Dividend Tax Rates in Europe, 2020

Many countries’ individual income tax systems tax various sources of individual income—including investment income such as dividends and capital gains. Today’s map shows how dividend income is taxed across European OECD countries.

A dividend is a payment made to a corporation’s shareholders from corporate after-taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. profits. In most countries, such dividend payments are subject to dividend tax. The dividend tax rates shown in the map below are expressed as the top personal dividend tax rate, taking account of all imputations, credits, or offsets.

Ireland has the highest dividend tax rate among European OECD countries, at 51 percent. Denmark and the United Kingdom follow, at 42 percent and 38.1 percent, respectively.

Estonia and Latvia are the only two European countries covered that currently do not levy a tax on dividend income. This is due to their cash-flow-based corporate tax system. Instead of levying a dividend tax, Estonia and Latvia impose a corporate income tax of 20 percent when a business distributes its profits to shareholders.

Of the countries that do levy a dividend tax, Greece has the lowest tax rate, at 5 percent, followed by Slovakia, at 7 percent.

European OECD countries levy an average dividend tax rate of 23.3 percent.

In many countries, corporate profits are subject to two layers of taxation: the corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. at the entity level when the corporation earns income and the dividend tax or capital gains tax at the individual level when that income is passed to its shareholders as either dividends or capital gains. Some countries, however, have integrated their taxation of corporate and dividend/capital gains income to eliminate such double taxation.