In 2003, the overall tax burden ¹ (i.e. the total amount of taxes and social security contributions) in the EU25² stood at 41.5% of GDP, compared with 41.3% in 2002. After an increase from 42.4% in 1998 to 42.9% in 1999, the tax to-GDP ratio declined steadily from 1999 to 2002. In all ten new Member States, the tax-to-GDP ratio was lower in 2003 than the EU15 average (41.8%).

Among the Member States there were substantial differences in the total tax burden. In 2003 Sweden (51.4%) recorded the highest tax-to-GDP ratio, followed by Denmark (49.8%), Belgium ( 48.1%), France (45.7%) and Finland (45. 1%). The lowest ratios were observed in Lithuania (28. 7%), Latvia (29.1%), Slovakia (30.9%), Ireland (31.2%) and Estonia (33.4%).

In 2003 as compared with 200 2, the tax burden rose in seventeen Member States, fell in seven and remained stable in Germany. The highest increases in the tax-to-GDP ratio were recorded in Cyprus (from 32.5% to 34.3%), Ireland (from 29.8% to 31.2%) and Estonia (from 32.4% to 33.4%). The largest reductions were observed in Slovakia (from 32.5% to 30.9%), Greece (from 39.8% to 38.6%), and Finland (from 46.1% to 45.1%).

These figures come from a publication³ issued today by Eurostat, the Statistical Office of the European Communities. This report gives additional information on the evolution of the tax burden in the EU and the Member States between 1995 and 2003, and on the breakdown of tax revenue across Member States by main tax category.

Looking at the different types of taxes⁴ reveals significant differences in the structure of taxation systems between the Member States. In 2003, Poland (19.7%), Slovenia (20.8%) and Slovakia (23.2%) recorded the lowest shares of direct taxes in the total tax burden, compared to the EU25 average of 31.6%. On the other hand, Denmark (59.6%), the United Kingdom (42.0%) and Finland (41.0%) had the highest shares of direct taxes.

With regard to indirect taxes, Cyprus (49.4%), Hungary (42.3%) and Portugal ( 41.9%) recorded the highest shares compared to the EU25 average of 33.8%, while Belgium ( 28.8%), Germany ( 29.7%) and the Czech Republic (31.4%) registered the lowest shares.

Regarding social contributions, the largest shares were observed in Germany (44.4%), the Czech Republic (41.6%) and France (40.2%) compared to the average of 34.5% for the EU25, whereas Denmark (5.4%), Ireland (19.1%) and the United Kingdom (21.0%) recorded the lowest shares of social security contributions. Denmark's social security system is, in fact, almost exclusively financed by general taxation.

Click here for Tax revenue in EU Member States: Trend, level and structure 1995-2003 report (in pdf format)

The press release has a useful summary table.

1. The tax-to-GDP ratio measures the overall tax burden as the total amount of taxes and social security contributions as a percentage of GDP. This indicator is widely used to measure the overall tax burden but includes the taxes that are raised on social transfers. Because social transfer recipients often receive directly a net payment, they do not feel the burden of paying taxes.

2. EU25: Belgium (BE), the Czech Republic (CZ), Denmark (DK), Germany (DE), Estonia (EE), Greece (EL), Spain (ES), France (FR), Ireland (IE), Italy (IT), Cyprus (CY), Latvia (LV), Lithuania (LT), Luxembourg (LU), Hungary (HU), Malta (MT), the Netherlands (NL), Austria (AT), Poland (PL), Portugal (PT), Slovenia (SI), Slovakia (SK), Finland (FI), Sweden (SE) and the United Kingdom (UK).

3. Eurostat, Statistics in Focus, Economy and Finance, 3/2005, "Tax revenue in EU Member States: Trend, level and structure 1995-2003". The publication will be available here in  PDF format.

4. Tax revenues received by the General Government are defined as taxes on production and imports, current taxes on income and wealth, capital taxes and actual and imputed social contributions. The different types of taxes comprise:

Indirect taxes, linked to production and imports. They include compulsory levies on producer units, value added tax, import duties, excises and other specific taxes on services (transport, insurances), on financial and capital transaction and other taxes on production.

Direct taxes, on income and wealth, include personal and corporate income taxes as well as capital taxes.

Social contributions comprise employers’ and employees’ actual and imputed social contributions, self-employed and nonemployed social contributions.