond to the total recorded tax receipts from macro-tax receipt data, due to
differences in definition and sampling error. The main differences between the micro and macro-tax receipt
data  occur  because  some  components  (i.e.  company  income  tax  and  unallocated  tax  receipts)  are  not
modelled. Also, there are various repayments of personal income tax which are made directly at source and are
not captured in the model data, including payments to pension funds, charities, special savings schemes, life
insurance relief, mortgage interest relief at source, working family tax credits and vocational training relief.
These  elements  of  the  macro-tax  receipt  data  have  also  been  allocated  across  the  selected  income  types,
whenever this was possible.

(C) Approach using tax return data aggregated at the level of income classes or tax brackets

In some Member States tax return data is used that is aggregated at the level of a number of income classes or tax
brackets. Basically, the recorded personal income tax payments are multiplied by the selected income types over the
sum  of  the  taxable  personal  income  sources  at  the  level  of  income  classes  or  tax  brackets.  This  approach  thus
implicitly assumes that a (common) average effective tax rate applies to all selected income types at the level of the
income  class.  The  corresponding  estimates  are  consequently  aggregated  to  obtain  the  estimate  of  the  split  of  the
personal income tax. Calculations by Italy have shown that differences from using either macro-tax return data or
micro data aggregated by income classes turn out to be significant for the taxable personal income types that are less
important from a quantitative point of view. Although the method cannot provide the degree of accuracy of micro
(taxpayer-level)  data,  it  is  believed  that  is  likely  to  capture  the  effects  of  progression  of  the  personal  income  tax
system and the distribution of income sources across different groups of taxpayers.

• Bulgaria: The split of the personal income tax was calculated by the Ministry of Finance using information
from the tax returns filed in the National Revenue Agency, representing aggregated micro data per tax return.
The tax base of the different types of income besides labour income is divided over the total tax base and the
ratio serves as weight to measure the share of the relevant income in the total tax due. The sum of the weighted
tax revenues shall be the tax due for all income except labour income. For employees receiving only labour
income, the PIT is withheld by the employer. The share of every type of non-labour income mentioned before
is  applied  to  the  cash  revenues  from  all  types  of  income  besides  labour  income.  The  revenues  from  labour
income and from non-labour income form the total revenues. The share of the labour income revenues in total
PIT revenues is known, the share of the total non-labour income revenues in total PIT revenues is also known,
as  well  as  the  share  of  each  type  of  non-labour  income  within  the  total  non-labour  income  revenues.  The
relevant shares serve as the PIT split.

• Cyprus: The split of the personal income tax was estimated by the Ministry of Finance. The calculations were
based on tax assessment data, which were grouped by category of income and by tax bracket into 26 income
classes.  The  recorded  personal  income  tax  payments  are  multiplied  by  the  taxable  income  sources  for  each
class and  then divided  by the  aggregate taxable income  of the  class. The income types  are measured  as net
taxable personal incomes. All deductions have been allocated to the correct base class and category for the
purposes of the split. The personal allowances have been allocated in proportion to the income sources.

• Greece: The split of the personal income tax was estimated by the Ministry of Finance in cooperation with the
National  Statistical  Service  and  Professor  Geogakopoulos  from  the  Athens  University  of  Economics.  The
calculations were based on data from personal income tax returns, which were grouped by category of income

376

Taxation trends in the European Union

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Methodology and explanatory notes

Annex B

and tax bracket. Basically, the method multiplies tax payments by proportions of the income types in the total
taxpayer's  income,  as  outlined  above,  but  aggregated  at  the  level  of  income  classes.  The  income  types  are
measured  as  net  taxable  personal  incomes.  In  order  to  split  between  income  from  employed  labour  and
transfers  data  from  the  General  Secretariat  of  Information  Systems  were  used.  The  final  percentages  are
comprehensive of tax on savings, which is included in category d51a in addition to tax revenue from personal
income tax; the total amount of this category constitutes tax on capital and, given that this tax is not calculated
on the total income of households, it was added to income tax from capital in the calculations.

