According to Eurostat’s new tax report, spreads between tax rates in the EU’s 27 member nations are remarkably wide. The difference between the highest top personal income tax rate, Sweden, at 56.4%, and Bulgaria, at 10%, is a whopping 46.4 percentage points.
Spreads are also wide for other forms of taxation. The average tax on capital is 10.7% in Estonia and 45.9% in the U.K. Tax on consumption was lowest in Spain, 14.1%, and highest in Luxembourg, 27.1%.
The tax situation is also volatile over the years. Bulgaria’s top personal income rate, for example, has fallen all the way from 40% in 2000. Romania’s has fallen to 16% from 40% and Slovakia’s to 19% from 42%. The biggest increases: The U.K., to 50% from 40%, and Sweden, to 56.4% from 51.5%.
Thanks to the tax-cutting Eastern Europeans, the overall tax rate on labor in the EU fell to 34.2% in 2008 from 35.8% in 2000. Consumption and corporate taxes have increased slightly in the last decade.
Despite the huge disparities between taxes in different countries, why don’t people and companies in Europe move more often? EU surveys indicate that language, cultural comfort and salaries are more important to Europeans than tax rates.
Source: Eurostat Tax Report