Malta retains lowest tax rates on labour in EU

Overall tax-to-GDP ratio in the EU27 up to 38.8% of GDP in 2011

Malta's economy has the lowest implicit tax rates on labour, with 22.7% of a salary on average going to inland revenue

The largest source of tax revenue in the EU27 is labour taxes, representing nearly half of total tax receipts, followed by consumption taxes at roughly one third and taxes on capital at around one fifth, data released by the EU shows.

The GDP-weighted average implicit tax rate on labour in the EU27 was up from 35.4% in 2010 to 35.8% in 2011. Among the Member States, the implicit tax rate on labour ranged in 2011 from 22.7% in Malta, 24.6% in Bulgaria, 25.5% in Portugal and 26.0% in the United Kingdom, to 42.8% in Belgium, 42.3% in Italy and 40.8% in Austria.

The average implicit tax rate on consumption in the EU27 was up from 19.7% in 2010 to 20.1% in 2011. Implicit tax rates on consumption were lowest in 2011 in Spain (14.0%), Greece (16.3%), Latvia (17.2%) and Italy (17.4%), and highest in Denmark (31.4%), Sweden (27.3%), Luxembourg (27.2%), Hungary (26.8%) and Finland (26.4%).

In the EU27 in 2011, the average implicit tax rate on capital for the Member States for which data are available was down compared with 2010 in ten Member States and up in nine. Implicit tax rates on capital ranged from 5.5% in Lithuania to 44.4% in France.

The overall tax-to-GDP ratio, meaning the sum of taxes and social contributions in % of GDP, in the EU272 stood at 38.8% in 2011, from 38.3% in 2010 and 38.4% in 2009. The overall tax ratio in the euro area (EA17) increased to 39.5% in 2011, up from 39.0% in 2010 and 39.1% in 2009.

The tax burden varies significantly between Member States, ranging in 2011 from less than 30% in Lithuania (26.0%), Bulgaria (27.2%), Latvia (27.6%), Romania (28.2%), Slovakia (28.5%) and Ireland (28.9%), to more than 40% in Denmark (47.7%), Sweden (44.3%), Belgium (44.1%), France (43.9%), Finland (43.4%), Italy (42.5%) and Austria (42.0%).

Between 2010 and 2011, the largest increases in tax-to-GDP ratios were recorded in Portugal (from 31.5% to 33.2%), Romania (from 26.7% to 28.2%) and France (from 42.5% to 43.9%), and the highest falls in Estonia (from 34.1% to 32.8%), Sweden (from 45.4% to 44.3%) and Lithuania (from 27.0% to 26.0%).

Personal income tax

The average top personal income tax rate in the EU27 is 38.3% in 2013, up from 38.1% in 2012, but well below the level of 2000 at 44.8%. The highest top rates on 2013 personal income are observed in Sweden (56.6%), Denmark (55.6%), Belgium (53.7%), Portugal (53.0%), Spain and the Netherlands (both 52.0%), and the lowest in Bulgaria (10.0%), Lithuania (15.0%), Hungary and Romania (both 16.0%) and Slovakia (19.0%).

The average top corporate tax rate in the EU27 is 23.5% in 2013, slightly higher than in 2012, but well below its level in 2000. The highest statutory tax rates on 2013 corporate income are recorded in France (36.1%), Malta (35.0%) and Belgium (34.0%), and the lowest in Bulgaria and Cyprus (both 10.0%) and Ireland (12.5%).

The average standard VAT rate in the EU27 is 21.3% in 2013, slightly up compared with 2012. In 2013 compared with 2012, six Member States increased their VAT rate, and only Latvia reduced it. In 2013, the standard VAT rate varies from 15.0% in Luxembourg and 18.0% in Cyprus and Malta to 27.0% in Hungary and 25.0% in Denmark and Sweden.