• Lithuania: The split of the personal income tax was estimated by the Ministry of Finance utilising data from
the State Tax Inspectorate. Data coverage is very high (99.9 % to 100 % of actual payments by the different
revenue group of personal income tax). Lithuania's calculations are simplified by the existence of a dual rate
system  for  earned  and  unearned  income.  The  categorisation  of  income  taxes  allowed  most  elements  to  be
allocated to their economic functions without need for further individual or income class breakdowns. The
split  of  personal  income  tax  calculation  breaks  down  the  total  amount  of  the  tax  refund  across  the  various
revenue  groups.  Payments  from  non-employment  related  or  n.e.c.  income  were  attributed  to  the  payments
from  capital  and  income  from  individual  activities,  in  proportion  to  the  interrelation  between  respective
incomes  calculated  according  to  tax  return  data.  Adaptations  to  the  methodology  were  done  from  2002  to
2003  as  a  result  of  changes  in  the  legislation  which  allowed  deductions  for  life  insurance  and  pension
contributions  and  for  certain  interest  payments.  Note  for  the  year  1999  data  limitations  required  a  special
estimate which was based on a different methodology.

• Spain: The split of the personal income tax was estimated by the Ministry of Finance using tax return data
aggregated in 46 income classes or intervals of the taxable base. For each individual taxpayer, the final income
tax liability of the annual declaration can be obtained as the function of the taxable personal income types,
certain tax allowances in the taxable base, a double tax schedule, their allotment between the regular taxable
base and the irregular one (for incomes or capital gains realised in more than one year) and a series of tax
credits  to  the  tax  liability.  Following  this  structure  and  certain  procedures  specified  for  the  assignment  of
deductions to certain income sources, it is supposed that the tax liability corresponding to the regular part of
the taxable base is distributed among the income types in a proportional way to the weight of each one in the
total amount of the declared income, as outlined above. The personal income tax reform of 1999 has changed
the structure of the tax system. The method has been adapted to take account of the most important changes.
The fraction of the personal income tax raised in respect of social transfers and pension benefits could not be
estimated by using the personal income tax statistics. The Ministry of Finance used statistics from the national
accounts  for  this  purpose.  It  is  however  believed  that  using  national  accounts  figures  leads  to  an
overestimation of the fraction of personal income tax that can be attributed to social transfers and pension
benefits.  The  social  transfers  in  national  accounts  also  include  some  social  transfers  which  are  not  taxed.
Furthermore, the amount of some social transfers is probably situated below the income tax threshold, and
therefore,  may  not  be  included  in  the  personal  income  tax  returns.  A  much  more  detailed  (technical)
description of the method employed by the Ministry of Finance is available upon request.

• Italy: The split of the personal income tax was estimated by the Ministry of Finance using a micro-data set
containing IRPEF tax return data for all taxpayers. Instead of computing an average tax rate for each individual
taxpayer, the information was allocated to 35 classes of gross income. Basically, the recorded personal income
tax  payments  were  multiplied  by  the  selected  net  taxable  income  sources  over  the  sum  of  the  net  taxable
income sources at the income class level. The income types are measured net of tax base deductions that are
exclusively earned on these income types. In addition, corrections were made for the revenue effects of tax
credits  that  are  exclusively  earned  on  the  selected  income  types.  In  addition  to  the  recorded  IRPEF  tax
revenues, IRPEF payments received by the treasury on denominations other than IRPEF were incorporated in
the calculations. These include tax on dividend distributions and dividend withholdings, which were directly
allocated to the capital income category.

Taxes and social contributions paid by the self-employed are allocated to the capital and business income category35).
Italy  proposed  to  split  tax  revenues  from  income  of  self-employed  in  80 %  and  20 %,  because  most  of  the  self-

35) Except the income and taxes of 'continuous and coordinated collaborations' that are allocated to the labour category. The income of these

self-employed workers is treated, for tax purposes, as income of employed workers.

Taxation trends in the European Union                 377

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Annex B

Methodology and explanatory notes

employed in Italy are more comparable to dependent employed workers. The 80 % are related to labour and the 20 %
are linked to capital income of self-employed. The mixed income of self-employed should be split accordingly. Social
contributions of self-employed are attributed to labour in the Italian method. The following table shows how this
different treatment of self-employed would affect the ratios of table C and D.

Table B-1.1

Italian method

<@>tb_1.pdf

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

C. Structure according to economic function as % of GDP
Labour
  Employed
    Paid by employers
    Paid by employees
  Self-employed (80 % incl. SSC)
  Non-employed 

22.5
18.0
10.2
7.8
2.6
1.9

20.9
16.4
8.7
7.7
2.6
1.9

Capital
  Capital and business income 
     Income of corporations
     Income of households 
     Income of self-employed (20 %)
  Stocks of capital / wealth

D. Implicit tax rates
  Labour employed
  Capital
  Capital and business income
     Corporations
     Households and self-employed

