Personal Taxes

Current Modifications in Highest Private Revenue Tax Charges in Europe, 2021

In 2019, income tax receipts accounted for 24 percent of total tax receipts in OECD countries. Countries tax labor income in different ways through payroll taxes, income taxes, and in some cases additional taxes.

Between 2018 and 2021, eight European OECD countries changed their highest income tax rates. Of these eight countries, four have lowered their highest income tax rates while the other four have raised their maximum rates.

The Czech Republic, Latvia and Lithuania switched from flat-rate taxation of personal income to progressive tax structures. Spain has increased its highest income tax rate. Sweden has abolished a surcharge. A surcharge in Greece has been temporarily suspended. The Netherlands has changed its income tax rates slightly. Turkey has added a new top income tax bracket.

Czech Republic

As of 2021, the Czech Republic has reintroduced progressive taxation with a peak rate of 23 percent for incomes over CZK 1 million (US $ 78,000). Previously, a flat tax of 15 percent applied.

Greece

Greece lowered the highest income tax rate from 55 to 54 percent (44 percent income tax plus 10 percent solidarity surcharge) in 2020. In 2021, the solidarity surcharge was suspended for all income except income from public employment and pensions. The maximum rate applies to income over $ 40,000 ($ 45,610).

Latvia

In 2018, Latvia switched its system from a flat rate tax on personal income to a progressive tax. Before this change, Latvia applied a flat tax of 23 percent. The new system has three separate brackets: 20 percent, 23 percent and 31 percent (31.4 percent before 2021). The maximum rate applies to income over € 62,800 ($ 71,608) in 2021.

Lithuania

In 2019, Lithuania switched from a flat income tax of 15 percent to a progressive income tax, initially with two levels with rates of 20 percent and 27 percent. The current peak value is now 32 percent. The top category applies to income over $ 81,162 ($ 92,545).

Netherlands

The progressive tax system in the Netherlands was changed in 2019 from four levels with a highest income tax rate of 52 percent to three levels with a maximum rate of 51.75 percent. The tier structure was further changed in 2020, which reduced the top personal income tax bracket to 49.5 percent.

Spain

Spain has a fiscally decentralized system with personal income tax rates which are a combination of national and regional measures. Madrid has the lowest combined income tax rate in the country – a local tax rate of 21 percent plus the current national income tax rate of 24.5 percent results in a combined tax rate of 45.5 percent. The highest rate is 54 percent in the Valencian Community. In 2020, the national rate was increased from 22.5 to 24.5, raising rates across the country.

Sweden

Sweden removed its highest income tax rate in 2020, which added a 5 percent surcharge on incomes over SEK 703,000 ($ 76,372). Sweden has a 20 percent tax rate on income over SEK 523,200 (US $ 56,839), as well as a different municipal tax rate. The municipal tax rate is currently 32.85 percent.

Turkey

In 2020, Turkey introduced a new top tax rate of 40 percent that applies to income over TRY 650,000 (US $ 92,527). The new rate has been added to Turkey’s 15, 20, 27 and 35 percent tax brackets.

European OECD countries with changes in the statutory top tax rates between 2018 and 2021

country Tax rates 2018 Tax rates 2019 Tax rates 2020 Tax rates 2021
Czech Republic (CZ) fifteen% fifteen% fifteen% 23%
Greece (GR) 55% 55% 54% 44%
Latvia (LV) 31.4% 31.4% 31.4% 31%
Lithuania (LT) fifteen% 27% 32% 32%
Netherlands (NL) 52% 51.75% 49.5% 49.5%
Spain (ES) (Madrid) 43.5% 43.5% 43.5% 45.5%
Sweden (SE) 57.1% 57.2% 52.3% 52.9%
Turkey (TR) 35.8% 35.8% 40.8% 40.8%

Note: Income tax rates in Spain vary by region. In 2021, they range from 45.5 percent in Madrid to 54 percent in the Valencian Community.

Source: OECD.Stat, “Table I.7. Highest Statutory Income Tax Rates ”, 2020, https://stats.oecd.org/index.aspx?DataSetCode=TABLE_I7; KPMG, “Individual Income Tax Rates Table”, accessed on August 23, 2021, https://home.kpmg/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/individual – income-tax-rates-table.html.

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