Prime Highlights:

• Norway and Ireland are major outliers in Europe, collecting the highest share of corporate income tax due to profitable industries and economic policies.
• Differences in corporate tax contributions reflect each country’s priorities, from encouraging investment to generating revenue from natural resources.

Key Facts:

• In 2024, most European countries have corporate tax rates between 20% and 25%, with Hungary at 9% and Malta at 35%.
• Among Europe’s five largest economies, the UK collects 10.1% of total tax revenue from corporate taxes, while France collects only 5.3%.

Key Background:

Corporate income tax (CIT) affects European economies differently because of variations in tax rules, economic structures, and how profitable companies are. On average, CIT makes up about 4% of GDP in OECD countries, but the numbers vary a lot across Europe.

The ratio of CIT to total tax revenue in 27 countries of Europe, including EU members (22 of which are non-EU members, or the UK, Switzerland, Norway, and Iceland), and 1 in Turkey, differs considerably, with 4.2 in Latvia and 28.3 in Norway. The basic mean of these countries is 9.8% and this indicates the amount of variance in corporate taxation policies.

Canada and Ireland are definite exceptions. Norway has a great amount of corporate tax, especially with an average tax of 22%, since the country has a profitable oil and gas sector. Ireland follows, as 21.7 percent of the total tax revenue of the country is composed of corporate taxes. Czechia (13.9%), Turkey (12.8%), and the Netherlands (12.7%) complete the top five. Other Nordic countries like Iceland, Denmark, Sweden, and Finland have corporate income tax (CIT) shares closer to the European average.

Looking at Europe’s five largest economies, the UK collects the most from CIT at 10.1% of its total tax revenue, while France collects the least at 5.3%. Spain (7.9%), Italy (6.5%), and Germany (6.1%) are also below the European average.

Experts say the differences come from each country’s economy, how profitable its companies are, and the tax rules in place. Countries with tax incentives, lower rates, or deferred taxation, like Estonia and Latvia, collect less CIT right away. Countries with large, profitable industries collect more.

Other countries differ; the rate in Hungary is 9, and in Malta it is 35. These disparities demonstrate prioritization of each nation, be it investment attraction or monetization of the natural resources.

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