Tax rates are creeping up across the EU member states

It will probably come as no surprise to learn that taxation rates are edging up in EU member states. Official data from the EU shows that VAT rates are increasing as are corporate and high earner’s personal income tax rates.

Eurostat recently published this year’s edition of taxation trends across the Union, which shows that the average rate of VAT has increased strongly since the start of the recession and ranges from 15% in Luxembourg to 27% in Hungary.

The highest rate of personal income tax is found in Sweden, where high earners are taxed at the rate of 56.6%. Denmark is not far behind at 55.4%, followed by Belgium with a top rate of 53.7%. At the other end of the scale Bulgaria has the lowest rate at 10%.

Corporate tax rates have also been edging up this year. France has the highest rate at 36.1%, followed by Malta and Belgium with rates of 35% and 34% respectively. Bulgaria and Cyprus have the lowest rate at 10%, followed by Ireland at 12.5%.

The overall tax-to-GDP ratio across all member states in 2010 was 38.4%, unchanged from the previous year. However, the tax-to-GDP ratio in the UK did increase from 34.8% to 35.6%.

The report also contained an overview of property tax. 4.2% of GDP in the UK comes from property tax, the highest percentage of all member states. In Slovakia, Estonia and the Czech Republic, property tax contributes just 0.4% to annual GDP.

Labour taxes continue to provide nearly half of the tax revenue for EU countries, consumption taxes contribute about a third and capital taxes slightly less than 20%.

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