Tax revenue statistics
From Statistics Explained
- Data from December 2011, most recent data: Further Eurostat information, Main tables and Database.
This article presents recent data on tax revenue and its relationship to gross domestic product (GDP) in the European Union (EU) and the euro area (EA-17). The latest year for which detailed tax revenue statistics are available for all Member States is 2010. In 2010, the economic and financial crisis shows a strong impact on tax revenues and their composition throughout the European Union.
In 2010 tax revenues (including social contributions) accounted for over 91 % of total general government revenue in the European Union. Tax revenue made up 39.6 % of GDP in 2010 in the European Union EU-27 and 40.2 % of GDP in the euro area (EA-17).
Taxes on production and imports accounted for 33.3 % and current taxes on income, wealth, etc. 31.2 % of total tax revenue. The share of current taxes on income, wealth, etc. has decreased from 2007 onwards with no recovery in 2010. The share of social contributions increased noticeably from 2008 to 2009 but decreased slightly from 2009 to 2010 to stand at 35.1 % of total tax revenue.
Contents |
Main statistical findings
Evolution of tax revenue
In 2010, EU-27 tax revenue (including social contributions) of general government (including institutions of the EU) in terms of GDP stayed quite stable at 39.6 % of GDP, following three years of decline. In the EA-17 the downward trend in tax revenues continued, but decelerated in 2010, with a slight drop to 40.2 % of GDP. As would be expected, the pattern for EU-27 and EA-17 is fairly similar in recent years, although from 2006 to 2007 the tax-to-GDP ratio still increased slightly in the euro area. Both in the EU-27 and in the EA-17, the drop in terms of GDP was most marked between 2008 and 2009 and tax revenues in terms of GDP are now at their lowest point in the 1995-2010 period.
Tax revenue-to-GDP ratio
Tax revenue-to-GDP ratio: Denmark, Belgium and Sweden show the highest ratios
In 2010, tax revenue (including social contributions) in the EU-27 stood at 39.6 % of GDP, accounting for over 91 % of total government revenue. The ratio of tax revenue to GDP in the euro area (EA-17) was slightly higher than in the EU-27, at 40.2 %. As figure 2 shows, the ratio of tax revenue to GDP was highest in Denmark, Belgium and Sweden (48.5 %, 46.4 % and 46.3 % respectively in 2010), whereas it tended to be lower than average in the countries which have joined the EU since 2004; the lowest shares were recorded in Bulgaria and Lithuania (both 27.4 % of GDP) and Latvia (27.5 % of GDP).
Among the countries which have joined the EU since 2004, Slovenia posted the highest tax revenue-to-GDP ratio. Even so, tax revenues in Slovenia are still nearly 1.4 pp. of GDP lower than in the EU-27. Amongst the countries which joined the EU before 2004, Ireland (29.8 % of GDP), Spain (32.9 % of GDP) and Greece (33.2 % of GDP) record the lowest revenues from taxes. It is interesting to note that the arithmetical average of the 27 countries is somewhat lower (36.5 %) than the GDP-weighted EU average, due to the relatively low levels of GDP (and therefore low weight) for the countries which tend to have the lower tax revenues.
The economic and financial crisis continues to affect tax revenues
When looking at the evolution of tax revenues in the last decade, the effects of the economic and financial crisis on tax revenues from 2007 onwards are striking. From its last spike in 2006 in the EU-27 the ratio of tax revenue to GDP decreased by 1 percentage point to 39.6 %, while the ratio for the EA-17 also decreased by 1 percentage point of GDP from its peak of 41.2 % in 2007 to 40.2 % in 2010. This means that both in the euro area and in the European Union, tax revenue in terms of GDP has fallen to its lowest point in the period from 1995 onwards. Euro area tax revenue as a percentage of GDP remains at a slightly higher level than EU tax revenue (please refer to figure 1).