Source: Commission services

8.8
4.9
2.9
1.8
0.3
3.9

35.0
32.4
18.0
19.5
9.2

9.2
5.6
3.3
2.0
0.3
3.6

37.9
33.1
20.2
21.9
10.0

23.5
18.8
10.8
8.0
2.6
2.0

9.9
6.1
3.8
2.0
0.3
3.8

39.4
39.1
24.1
26.0
11.1

23.5
18.6
10.6
8.1
2.7
2.2

8.2
4.9
2.8
1.6
0.4
3.3

39.9
34.3
20.4
18.8
10.8

23.3
18.3
10.0
8.3
2.9
2.0

8.3
5.3
3.2
1.6
0.5
3.0

39.5
36.5
23.4
22.5
11.0

22.8
17.9
10.0
7.9
2.9
2.0

8.0
5.4
2.9
2.1
0.4
2.6

39.1
35.0
23.6
19.3
13.7

23.0
18.0
10.1
7.9
2.8
2.1

8.1
5.6
3.7
1.4
0.4
2.5

39.1
34.5
23.9
23.7
10.2

23.0
18.1
10.2
7.9
2.8
2.1

7.7
4.8
3.1
1.3
0.4
2.8

39.0
35.4
22.3
21.0
9.7

23.6
18.2
10.4
7.8
3.3
2.1

7.8
5.2
3.5
1.1
0.5
2.6

39.7
37.5
25.0
24.7
10.2

23.1
18.0
10.3
7.7
3.0
2.1

7.5
4.7
3.1
1.1
0.4
2.8

38.8
36.0
22.5
21.4
9.8

23.3
18.3
10.5
7.7
2.9
2.2

7.1
4.5
2.9
1.2
0.4
2.6

38.9
35.7
22.5
20.8
10.1

23.6
18.3
10.5
7.8
3.1
2.2

8.1
5.3
3.5
1.4
0.4
2.8

39.1
42.9
28.1
27.1
11.9

24.5
18.9
10.8
8.1
3.3
2.3

8.5
5.7
3.8
1.5
0.5
2.8

40.7
45.2
30.5
30.1
12.4

(D) Approach using aggregate withholding tax and final assessment income tax data with certain adjustments

In  some  Member  States  the  estimates  of  the  split  of  the  personal  income  tax  were  computed  on  the  basis  of
aggregates statistics of withholding tax and the final personal income tax by assessment.

•  Austria:  The  split  of  the  personal  income  tax  was  estimated  by  the  Ministry  of  Finance  using  statistical
information from the wage withholding tax and the final income tax by assessment. Taxes raised on income
from  employed  labour  are  withheld  by  the  employer  at  source,  and  the  wage  tax  system  is  designed  to
approximate the final personal income tax as closely as possible, but in some cases certain repayments have to
be made by the tax administration. This can for example occur if the taxpayer receives income from several
jobs  or  pensions  during  one  year,  or  if  there  are  different  payments  per  month  or  deductions  for  special
expenses etc. As these repayments concern only wage taxpayers, the total net amount of the repayments was
deducted from the total recorded wage tax, and the recorded income tax was adjusted accordingly. Also, the
income from employment includes income in the form of social transfers and pension benefits received. The
recorded revenue of the wage tax was also corrected for the relevant amount to arrive at the fraction of income
tax  levied  on  labour  income.  The  revenue  of  the  personal  income  tax  by  assessment  largely  reflects
entrepreneurial income and income from capital. The (corrected) recorded revenue from the personal income
was split between the two sources, using tax return data aggregated at the level of a number of income classes
as outlined above.

•  Czech  Republic:  The  split  of  the  personal  income  tax  was  estimated  by  the  Ministry  of  Finance.  Three  PIT
accounts exist; the first, wage tax withheld by the employer is purely labour, the second, withholding tax, is
presumed to be purely capital, and the tax paid per tax return was split. The calculations were based on data
from  personal  income  tax  returns,  which  were  grouped  by  category  of  income  and  by  tax  bracket  into  20
classes. The method multiplies tax payments by proportions of the income types in the total taxpayer's income,
aggregated at the level of income classes. The income types are measured as net taxable personal incomes. In
calculating  the  split  between  income  from  employed  labour  and  transfers,  it  was  found  that  almost  all  the
transfers  were  tax  exempt  (0.001 %  of  the  total  PIT  revenue)  so  all  were  allocated  to  employed  labour.  All
deductions have been allocated to the correct base class and category for the purposes of the split.

