The FINANCIAL — 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.
Highest tax-to-GDP ratio in France, Denmark and Belgium
The tax-to-GDP ratio varies significantly between 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.
Largest growth of tax-to-GDP ratio in Greece, largest decrease in Romania
Compared with 2015, the tax-to-GDP ratio increased in a 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%).
Highest ratio of taxes on production and imports in Sweden, of taxes on income and wealth in Denmark and of net social contributions in France
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%). The ordering of tax categories was slightly different in the euro area. The largest part of tax revenue came from net social contributions (15.3%), ahead of taxes on production and imports (13.2%) and taxes on income and wealth (12.6%).