There are many reasons why government tax revenue varies from year to year as a percentage of GDP. It would take a more in-depth analysis in order to explain the causes of such variations in particular countries. However, in general, the main reasons are changes in economic activity (affecting levels of employment, sales of goods and services, etc.) and in tax legislation (affecting tax rates, the tax base, thresholds, exemptions, etc.) as well as changes in the level of GDP. The economic and financial crisis – together with measures of fiscal policy adopted in the countries – has a strong impact on the level and composition of tax revenue in 2009 and 2010, although first effects had already become visible in 2008. It should be noted, that even when using accrual methods of recording, the effects of changes in legislation or economic activity tend to have a delayed impact on tax revenue.
As shown in figure 6, tax revenue in terms of GDP fell in 14 EU Member States and 2 EFTA countries from 2009 to 2010. It increased in 13 Member States and Iceland. Hungary (-2.4 percentage points of GDP) and Lithuania (-2.3 pp) recorded the largest declines relative to GDP. The strongest increases in tax revenue relative to GDP were seen in Spain (1.3 pp) and Iceland (1.2 pp). In both these countries, tax revenue also increased in absolute terms.
Even in absolute terms, tax revenue fell in the EU and the euro area between 2008 and 2009 – for the first time in the period from 1995 onwards (see figure 3), before effecting a partial recovery from 2009 to 2010 – although absolute revenues still remain below their pre-crisis levels.
The recovery in absolute tax revenues was more marked in the EU-27 than in the EA-17. Indeed, from 2008 to 2009 tax revenues experienced a stronger decline than nominal GDP. From 2009 to 2010 GDP at current prices in the EU-27 grew by around 4.2 % and in the EA-17 by around 2.6 %. Tax revenues grew at a similar pace (also by 4.2 % and 2.6 %). Of the 14 countries which had experienced double-digit falls in absolute tax revenues from 2008 to 2009, five countries went on to experience a double-digit growth in absolute tax revenue from 2009 to 2010 – Poland (14.1 %), Sweden (16.5 %), the United Kingdom (11.1 %), Iceland (13.4 %, strong contraction in previous two years) and Norway (16.5 %). In the Czech Republic, Cyprus and Romania, tax revenue also grew while in Bulgaria, Ireland, Latvia, Lithuania and Hungary tax revenues contracted further. Of these latter countries, nominal GDP still contracted in Ireland and Latvia. In Luxembourg, Malta and Switzerland absolute tax revenues grew even though they had not previously contracted.
Indirect taxes, direct taxes and social contributions
Indirect taxes, direct taxes and social contributions continue to contribute roughly equal shares to tax revenue in the EU-27
Tax revenue can be grouped into three main categories or types: indirect taxes defined as taxes linked to production and imports (such as value added taxes - VAT), direct taxes consisting of current taxes on income and wealth plus capital taxes, and social contributions that include actual social contributions (for paying into social security funds or other social insurance schemes) as well as imputed social contributions. In the ESA 95 classification, these categories correspond to the following transactions: taxes on production and imports (D.2), current taxes on income, wealth, etc. (D.5), capital taxes (D.91), social contributions (D.61) composed of actual social contributions (D.611) and imputed social contributions (D.612). Figure 4 shows the recent historical trend of D.2, D.5, and D.61 for the EU-27 relative to GDP.
In 2010 tax revenue in the EU-27 was still relatively equally distributed between social contributions (35.1 % of total tax revenue), taxes on production and imports (33.3 %), and current taxes on income, wealth, etc. (31.2 %). The revenue share of social contributions has increased noticeably from 2008 to 2009 and decreased slightly from 2009 to 2010. However, the share of current taxes on income, wealth, etc. has decreased from 2007 onwards with no recovery in 2010. From 2008 to 2009 it decreased more than GDP, which could be due to the economic crisis affecting the profits of corporations and increased unemployment. Taxes on production and imports have slightly increased their share of total taxation in 2010 (see figure 4). For the euro area, a less even share of tax revenue was recorded among the main categories, with social contributions accounting for 38.9 % in 2010, while current taxes on income, wealth, etc. accounted for the lowest share, at 28.7 % and taxes on production and imports for 32.1 % of total tax revenues. This last category is expected to have a shorter lag in reaction to the renewed growth in output.