378

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Methodology and explanatory notes

Annex B

•  Hungary:  The  split  of  the  personal  income  tax  was  estimated  by  the  Ministry  of  Finance  using  aggregate
statistical  information  from  individual  personal  income  tax  returns  and  the  declarations  of  enterprises  on
withholding  tax.  The  share  of  the  personal  income  tax  on  labour  is  related  to  the  total  revenue  from  the
personal income tax by deduction of shares pertaining to capital and to self-employed income together with a
weighted proportion of the tax credits from the latter. 

• Estonia: The split of the personal income tax was estimated by the Ministry of Finance using micro-level data
from the income tax returns and withholding tax statistics. Different approaches were used for determining
the PIT splits depending on data availability. Thanks to the very good quality and detail of the data for 2004,
the split for this year is the most thorough. Firstly, withholding tax returns were used to derive the split in the
case of resident natural persons who didn't submit the 2004 income tax return. As in the case of withholding
tax  returns  the  income  is  already  divided  between  19  different  income  categories,  the  data  was  grouped
between income from labour, capital and transfers. Secondly withholding tax returns, where payments to non-
resident natural persons are declared and divided into 11 different income sources, were used and the PIT split
obtained. In both cases the allowed deductions are taken into account finding the PIT split. In the third step,
based  on  the  income  tax  returns,  firstly  PIT  from  self-employed  labour  was  estimated.  As  from  2004,  the
increased basic exemption in event of pension is declared on the income tax return; it was assumed that only
resident natural persons who are entitled to pension declare it and would be able to use this deduction. In the
case  of  other  income  sources,  i.e.  income  from  Estonia,  gains  from  transfer  of  property,  other  income  and
income from abroad, all the deductions (including basic tax allowance) were allocated proportionally over the
income sources, except the special deduction for self-employed persons in agriculture, which was allocated to
their  income.  The  split  for  the  years  2001–03  was  made  based  on  withholding  tax  returns  of  non-resident
natural persons and on income tax returns. The estimates concerning 1996–2000 were made based solely on
the income tax returns data. 

• Portugal: The split of the personal income tax was estimated by the Ministry of Finance using information
from personal income tax returns except for the amount of tax raised on capital income, which was estimated
using  information  of  both  withholding  taxes  and  personal  income  tax  returns.  The  estimates  are  based  on
three  data  sets:  (1)  aggregate  net  taxable  incomes  by  category  of  income;  (2)  tax  liabilities  by  category  of
income or groups of categories, depending on the type of tax returns. Some households only earn income from
one category of income (e.g. income from labour), and so the tax liability is directly imputable to that category
but other households simultaneously earn income from more than one category (e.g. income from labour and
income  from  self-employed  labour);  (3)  aggregate  data  from  withholding  tax  returns  relating  to  incomes
subject  to  a  final  withholding  tax,  which,  in  general,  are  not  reported  in  tax  returns  (e.g.  interest  on  bank
deposits). The split of the personal income tax was estimated according to the following procedure. As the first
step, the tax liability of households with one source of taxable personal income was directly allocated. As the
second step, from the aggregates of the net taxable incomes by category of income the net taxable incomes of
households with one source of income were subtracted. Third, the aggregate tax liability of households which
earn more than income was split. This split was made in proportion to the aggregate taxable incomes for each
category that resulted from the second step. In this step it was thus assumed that all categories of income are
subject to a common average effective tax rate. Finally, the revenue from the final withholding tax was added
to  the  relevant  categories.  It  should  be  noted  that  this  assumes  that  none  of  the  incomes  subject  to  a  final
withholding tax is reported in the tax return and so could result in double counting. However, in practice, it is
believed that the amounts concerned are not of great magnitude. 

• Romania: The split of personal income tax was estimated by the Ministry of Finance in collaboration with the
National statistical office using aggregate statistical information of the general personal income tax revenues,
and the afferent taxable base, divided on the relevant categories.

Estimates of the split of personal income tax

The following tables present the resulting estimates for the split of the personal income tax. Looking at the estimates,
there are some noticeable differences, in particular for the income tax allocated to capital and social transfer and
pensions benefits. By including net interest payments in the tax base of capital, for example, some Member States
(e.g. Denmark and the Netherlands) have taken into account the way the tax relief for mortgage interest payments
and  other  interest  payments  on  loans  effectively  reduces  the  tax  base  of  capital.  This  explains  why  the  estimated

Taxation trends in the European Union                 379

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Annex B

Methodology and explanatory notes

fraction for personal income tax raised on capital income is sometimes relatively low (or even negative) for a number
of Member States. In some Member States such deductions are less significant or non-existent, while others were
unable to take the revenue effects of such specific tax base deductions yet into account. Also, some Member States
were  unable  to  estimate  the  amount  of  personal  income  tax  on  (taxable)  social  transfers,  while  others  could  not
distinguish (between different types of) pension benefits. Inevitably this may have had some consequences for the
implicit tax rates on labour and capital. The estimates for the amount of personal income tax allocated to capital
income and social transfers and pensions would benefit from future work. What is furthermore noteworthy from the
table is the fact that the personal income tax revenue allocated to (employed) labour income appears to be relatively
low in Greece, Spain and Italy.

