20 Countries with Highest Income Tax Rates in Europe
In this article, we will look at 20 countries with highest income tax rates in Europe. If you want to skip our detailed analysis, head straight to 5 Countries with Highest Income Tax Rates in Europe.
Income Taxes in Europe
Governments generally rely on income taxes for revenue generation by leveraging marginal tax rates which lie at the lower end of the income distribution than by using higher top rates. Raising tax rates on lower income brackets doesn’t have much of an impact on earnings compared to higher brackets which increases the chances of reduction in earnings. However, most of the European countries’ income taxes have a progressive tax structure, with a high top statutory personal income tax rate. In addition, the highest tax rate individuals pay differs significantly across European countries.
The average top statutory personal income tax rate is around 42.8%, as of 2024, across the European OECD countries. Portugal is among the OECD countries which has enhanced its corporate tax base while Belgium has made its corporate tax base less competitive. Hungary, Estonia, and the Czech Republic have the lowest top rates at 15%, 20%, and 23%, respectively. Non-OECD European countries tend to have lower rates and charge taxes on personal income at a single rate. Bulgaria and Romania each levy a 10% top tax on personal income, with Moldova, Ukraine, and Georgia following next with top personal income tax rates of 12%, 19.5%, and 20%, respectively.
As we mentioned earlier in our articles on the 20 countries with the highest income tax rates in the world, Estonia has the best tax code and it has made it to the top spot for a consecutive tenth year on the Tax Foundation’s International Tax Competitiveness Index. Estonia has a competitive tax score of 100. Latvia follows next as it has adopted the Estonian system for corporate taxation. Latvia also has an effective taxing system for labor income and the country has a second-best tax score of 88.5. Switzerland, the Czech Republic, and Luxembourg fall next in line as the leading European countries with the most efficient and competitive tax systems, with competitive tax scores of 84.7, 81.2, and 78.9, respectively. Italy and France are among the European countries with the least competitive tax systems having competitive tax scores of 48.4 and 49.1, respectively.
Several countries in Europe are working on changing their top personal income tax rates in the coming years. Similarly, US states have made income tax cuts in 2024. Among the European countries, Austria plans to eliminate its highest tax bracket in 2026, lowering its top income tax rate from 55% to 50%. On the contrary, Estonia plans to increase its flat income tax rate from 20% to 22% in 2025.
Tax Services Providers in European Markets
Wolters Kluwer N.V. (AMS:WKL), Xero Limited (ASX:XRO), and Thomson Reuters Corporation (NYSE:TRI) are some of the top companies that offer tax-related services in European markets.
Wolters Kluwer N.V. (AMS:WKL) is a Dutch information services firm that serves legal, tax, audit, accounting, finance, and other business segments. Wolters Kluwer N.V. (AMS:WKL) offers a wide range of tax services through its online platforms including CCH Axcess which serves over 96 top accounting firms. On March 4, the company announced that it launched CCH iFirm in the UK. CCH iFirm is Wolters Kluwer N.V.’s (AMS:WKL) award-winning cloud-based management and compliance software that offers integrated and scalable tax and accountancy solutions for clients.
Thomson Reuters Corporation (NYSE:TRI) is one of the top multinational information firms that also offers tax services across the globe. Thomson Reuters Corporation (NYSE:TRI) offers tax services across Germany, Ireland, Netherlands, Spain, and the UK. The company is working to meet the tax, accounting, and compliance needs of clients throughout the EMEA region. On February 8, Thomson Reuters Corporation (NYSE:TRI) announced its earnings for the fiscal fourth quarter of 2023. The company reported earnings per share of $0.98, beating consensus estimates by $0.07. In the last six months, Thomson Reuters Corporation's (NYSE:TRI) share price has soared over 23%, as of March 5. Here are some of the comments from the Q4 2023 earnings call:
“We delivered another year of good financial results meeting or exceeding our key financial targets. Full-year organic revenue grew 6% with the fourth quarter growing at 7%. The Big 3 segments also accelerated in Q4, growing 8% versus 7% for the full year, despite lingering inflationary pressures and heavy investment. Our full-year adjusted EBITDA margin rose by 420 basis points to 39.3%, and we delivered $1.9 billion of free cash flow, slightly ahead of target. Although the macroeconomic and geopolitical backdrop remains uncertain, we have many areas of strength in our portfolio.”