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As shown in figure 5, in terms of GDP, EU-27 government revenue from taxes on production and imports (D.2) amounted to 13.2 % in 2010; 12.4 % was accounted for by current taxes on income, wealth, etc. (D.5), and 12.9 % and 1.0 % were recorded for actual (D.611) and imputed (D.612) social contributions respectively. Because of differing national tax structures, indirect taxes, direct taxes and social contributions vary considerably in importance from country to country in terms of the tax revenue they generate.
Taxes on production and imports (D.2) are divided into taxes on products (D.21) payable per unit of some good or service produced or transacted and other taxes on production (D.29). Taxes on products are further split into value added type taxes (VAT; D.211), taxes and duties on imports excluding VAT (D.212) and taxes on products except VAT and import taxes (D.214). The most important type of taxes on production and imports is VAT. In the EU-27, revenue from taxes on products accounted for nearly 85 % and VAT for over 50 % of the total taxes on production and imports in 2010. The biggest ratios of taxes on production and imports relative to GDP were recorded in Sweden (18.2 %) and Denmark (16.9 %), in line with the high overall level of taxation in these two countries, with a high share also now being recorded for Hungary (17.2 %), even though the total tax burden decreased. The lowest ratios of these indirect taxes were recorded for Spain (10.6 %) and Switzerland (6.9 %), the latter having a low overall level of taxation (please refer to figure 7).
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Current taxes on income, wealth, etc. (D.5) include taxes on income (D.51) and other current taxes (D.59). Taxes on income cover both taxes on individual or household income and the income or profits of corporations, and include taxes on holding gains. The contribution of these taxes by country varies significantly: Denmark is an outlier by raising 29.6 % of GDP from these taxes in 2010. However, the comparatively high ratio for Denmark is due to the fact that most welfare spending is financed via taxes on income and, consequently, the figures for actual social contributions are very low relative to other countries. The next-highest relative figures are recorded by Norway and Sweden, which raise 20.5 % and 19.4 % of GDP respectively from current taxes on income, wealth, etc. At the other end of the scale, Lithuania (4.7 % of GDP in 2010) and Bulgaria (4.9 % of GDP in 2010) had relatively small revenues from these taxes.
Actual social contributions (D.611) are the main component of social contributions. This source of government revenue covers the compulsory and voluntary contributions paid to government by employees, employers, self- and non-employed persons. They also include any amounts payable to government as an employer. Actual social contributions accounted for the highest ratios in GDP terms in France (16.7 %) and Germany (15.8 %) and for the lowest shares in Iceland, Ireland and Malta (4.1 %, 5.8 % and 6.0 % respectively). Thus, as with taxes on income, the importance of revenue from actual social contributions differs widely among countries. The case of Denmark mentioned above is an exception, in that its share only represented 1.0 % of GDP in 2010 for this type of tax revenue. In National Accounts, imputed social contributions (D.612) represent the counterpart of unfunded social benefits provided by the government as an employer. In 2010, they accounted for 3.2 % in Portugal, 2.5 % in Belgium and 2.2 % in Greece in terms of GDP, but for less than 0.1 % of GDP in Cyprus, Iceland, Norway, the Czech Republic, Switzerland and Hungary.
More detailed breakdowns of D.2, D.5 and D.611 by country for 2010 are shown in figure 7. Besides the main transactions, figure 5 also shows two minor components that are included in the definition of tax revenue: capital taxes (D.91) and capital transfers from general government to relevant sectors, representing taxes and social contributions assessed but unlikely to be collected (D.995).
