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Tax-to-GDP ratio at 33.6%

08/12/2017 15:19
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 2016, an increase compared with 2015 (39.7%).

In the euro area, tax revenue accounted for 41.3% of GDP in 2016, slightly up from 41.2% in 2015. The tax-to-GDP ratio is therefore on the increase again in both zones after a slight decline recorded in the previous year.

In Cyprus total revenue stood at 32.1%, 31.9%, 33.2%, 33.6%, for the years 2006, 2010, 2015 and 2016. In Cyprus taxes on production and imports, represented a 15.4% of the GDP, out of which VAT was 9.2%. Taxes on income and wealth were 9.7% of which 2.9% taxes on individual or household income and 5.8% taxes on the income or profits of corporations. Finally 8.5% were the net social VAT contributions.

The tax-to-GDP ratio varies significantly among member states, with the highest share of taxes and social contributions in percentage of GDP in 2016 being recorded in France (47.6%), Denmark (47.3%) as well as Belgium (46.8%), followed by Sweden (44.6%), Finland (44.3%), Austria and Italy (both 42.9%) as well as Greece (42.1%). At the opposite end of the scale, Ireland (23.8%) and Romania (26.0%), ahead of Bulgaria (29.0%), Lithuania (30.2%), Latvia (31.6%) and Slovakia (32.4%) registered the lowest ratios.

Compared with 2015, the tax-to-GDP ratio increased in the majority of member states in 2016, with the largest rise being observed in Greece (from 39.8% in 2015 to 42.1% in 2016), ahead of the Netherlands (from 37.8% to 39.3%) and Luxembourg (from 38.4% to 39.6%). In contrast, decreases were recorded in nine member states, notably in Romania (from 28.0% in 2015 to 26.0% in 2016), Austria (from 43.8% to 42.9%) and Belgium (from 47.6% to 46.8%).

Looking at the main tax categories, a clear diversity prevails across the EU member states. In 2016, the share of taxes on production and imports was highest in Sweden (where they accounted for 22.6% of GDP), Croatia (19.6%) and Hungary (18.3%), while they were lowest in Ireland (8.7%), Slovakia (10.8%) and Germany (10.9%).

For taxes related to income and wealth, the highest share by far was registered in Denmark (30.0% of GDP), ahead of Sweden (18.8%), Finland (16.5%) and Belgium (16.3%). In contrast, Bulgaria (5.4%), Lithuania (5.7%), Romania (6.5%) and Croatia (6.6%) 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 (18.8%), Germany (16.7%) and Belgium (16.1%), while the lowest shares were observed in Denmark (1.0% of GDP) and Sweden (3.3%). In 2016, 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 (13.3%) and taxes on income and wealth (13.0%).