380

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Methodology and explanatory notes

Annex B

Table B-1.2

Estimates for the split of personal income tax
Personal income tax revenue allocated to employed labour income

1995–2007, in % of total revenue of personal income tax

<@>tb_2.pdf

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995
0.749
-
0.797
0.724
0.757
0.959
0.843
0.473
0.527
0.603
0.589
0.891
0.995
0.917
0.695
0.813
0.692
0.655
0.629
0.488
0.631
-
0.894
0.819
0.661
0.715
0.764

1996
0.741
-
0.797
0.728
0.729
0.959
0.842
0.484
0.535
0.603
0.578
0.891
0.993
0.917
0.695
0.805
0.692
0.651
0.604
0.520
0.631
-
0.889
0.819
0.676
0.709
0.755

1997
0.747
-
0.797
0.738
0.734
0.937
0.840
0.497
0.544
0.603
0.567
0.891
0.992
0.917
0.688
0.805
0.692
0.647
0.624
0.517
0.631
-
0.891
0.819
0.673
0.706
0.746

1998
0.740
-
0.797
0.725
0.724
0.945
0.830
0.484
0.545
0.603
0.556
0.891
0.989
0.917
0.696
0.809
0.710
0.659
0.622
0.510
0.631
0.621
0.893
0.819
0.686
0.711
0.743

1999
0.744
0.882
0.797
0.728
0.704
0.936
0.842
0.498
0.536
0.603
0.564
0.891
0.975
0.917
0.716
0.802
0.710
0.670
0.625
0.525
0.651
0.621
0.889
0.819
0.683
0.688
0.735

2000
0.750
0.882
0.797
0.755
0.736
0.929
0.833
0.495
0.545
0.583
0.555
0.891
0.953
0.908
0.738
0.790
0.707
0.682
0.629
0.526
0.648
0.621
0.902
0.819
0.679
0.676
0.743

2001
0.747
0.888
0.797
0.758
0.752
0.938
0.817
0.494
0.556
0.603
0.553
0.891
0.965
0.904
0.754
0.803
0.709
0.643
0.595
0.530
0.635
0.621
0.907
0.830
0.703
0.711
0.739

2002
0.749
0.859
0.808
0.755
0.763
0.915
0.811
0.487
0.557
0.593
0.561
0.915
0.950
0.900
0.747
0.845
0.712
0.659
0.620
0.519
0.641
0.621
0.904
0.830
0.706
0.716
0.736

2003
0.748
0.891
0.809
0.745
0.761
0.913
0.802
0.487
0.563
0.593
0.552
0.915
0.968
0.912
0.741
0.849
0.708
0.674
0.621
0.509
0.635
0.643
0.908
0.873
0.703
0.690
0.726

2004
0.765
0.878
0.821
0.737
0.749
0.902
0.804
0.507
0.562
0.593
0.545
0.915
0.972
0.913
0.740
0.863
0.694
0.688
0.619
0.531
0.637
0.634
0.900
0.826
0.688
0.684
0.720

2005
0.765
0.856
0.867
0.726
0.718
0.864
0.804
0.519
0.555
0.594
0.547
0.915
0.975
0.901
0.756
0.862
0.690
0.702
0.628
0.515
0.635
0.690
0.894
0.848
0.682
0.683
0.718

2006
0.767
0.841
0.890
0.734
0.694
0.886
0.804
0.510
0.533
0.582
0.536
0.915
0.967
0.896
0.765
0.856
0.699
0.702
0.636
0.501
0.636
0.692
0.876
0.854
0.673
0.663
0.712

0.743

0.742

0.746

0.754

0.752

0.738

0.741

0.754

0.763

0.756

0.736

0.750

2007
0.767
0.848
0.890
0.741
0.687
0.904
0.804
0.507
0.533
0.584
0.536
0.915
0.965
0.880
0.765
0.796
0.703
0.702
0.644
0.450
0.636
0.689
0.876
0.864
0.665
0.674
0.703

0.750

Note: The numbers printed in bold are the actual estimates; the numbers printed in italics represent either linear interpolation or fractions that 

were assumed to remain constant.