Capital taxes (D.91) are taxes levied at irregular and infrequent intervals on the net worth or value of assets owned, or transferred in the form of legacies or gifts. These taxes accounted for 0.2 % of GDP in the EU-27 in 2010, with low ratios mainly recorded for the new Member States (Bulgaria being an exception) and some of the Nordic countries. They range from 0.7 % of GDP in Belgium and 0.5 % in Hungary to less than 0.02 % of GDP or being non-existent in several countries.
For the countries having implemented the assessment method of accrual recording (please see below for an explanation), capital transfers from general government to other sectors of the economy (D.995), representing taxes and social contributions assessed but unlikely to be collected, have to be deducted from tax revenue. In 2010, for the EU-27, this adjustment amounted to 0.1 % of GDP, with the highest shares being registered for Spain (0.8 %), followed by France and Slovenia (both 0.2 %).
Data sources and availability
Reporting of data to Eurostat
Data are collected by Eurostat on the basis of the European system of national and regional accounts (ESA 95) transmission programme, table 0900, 'Detailed tax and social contributions receipts by type and receiving sub-sector'. The legal requirement for transmission of data by EU Member States is at year t+9 months. The data in this publication mainly corresponds to the end-September 2011 transmission, with some Member States (DK, SE) having updated their data since.
In all cases, the data is consistent with the ESA table 0200 'main aggregates of general government' data released on 21 October 2011 (and which was updated by DK and SE), except for some differences for PL for years before 2007.
Provisional data
Data for Greece is labelled provisional for 2003-2010.
Major revisions
Scheduled national accounts revisions in some of the largest Member States have lead to revisions of tax revenues and also to reclassifications of taxes. The main components of tax revenues are affected by this. Most notably a shift from taxes on production and imports (D.2) to current taxes on income, wealth, etc. (D.5) is observed.
Definition of government
The data relate to the general government sector of the economy, as defined in ESA95, comprising the sub-sectors central government, state government (where applicable), local government, and social security funds (where applicable).
For the purpose of this publication the term 'general government' also includes taxes collected on behalf of the EU institutions. Thus it presents all tax revenues collected at the EU level.
Definition of tax revenue
The definition used in this article is ‘Total taxes and social contributions payable to general government, including those for government as an employer’. This corresponds to ‘Indicator 4’, the broadest of four indicators defined by the Eurostat National Accounts Working Group in June 2001. This indicator covers fully the series reported under table 0900 of the ESA 95 transmission programme. In particular it encompasses the wide diversity of social security systems in the EU.
The four indicators are defined as follows (the codes in brackets refer to ESA95 codes):
- taxes on production and imports (D.2)
- + current taxes on income, wealth, etc. (D.5)
- + capital taxes (D.91)
- - capital transfers from general government to relevant sectors representing taxes and social contributions assessed but unlikely to be collected (D.995)
- + compulsory actual social contributions (D.611) payable to the social security funds (S.1314)
= Indicator 1 (total taxes and compulsory social security contributions);
- + compulsory actual social contributions (D.611) payable to central government (S.1311), state government (S.1312), and local government (S.1313) subsectors as employers
= Indicator 2 (total taxes and compulsory actual social contributions payable to general government, including those for government as an employer);
- + imputed social contributions (D.612) payable to general government as an employer
= Indicator 3 (total taxes and compulsory social contributions payable to general government, including those for government as an employer);
- + voluntary actual social contributions payable to the general government sector
= Indicator 4 (total taxes and social contributions payable to general government, including those for government as an employer).
Comparing the four indicators, the trend in tax revenue remains very similar. In terms of level of tax revenue, Indicator 4 is roughly one percentage point of GDP higher than the Indicator 2 measure.
For a full analysis of tax structures, see the Eurostat / DG Taxud joint publication Taxation trends in the European Union, 2011 edition.
