Tax rates in Romania and EU countries

Romanias flat tax puts personal and corporate tax rates among EUs lowest, but VAT relatively high Latest figures form EU statistics wing Eurostat show that Romania has one of the lowest personal tax rates in the EU27. At 16 percent in 2012, under the continuing flat tax policy, it makes the personal tax rate in Romania the EU’s fourth lowest. The highest recorded personal tax rates are found in Sweden with 56.6 percent, Denmark at 55.4 percent, and Belgium at 53.7 percent. Bulgaria has the lowest recorded personal income tax rate – 10 percent, and is followed by the Czech Republic and Lithuania, both at 15 percent, while next lowest after Romania’s 16 percent is Slovakia with 19 percent.

Tax rates in general across the European Union have risen over the past few years. The average standard VAT rate over the EU27 has risen dramatically since 2008. VAT in 2012 varies from country to country, with Luxembourg recording the lowest at 15 percent, and Hungary recording the highest at 27 percent. Romania has a rather high VAT rate of 24 percent.

Corporate tax rates in the EU have risen slightly in 2012, ending a long declining trend. The highest statutory tax rates on 2012 corporate income are recorded in France – 36.1 percent, Malta – 35 percent and Belgium – 34 percent, while the lowest are in Bulgaria and Cyprus, both standing at 10 percent, and Ireland with 12.5 percent. Romania’s tax on corporate income, also under the flat tax policy, is relatively low at 16 percent.

In comparison with the rest of the world, the EU’s tax ratio remains generally high. However, the tax burden varies significantly between member states, ranging from 27.2 percent in Romania and 27.1 percent in Lithuania, to over 45 percent in Denmark and Sweden.

As well as the tax burden varying from country-to-country, the implicit tax rates also vary, with the highest rates on labor being in Italy, and the highest rates on consumption being in Denmark. The average implicit tax rate on labor was slightly up in the EU27 in 2010 compared with 2009, ending a steady decline lasting a decade. Again, Romania was among the lowest with an implicit tax rate of 27.5 percent. Elsewhere in Europe, figures ranged from 25.7 percent in the United Kingdom up to 40.5 percent in Austria and 42.6 percent in Italy in 2010.

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