Source: Commission services

Taxation trends in the European Union                 381

report2009.book  Page 382  Thursday, May 28, 2009  1:35 PM

Annex B

Methodology and explanatory notes

Table B-1.3

Estimates for the split of personal income tax
Personal income tax revenue allocated to income of the self-employed

1995–2007, in % of total revenue of personal income tax

<@>tb_3.pdf

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995
0.127
-
0.165
0.253
0.190
0.022
0.109
0.279
0.152
0.159
0.162
0.033
0.002
0.062
0.121
0.055
0.090
0.185
0.176
0.224
0.093
-
0.057
0.131
0.082
0.023
0.121

1996
0.130
-
0.165
0.253
0.221
0.022
0.108
0.265
0.144
0.159
0.169
0.033
0.002
0.062
0.121
0.057
0.090
0.196
0.195
0.185
0.093
-
0.058
0.131
0.074
0.026
0.122

1997
0.122
-
0.165
0.239
0.214
0.025
0.109
0.245
0.148
0.159
0.175
0.033
0.002
0.062
0.116
0.069
0.090
0.207
0.174
0.223
0.093
-
0.055
0.131
0.079
0.027
0.126

1998
0.129
-
0.165
0.232
0.224
0.033
0.112
0.259
0.145
0.159
0.182
0.033
0.002
0.062
0.133
0.056
0.081
0.216
0.178
0.232
0.093
0.035
0.051
0.131
0.075
0.027
0.120

1999
0.132
0.096
0.165
0.223
0.242
0.021
0.111
0.238
0.146
0.159
0.186
0.033
0.002
0.062
0.102
0.052
0.079
0.225
0.172
0.288
0.096
0.035
0.057
0.131
0.074
0.028
0.122

2000
0.129
0.096
0.165
0.218
0.213
0.020
0.111
0.245
0.134
0.179
0.188
0.033
0.002
0.067
0.105
0.051
0.082
0.234
0.170
0.265
0.092
0.035
0.049
0.131
0.074
0.029
0.119

2001
0.125
0.086
0.165
0.215
0.201
0.023
0.119
0.242
0.130
0.174
0.183
0.033
0.002
0.054
0.082
0.046
0.080
0.234
0.204
0.263
0.106
0.035
0.046
0.122
0.074
0.030
0.124

2002
0.121
0.111
0.160
0.221
0.192
0.024
0.133
0.248
0.131
0.169
0.174
0.051
0.002
0.041
0.099
0.047
0.080
0.208
0.169
0.254
0.091
0.035
0.048
0.135
0.082
0.029
0.127

2003
0.122
0.087
0.159
0.232
0.171
0.022
0.118
0.248
0.126
0.169
0.183
0.051
0.002
0.027
0.096
0.038
0.081
0.184
0.161
0.256
0.087
0.037
0.049
0.095
0.081
0.028
0.129

2004
0.125
0.101
0.151
0.232
0.186
0.018
0.114
0.232
0.125
0.168
0.181
0.051
0.003
0.014
0.110
0.036
0.081
0.162
0.170
0.246
0.092
0.038
0.053
0.150
0.078
0.028
0.129

2005
0.125
0.119
0.108
0.226
0.214
0.020
0.114
0.203
0.117
0.168
0.177
0.051
0.004
0.013
0.102
0.034
0.083
0.141
0.165
0.249
0.091
0.041
0.055
0.137
0.076
0.033
0.124

2006
0.127
0.118
0.088
0.213
0.238
0.021
0.114
0.202
0.109
0.157
0.190
0.051
0.004
0.031
0.114
0.033
0.082
0.141
0.156
0.250
0.089
0.048
0.050
0.128
0.077
0.027
0.123

0.105

0.094

0.095

0.095

0.085

0.089

0.090

0.091

0.082

0.088

0.099

0.078

2007
0.127
0.115
0.088
0.200
0.242
0.015
0.114
0.197
0.109
0.154
0.190
0.051
0.003
0.032
0.114
0.031
0.080
0.141
0.149
0.304
0.089
0.054
0.050
0.118
0.080
0.026
0.120

0.078

Note: The numbers printed in bold are the actual estimates; the numbers printed in italics represent either linear interpolation or fractions that 

were assumed to remain constant.

