Denmark (55.9 percent), France (55.4 percent), and Austria (55 percent) have the highest top statutory personal income tax rates among European OECD countries.
The EU countries with the highest standard VAT rates are Hungary (27 percent), Croatia, Denmark, and Sweden (all at 25 percent). Luxembourg levies the lowest standard VAT rate at 16 percent, followed by Malta (18 percent), Cyprus, Germany, and Romania (all at 19 percent).
Taking into account central and subcentral taxes, Portugal has the highest corporate tax rate in Europe at 31.5 percent, followed by Germany and Italy at 29.8 percent and 27.8 percent, respectively
All EU Tax Data
Most countries provide tax relief to families with children—typically through targeted tax breaks that lower income taxes. While all European OECD countries provide tax relief for families, its extent varies substantially across countries.
A higher tax burden on labor often leads to lower employment rates and wages. That’s important for policymakers to remember as they look for ways to help their economies recover from coronavirus-induced shutdowns. If their goal is to encourage employment, policies that lower the tax burden on labor could prove a powerful tool.
Although sometimes overlooked in discussions about corporate taxation, capital cost recovery plays an important role in defining a business’s tax base and can impact investment decisions—with far-reaching economic consequences.
The extent to which businesses and consumers will benefit from coronavirus relief measures like temporary VAT changes will depend on the VAT base.
Due to certain VAT exemption thresholds, many small businesses will not be able to benefit from the VAT changes being introduced throughout Europe to provide relief during the COVID-19 crisis.
As policymakers consider ways to facilitate investment, effective average tax rates provide a valuable perspective on where burdens on those activities are high and where they are low.