Xero Limited (ASX:XRO) is one of the leading accounting firms in the world that also offers tax services to clients. Xero Tax allows users to manage tax preparation, lodgement, and compliance tasks for all accounting and bookkeeping clients. On February 16, Xero Limited (ASX:XRO) announced that it has signed a three-year global agreement with Mazars, a leading international audit, tax, and advisory company operating in more than 100 countries. With the following agreement, Mazars will be awarded Xero Global Partner status which will help Xero Limited (ASX:XRO) clients to have greater collaboration with their advisors and insights across the Mazars network.
These are a few companies that offer various tax services across different countries in the world, including Europe. Now, let’s take a look at the countries with the highest income tax rates in Europe.
20 Countries with Highest Income Tax Rates in Europe
Our Methodology
We have gathered data for the countries with the highest income tax rates in Europe from the Tax Foundation. Our ranking is based on the countries with the highest top statutory personal income tax rate in Europe, as of 2024. We have also mentioned each country’s tax-to-GDP ratio, sourced from CEIC Data.
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20 Countries with Highest Income Tax Rates in Europe
20. Switzerland
Personal Income Tax Rate: 39.50%
Switzerland has a top personal income tax rate of 39.50%, as of 2024. With a tax-to-GDP ratio of 28.30%, Switzerland ranks 20th among the countries with the highest income tax rates in Europe.
19. Norway
Personal Income Tax Rate: 39.60%
Norway has a tax-to-GDP ratio of 31.90% and a top personal income tax rate of 39.60%. Norway is one of the countries with the highest income tax rates in Europe.
18. Türkiye
Personal Income Tax Rate: 40.80%
Türkiye has a 40.80% top tax rate on personal income in 2024. Türkiye has a tax-to-GDP ratio of 18%.
17. Greece
Personal Income Tax Rate: 44%
Greece has a tax-to-GDP ratio of 26.70%. With a 44% top personal income tax rate, Greece is placed 17th among the countries with the highest income tax rates in Europe.
16. United Kingdom
Personal Income Tax Rate: 45%
The United Kingdom has one of the highest tax rates in the world having a top personal income tax rate of 45%. The United Kingdom has a tax-to-GDP ratio of 27.40%.
15. Luxembourg
Personal Income Tax Rate: 45.80%
Luxembourg is one of the richest countries in the world and charges a 45.80% top tax rate on personal income. Luxembourg has a tax-to-GDP ratio of 27.20%
14. Iceland
Personal Income Tax Rate: 46.30%
Iceland is one of the countries with the highest income tax rates in Europe. Iceland has a 46.30% top personal income tax rate and a tax-to-GDP ratio of 32.30%.
13. Italy
Personal Income Tax Rate: 47.30%
Italy has a tax-to-GDP ratio of 28.80% and a top personal income tax rate of 47.30%. Italy is one of the countries with the highest income tax rates in the world.
12. Germany
Personal Income Tax Rate: 47.50%
Germany ranks 12th among the countries with the highest income tax rates in Europe. Germany has a tax-to-GDP ratio of 22.50% and a top personal income tax rate of 47.50%.
11. Ireland
Personal Income Tax Rate: 48%
Ireland is one of the richest countries in Europe and has a top personal income tax rate of 48%. Ireland has a tax-to-GDP ratio of 16.80%.
10. Netherlands
Personal Income Tax Rate: 49.50%
The Netherlands has a 49.50% top personal income tax rate, as of 2024. With a tax-to-GDP ratio of 25.60%, the Netherlands ranks 10th among the countries with the highest income tax rates in Europe.
9. Slovenia
Personal Income Tax Rate: 50%
Slovenia is one of the few countries with a top personal income tax rate of 50%. Slovenia has a tax-to-GDP ratio of 19%.
8. Finland
Personal Income Tax Rate: 51.40%
Finland charges a 51.40% top tax rate on personal income, as of 2024. Finland has a tax-to-GDP ratio of 26.30% and ranks among the countries with the highest income tax rates in Europe.
7. Sweden
Personal Income Tax Rate: 52.30%
Sweden has a tax-to-GDP ratio of 21.90% and a top personal income tax rate of 52.30%.
6. Portugal
Personal Income Tax Rate: 53%
Portugal has a 53% top personal income tax rate, as of 2024. Portugal has a tax-to-GDP ratio of 22.30% and ranks sixth among the countries with the highest income tax rates in Europe.
Click here to see 5 Countries with Highest Income Tax Rates in Europe.
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Disclosure: None. 20 Countries with Highest Income Tax Rates in Europe is originally published on Insider Monkey.