The overall tax-to-GDP ratio in the EU27 was 39.8% in 2007, a slight increase from 39.7% in 2006. The EU27 tax ratio, which stood at 40.6% in 2000, fell to 38.9% by 2004 and then started to rise.

The overall tax ratio in the euro area (EA16) was 40.4% in 2007, and also rose slightly from 40.3% in 2006. Since 2000, taxes in the euro area have followed a similar trend to the EU27, although at a slightly higher level.

In comparison with the rest of the world, the EU27 tax ratio remains generally high, exceeding those of the USA and Japan by some 12 percentage points. However, the tax burden varies significantly between Member States, ranging in 2007 from less than 30% in Romania and Slovakia (both 29.4%) and Lithuania (29.9%), to a little less than 50% in Denmark (48.7%) and Sweden (48.3%). Since 2000, significant changes in tax-to-GDP ratios have taken place in several Member States. The largest falls were recorded in Slovakia, where the overall tax burden dropped from 34.1% in 2000 to 29.4% in 2007, and Finland (from 47.2% to 43.0%). The highest increases were observed in Cyprus (from 30.0% to 41.6%) and Malta (from 28.2% to 34.7%).

This information comes from the 2009 edition of the publication Taxation trends in the European Union issued by Eurostat, the Statistical Office of the European Communities and the Commission’s Directorate-General for Taxation and Customs Union. This publication compiles tax indicators in a harmonised framework based on the European System of Accounts (ESA 95), allowing accurate comparison of the tax systems and tax policies between EU Member States.

This year’s edition of the report includes an overview of the tax measures adopted in the Member States to respond to the global economic and financial crisis.

Highest implicit tax rates on labour in Italy, on consumption in Denmark and on capital in Cyprus

Labour taxes remain the largest source of tax revenue, representing close to half of total tax receipts in the EU27. Taxes on capital accounted for approximately 23% of total tax receipts, and consumption taxes for 28%.

The average implicit tax rate on labour, a broad measure of the tax burden falling on work income, was unchanged in the EU27 at 34.4% in 2007 compared with 2006, after having declined steadily from 35.9% in 2000. Among the Member States, the implicit tax rate on labour ranged in 2007 from 20.1% in Malta, 24.0% in Cyprus and 25.7% in Ireland to 44.0% in Italy, 43.1% in Sweden and 42.3% in Belgium.

Continuing an upward trend that started in 2002, the average implicit tax rate on consumption in the EU27 increased marginally, from 22.0% in 2006 to 22.2% in 2007. Implicit tax rates on consumption were highest in 2007 in Denmark (33.7%), Sweden (27.8%) and Hungary (27.1%), and lowest in Greece (15.4%), Spain (15.9%) and Italy (17.1%), Malta stood at 20.3%.

In the EU27, the average implicit tax rate on capital for the Member States for which data are available was 28.7% in 2007. The highest implicit tax rates on capital were recorded in Cyprus (50.5%), Denmark (44.9%) and the United Kingdom (42.7%), and the lowest in Estonia (10.3%), Lithuania (12.1%) and Latvia (14.6%), no data was available for Malta on this tax rate.