OREANDA-NEWS. The overall tax-to-GDP ratio, meaning the sum of taxes and net social contributions as a percentage of GDP, stood at 40.0% in the European Union (EU) in 2014, compared with 39.9% in 2013. In the euro area, tax revenue accounted in 2014 for 41.5% of GDP, up from 41.2% in 2013. Over recent years, the tax-to-GDP ratio in both zones has increased continuously since its low point in 2010.

The tax-to-GDP ratio varies significantly between Member States, with the highest share of taxes and social contributions in percentage of GDP in 2014 being recorded in Denmark (50.8%), followed by Belgium and France (both 47.9%), Finland (44.0%), Austria (43.8%), Italy and Sweden (both 43.7%). At the opposite end of the scale, Romania (27.7%), Bulgaria (27.8%), Lithuania (28.0%) and Latvia (29.2%) registered the lowest ratios.

This information comes from a report issued by Eurostat, the statistical office of the European Union. Tax indicators are compiled in a harmonised framework based on the European System of Accounts (ESA 2010), enabling an accurate comparison of the tax systems and tax policies between EU Member States.

Largest growth of tax-to-GDP ratio in Denmark, largest fall in the Czech Republic

Compared with 2013, the tax-to-GDP ratio increased in 2014 in a majority of Member States, with the largest rise being observed in Denmark (from 48.1% in 2013 to 50.8% in 2014), ahead of Cyprus (from 31.6% to 34.2%) and Malta (from 33.6% to 35.0%). In contrast, decreases were recorded in eight Member States, notably in the Czech Republic (from 34.8% in 2013 to 34.1% in 2014) and the United Kingdom (from 34.9% to 34.4%).

Highest ratio of taxes on production and imports in Sweden, of taxes on income and wealth in Denmark and of net social contributions in France

Looking at the main tax categories, a clear diversity prevails across the EU Member States. Taxes on production and imports were the most significant tax category in thirteen Member States, net social contribution in nine and taxes on income and wealth in six. In 2014, the share of taxes on production and imports was highest in Sweden (where they accounted for 22.1% of GDP), Croatia (18.8%) and Hungary (18.6%), while they were lowest in Slovakia (10.8%) and Germany (10.9%). For income and wealth related taxes, the highest share by far was registered in Denmark (33.4% of GDP), ahead of Sweden (17.9%), Belgium (16.8%) and Finland (16.5%). In contrast, Lithuania (5.1%) and Bulgaria (5.3%) recorded the lowest taxes on income and wealth as a percentage of GDP. Net social contributions accounted for a significant proportion of GDP in France (19.2%), Belgium (16.9%) and Germany (16.5%), while the lowest shares were observed in Denmark (1.1% of GDP), Sweden (3.7%) and Ireland (5.8%). In 2014, taxes on production and imports made up the largest part of tax revenue in the EU (accounting for 13.6% of GDP), closely followed by net social contributions (13.4%) and taxes on income and wealth (12.8%). The ordering of tax categories was slightly different in the euro area. The largest part of tax revenue came from net social contributions (15.5%), ahead of taxes on production and imports (13.3%) and taxes on income and wealth (12.5%).