Time of recording
According to ESA 95, taxes and social contributions should be recorded on an accrual basis. Council Regulation 2516/2000 details the rules to be followed on the time of recording and the amounts to be recorded. Two methods can be used:
- 'time-adjusted' cash − the cash is attributed when the activity took place to generate the tax liability or when the amount of taxes was determined in the case of some income taxes. This adjustment may be based on the average time difference between the activity and cash receipt;
- a method based on declarations and assessments. In this case, an adjustment needs to be made for amounts assessed or declared but unlikely to be collected. These amounts have to be eliminated from government revenue, either by using a tax-specific coefficient based on past experience and future expectations or by recording a capital transfer for the same adjustment (ESA 95 code D.995) to the relevant sectors.
ESA 95 classifications and codes
- D.2: TAXES ON PRODUCTION AND IMPORTS
- D.21: Taxes on products
- D.211: Value added type taxes (VAT)
- D.212: Taxes and duties on imports excluding VAT
- D.214: Taxes on products, except VAT and import taxes
- D.29: Other taxes on production
- D.5: CURRENT TAXES ON INCOME, WEALTH, ETC.
- D.51: Taxes on income
- D.59: Other current taxes
- D.91: Capital Taxes
- D.2_D.5_D.91: TOTAL TAX RECEIPTS
- D.611: Actual social contributions
- D.6111: Employers' actual social contributions
- D.6112: Employees' social contributions
- D.6113: Social contributions by self- and non-employed persons
- D.612: Imputed social contributions
- D.995: Capital transfers from general government to relevant sectors representing taxes and social contributions assessed but unlikely to be collected;
TOTAL (D.2_D.5_D.91_D.611_D.612_M_D.995): total receipts from taxes and social contributions (including imputed social contributions) after deduction of amounts assessed but unlikely to be collected;
Total general government revenue (TR) includes total taxes and social contributions as well as market output (P.11), output for final use (P.12), payments for other non-market output (P.131), other subsidies on production, receivable (D.39rec), property income, receivable (D.4rec), other current transfers, receivable (D.7rec) and capital transfers, receivable (D.9rec);
GDP at current prices (nominal GDP) is used throughout.
Symbols:
"-" ‘not applicable’, ‘real zero’ or ‘zero by default
":" not available
"pp" percentage points
Context
Tax revenues (including social contributions) accounted for over 91 % of total general government revenue in the European Union in 2010.
Tax revenue made up 39.6 % of GDP in 2010 in the European Union (EU-27) and 40.2 % of GDP in the euro area (EA-17).
Taxes on production and imports accounted for 33.3 % and current taxes on income, wealth, etc. 31.2 % of total tax revenue. The share of current taxes on income, wealth, etc. has decreased from 2007 onwards with no recovery in 2010. The share of social contributions increased noticeably from 2008 to 2009 but decreased slightly from 2009 to 2010 to stand at 35.1 % of total tax revenue.
Further Eurostat information
Publications
- Tax revenue in the European Union - Statistics in focus 2/2012
- Tax revenue in the European Union - Statistics in focus 26/2011
- Taxation trends in the European Union - Data for the EU Member States, Iceland and Norway (2011 edition)
- Taxation trends in the European Union - Focus on the crisis: the main impacts on EU tax systems (2011 edition)
Main tables
- Government statistics, see:
- Total general government revenue (tec00021)
- Total general government expenditure (tec00023)
- Taxes on production and imports (tec00020)
- Current taxes on income, wealth, etc. (tec00018)
- Social contributions (tec00019)
Database
- Annual government finance statistics (gov_a)
- Government revenue, expenditure and main aggregates (gov_a_main)
- General government expenditure by function (COFOG) (gov_a_exp)
- Main national accounts tax aggregates (gov_a_tax_ag)
Dedicated section
Methodology / Metadata
- General government expenditure by function (COFOG) (ESMS metadata file - gov_a_exp_esms)
- Government revenue, expenditure and main aggregates (ESMS metadata file - gov_a_main_esms)
- Main national accounts tax aggregates (ESMS metadata file - gov_a_tax_ag_esms)
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