Source: Commission services

382

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Methodology and explanatory notes

Annex B

Table B-1.4

Estimates for the split of personal income tax
Personal income tax revenue allocated to capital income

1995–2007, in % of total revenue of personal income tax

<@>tb_4.pdf

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995
-0.016
-
0.038
-0.034
0.019
0.014
0.033
0.114
0.108
0.070
0.048
0.007
0.003
0.016
0.057
0.045
0.086
-0.008
0.023
0.005
0.189
-
0.016
0.050
0.024
-0.015
0.100

1996
-0.016
-
0.038
-0.037
0.023
0.014
0.035
0.115
0.105
0.070
0.049
0.007
0.004
0.016
0.057
0.073
0.086
-0.008
0.026
0.007
0.189
-
0.020
0.050
0.029
0.010
0.107

1997
-0.017
-
0.038
-0.031
0.023
0.034
0.038
0.117
0.097
0.070
0.049
0.007
0.004
0.016
0.061
0.061
0.086
-0.008
0.023
0.006
0.189
-
0.020
0.050
0.041
0.025
0.112

1998
-0.016
-
0.038
-0.018
0.025
0.019
0.045
0.120
0.107
0.070
0.050
0.007
0.005
0.016
0.055
0.067
0.071
-0.028
0.023
0.009
0.189
0.340
0.019
0.050
0.047
0.026
0.121

1999
-0.017
0.022
0.038
-0.014
0.026
0.011
0.038
0.124
0.123
0.070
0.057
0.007
0.007
0.016
0.067
0.079
0.068
-0.048
0.021
0.018
0.161
0.340
0.019
0.050
0.063
0.056
0.128

2000
-0.016
0.022
0.038
-0.028
0.026
0.024
0.046
0.121
0.125
0.070
0.059
0.007
0.029
0.019
0.049
0.093
0.066
-0.068
0.019
0.040
0.165
0.340
0.017
0.050
0.075
0.078
0.124

2001
-0.011
0.025
0.038
-0.033
0.023
0.017
0.056
0.121
0.116
0.055
0.054
0.007
0.018
0.028
0.066
0.084
0.066
0.009
0.023
0.030
0.156
0.340
0.017
0.048
0.059
0.032
0.122

2002
-0.011
0.030
0.032
-0.028
0.022
0.028
0.048
0.123
0.109
0.070
0.055
0.009
0.031
0.037
0.058
0.093
0.061
0.008
0.020
0.053
0.154
0.340
0.020
0.035
0.037
0.017
0.121

2003
-0.014
0.022
0.031
-0.029
0.040
0.032
0.068
0.123
0.109
0.070
0.057
0.009
0.013
0.035
0.057
0.098
0.063
0.007
0.020
0.058
0.154
0.314
0.018
0.032
0.038
0.018
0.128

2004
-0.012
0.022
0.028
-0.020
0.037
0.020
0.072
0.120
0.106
0.066
0.061
0.009
0.008
0.049
0.049
0.085
0.074
0.005
0.021
0.042
0.137
0.323
0.022
0.025
0.050
0.025
0.135

2005
-0.012
0.025
0.025
-0.007
0.036
0.057
0.072
0.118
0.123
0.073
0.061
0.009
0.002
0.060
0.040
0.087
0.073
0.002
0.024
0.066
0.132
0.258
0.027
0.015
0.058
0.046
0.142

2006
-0.015
0.041
0.022
-0.001
0.037
0.043
0.072
0.118
0.158
0.095
0.061
0.009
0.011
0.044
0.027
0.091
0.056
0.002
0.023
0.076
0.126
0.247
0.051
0.018
0.068
0.070
0.148

0.061

0.070

0.066

0.051

0.062

0.075

0.070

0.061

0.058

0.056

0.067

0.073

2007
-0.015
0.037
0.022
0.004
0.040
0.042
0.072
0.114
0.158
0.093
0.061
0.009
0.023
0.050
0.027
0.100
0.054
0.002
0.022
0.090
0.126
0.237
0.051
0.019
0.078
0.066
0.160

0.073

Note: The numbers printed in bold are the actual estimates; the numbers printed in italics represent either linear interpolation or fractions that 

were assumed to remain constant.

