A recent report on sources of tax revenue shows the extent to which OECD countries rely on different types of taxes. Today’s map shows corporate income tax, which generates a relatively small percentage of tax revenue in Europe compared to individual taxes, social security taxes, and consumption taxes. In 2019 – the last year for which data is available – the European countries covered in today’s map averaged 7.4 percent of total corporate income tax revenue.
In 2019, Luxembourg relied the most on its corporate income tax, accounting for 15.1 percent of total tax revenue, followed by Norway (14.4 percent) and Ireland (13.8 percent). Latvia (0.5 percent), Hungary (2.0 percent) and Italy (4.6 percent) were least dependent on corporation tax.
Despite falling corporate tax rates in Europe (and other parts of the world) over the past 30 years, the average corporate tax revenue as a proportion of total tax revenue has not changed significantly compared to 1990. Many countries have weakened their tax treatment of capital investment, which has resulted in a broader tax base and has helped offset the loss of lower corporate tax revenues due to lower tax rates.
Corporate taxes are a direct tax on corporate profits, and fluctuating business cycles can significantly affect the profits generated by companies. This can make corporate tax a relatively volatile source of income.
Note: This is part of a series of maps in which we examine the sources of tax revenue in Europe.
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