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Political Economy



Denmark still leads as European most taxed country

Monday, 29 April 2013

Danish tax burden of 47.7 percent is the highest in the EU. The lower corporate tax will move Denmark from the 10th to 13th most expensive place to do business.

The Danes still occupy the leadership position in an annual comparison of countries whose citizens in the EU give the largest amount of their incomes to their country's treasury. This means that Danish tax burden according to the statement from the EU statistical office, Eurostat for 2011 was 47.7 percent. The figure also includes social security contributions.

In subsequent order when it comes to other countries in the EU comparatively, Sweden, Belgium, France, Finland, Italy and Austria, follow with tax burdens ranging between 42 and 44 percent.

Far below on the list is Lithuania with 26 percent, followed by Bulgaria, Latvia, Romania, Slovakia and Ireland with a tax burden of between 27 and 29 percent.

The average tax burden in the EU in 2011 was at 38.8 percent, an increase from 38.3 years before. In the 17-euro countries, it is a bit higher - and from 2010 to 2011 tax burden rose from 39.0 to 39.5 percent in the single currency bloc.

While the Danish consumers or earners are the ones that give the most to the taxman in the individual EU countries, the situation is markedly different with Danish companies.

In 2011 the Danish corporate tax fell to 25 percent. That placed Denmark on a shared tenth place with the Netherlands and Austria. France was the most expensive country to do business with a corporate tax rate of 36.1 percent. Bulgaria and Cyprus came as the cheapest with 10 percent, followed by Ireland with 12.5 percent.

If the other countries keep their corporation taxes steady, that is they don't reduce it in the future, then the Denmark could earn an improved ranking in the future when it lowers its own corporation taxe to 22 percent. Denmark along with Sweden is having the 13 highest and 9 lowest corporation tax in the EU.

The Danish VAT of 25 percent is also the EU's highest, but here Denmark is joined by Sweden and Hungary. Cyprus in 2011 was by far the country with the lowest VAT rate of 10 percent.

VAT in Cyprus has since been increased, partly as a result of euro zone harsh conditions given to the Cypriot economy in the rescue package.

By Team

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