Out-Law News 1 min. read

Overall tax-to-GDP ratio in EU member states rises in 2012 says Eurostat

Tax revenues as a percentage of gross domestic product (GDP) rose across the European Union in 2012 and look likely to show a further rise in 2013, according to the EU official statistics office Eurostat.

The overall tax-to-GDP ratio of the 28 EU member countries stood at 39.4% in 2012, a rise from 38.8% in 2011.

The overall tax-to-GDP ratio across the 18 states which make up the single currency euro zone increased to 40.4% in 2012 compared to 39.5% in 2011.

"In 2013 Eurostat estimates show that tax revenues as a percentage of GDP are set to continue rising in both zones," said a statement by Eurostat as it published the figures for 2011 and 2012 in conjunction with the European Commission's Directorate-General for Taxation and Customs Union.

Between 2011 and 2012 six countries recorded increases in tax-to-GDP ratios of more than 1 percentage point. These were France, which recorded a rise from 43.7% to 45% and Hungary, Italy, Greece, Belgium and Luxembourg.

The largest falls in the ratio were experienced in Portugal, where it fell from 33.2% to 32.4%, the UK, where the ratio fell from 35.8% to 35.4% and Slovakia, where it fell from 28.6% to 28.3%.

According to Eurostat "the tax burden varies significantly between member states".

Denmark recorded the highest ratio at 48% of GDP, followed by Belgium with a ratio of 45.4%. France recorded the third highest ratio at 45%. By comparison Lithuania recorded the lowest ratio in 2012 at 27.2% with Latvia and Bulgaria sharing the second lowest level at 27.9%.

Germany had the 10th highest level at 39.1% of GDP, while the UK had the 14th highest tax-to-GDP ratio at 35.4%.

Labour taxes were the largest source of tax revenue across the 28 EU member states, representing 51% of total tax receipts in the bloc in 2012. The highest shares of taxation from labour were found in Sweden (58.6%), the Netherlands (57.5%), Austria (57.4%). Labour taxes accounted for 56.6% of tax receipts in Germany and 52.3% of tax receipts in France.  

The share of taxation from labour fell below 40% in only four states, including the UK, where it stood at 38.9%, down slightly from 39.1% in 2011. Bulgaria had the lowest share of taxation from labour, recording a ratio of 32.9%.

Consumption taxes accounted for 28.5% of all tax receipts overall in the 28 EU member states in 2012. Bulgaria recorded the highest share of consumption taxes at 53.3%, followed by Croatia at 49.1% and Romania at 45.1%. Belgium recorded the lowest share at 23.7% with France and Italy both recording the second lowest share at 24.7%.

Taxes on capital accounted for the smallest share of tax revenue in all member states in 2012. Luxembourg recorded the highest share at 27.5%, followed by the United Kingdom at 27.4% and Malta at 26.6%. Estonia recorded the lowest share from taxes on capital at 7.1%.

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