Source: Commission services

Taxation trends in the European Union                 383

report2009.book  Page 384  Thursday, May 28, 2009  1:35 PM

Annex B

Methodology and explanatory notes

Table B-1.5

Estimates for the split of personal income tax
Personal income tax revenue allocated to social transfers and pensions

1995–2007, in % of total revenue of personal income tax

<@>tb_5.pdf 

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

NO

1995
0.140
-
0.000
0.057
0.033
0.005
0.015
0.133
0.213
0.168
0.201
0.069
0.000
0.005
0.127
0.087
0.132
0.168
0.172
0.283
0.087
-
0.034
0.000
0.233
0.278
0.015

1996
0.145
-
0.000
0.056
0.027
0.005
0.015
0.137
0.216
0.168
0.205
0.069
0.000
0.005
0.126
0.065
0.132
0.161
0.175
0.288
0.087
-
0.033
0.000
0.221
0.255
0.016

1997
0.147
-
0.000
0.054
0.029
0.004
0.013
0.140
0.211
0.168
0.208
0.069
0.001
0.005
0.135
0.065
0.132
0.154
0.178
0.254
0.087
-
0.034
0.000
0.207
0.243
0.015

1998
0.146
-
0.000
0.061
0.027
0.003
0.012
0.137
0.203
0.168
0.213
0.069
0.004
0.005
0.116
0.068
0.138
0.153
0.176
0.249
0.087
0.003
0.037
0.000
0.192
0.236
0.016

1999
0.141
0.000
0.000
0.063
0.028
0.032
0.010
0.140
0.195
0.168
0.193
0.069
0.015
0.005
0.115
0.067
0.143
0.152
0.183
0.169
0.091
0.003
0.036
0.000
0.181
0.228
0.015

2000
0.137
0.000
0.000
0.055
0.025
0.027
0.010
0.140
0.195
0.168
0.198
0.069
0.016
0.006
0.108
0.066
0.145
0.151
0.182
0.168
0.096
0.003
0.032
0.000
0.172
0.217
0.014

2001
0.139
0.000
0.000
0.060
0.024
0.022
0.008
0.143
0.197
0.168
0.210
0.069
0.016
0.014
0.098
0.067
0.145
0.114
0.178
0.177
0.104
0.003
0.030
0.000
0.164
0.227
0.016

2002
0.140
0.000
0.000
0.052
0.023
0.033
0.008
0.142
0.204
0.168
0.209
0.025
0.016
0.022
0.097
0.015
0.146
0.125
0.192
0.174
0.113
0.003
0.028
0.000
0.175
0.238
0.017

2003
0.144
0.000
0.000
0.052
0.028
0.033
0.012
0.142
0.202
0.168
0.209
0.025
0.016
0.025
0.106
0.016
0.148
0.135
0.198
0.177
0.124
0.005
0.026
0.000
0.179
0.265
0.017

2004
0.122
0.000
0.000
0.052
0.028
0.060
0.009
0.141
0.207
0.173
0.214
0.025
0.017
0.025
0.100
0.016
0.151
0.145
0.190
0.181
0.135
0.005
0.025
0.000
0.184
0.263
0.017

2005
0.122
0.000
0.000
0.055
0.032
0.059
0.009
0.160
0.206
0.165
0.216
0.025
0.019
0.026
0.101
0.018
0.154
0.155
0.182
0.169
0.142
0.011
0.025
0.000
0.185
0.239
0.016

2006
0.122
0.000
0.000
0.055
0.031
0.050
0.009
0.170
0.200
0.167
0.213
0.025
0.018
0.030
0.095
0.019
0.163
0.155
0.185
0.173
0.149
0.014
0.023
0.000
0.183
0.241
0.016

0.092

0.093

0.093

0.100

0.100

0.098

0.099

0.095

0.097

0.099

0.098

0.099

2007
0.122
0.000
0.000
0.054
0.031
0.039
0.009
0.181
0.200
0.169
0.213
0.025
0.009
0.037
0.095
0.074
0.162
0.155
0.185
0.156
0.149
0.019
0.023
0.000
0.178
0.233
0.016

0.099

Note: The numbers printed in bold are the actual estimates; the numbers printed in italics represent either linear interpolation or fractions that 

were assumed to remain constant.

Source: Commission services

384

Taxation trends in the European Union

report2009.book  Page 3  Thursday, May 28, 2009  1:35 PM

European Commission

Taxation trends in the European Union – Data for the EU Member States and Norway

Luxembourg: Office for Official Publications of the European Communities

2009 — 384 pp. — 21 x 29.7 cm

ISBN 978-92-79-11171-6

Price (excluding VAT) in Luxembourg: EUR 30

report2009.book  Page 3  Thursday, May 28, 2009  1:35 PM

report2009.book  Page 3  Thursday, May 28, 2009  1:35 PM

report2009.book  Page 3  Thursday, May 28, 2009  1:35 PM