European countries taxes ranking

Are you considering moving to a European country? If so, one of the key things to look into before making your decision is the country’s tax system. While taxes in an unfamiliar country can seem complicated, it’s important to understand how they work. Whether you plan to stay long-term or just for a short period, it’s essential to know what to expect. To help you determine if moving is the right financial choice, we’ve put together a ranking of taxes across European countries.

Let us guide you through an overview of the key taxes in various parts of Europe. We’ll highlight which countries have the highest personal income tax rates, social security contributions, and VAT. Additionally, we’ll touch on other important taxes you should be aware of to stay compliant with your tax duties.

How many countries are there in Europe?

Although only 27 countries are part of the European Union (EU), there are more than 50 sovereign states in Europe recognized by most international organizations. These countries are: Albania, Germany, Andorra, Armenia, Austria, Azerbaijan, Belgium, Belarus, Bosnia and Herzegovina, Bulgaria, Cyprus, Vatican City, Croatia, Denmark, Slovakia, Slovenia, Spain, Estonia, Finland, France, Georgia, Greece, Hungary, Ireland, Iceland, Italy, Kazakhstan, Kosovo, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Monaco, Montenegro, Norway, Netherlands, Poland, Portugal, the United Kingdom, Czech Republic, North Macedonia, Romania, Russia, San Marino, Serbia, Sweden, Switzerland, and Ukraine.

What kind of taxes are paid in Europe?

Before we dive in, it’s worth mentioning that the taxes you owe in a European country depend on your tax residency status. Typically, residents are taxed on their global income, while non-residents are only taxed on the income they earn within that country. Understanding this difference is essential for managing your taxes and finances correctly.

In this section, we’ll go over the key taxes that individuals in Europe are subject to, as well as the countries where they apply. Familiarizing yourself with each country’s tax system can help you make better decisions about living and working in Europe.

Personal Income Tax (IRPF)

Income tax (IRPF) applies to the global income of tax residents. In Europe, it typically follows a progressive rate system, meaning the more you earn, the higher the percentage you pay. Every European country applies this tax.

• Personal income tax rates in Europe: Countries like Sweden and Denmark apply maximum rates of up to 57%. Bulgaria, however, has a flat rate of 10%, one of the lowest.
• Income brackets: In general, European personal income tax is progressive. It is applied in differentiated brackets according to annual income.
• Exceptions: Deductions for housing, children and other personal circumstances are available in some countries.

Value-added Tax (VAT)

VAT is an indirect tax that applies to the consumption of goods and services. Every EU country, along with nearly 96% of Europe, imposes VAT, though the rates can vary.

• VAT rates in Europe: In Luxembourg it is 17%, the EU minimum. Hungary, however, imposes 27%, the highest.
• Reduced VAT: Basic products such as basic food, books and medicines usually have a reduced VAT rate (between 5% and 10% generally).

Social Security Contributions

In most European countries (92%), contributing to social security is mandatory, as it helps sustain healthcare, pensions, and other welfare benefits. The responsibility for these payments is usually split between employers and employees.

• Social security rates: These vary considerably. In France, the total contribution can reach up to 45% of salary. In Switzerland, however, it is around 15%.
• Coverage: Benefits include public health, pensions, maternity and unemployment.

Corporate Income Tax

This tax is applied to business profits and is enforced in 88% of European countries. The rates differ depending on each country’s tax strategy.

• Corporate income tax rates: Ireland offers one of the lowest corporate tax rates (12.5%) to attract investment. In contrast, France and Germany have rates closer to 25%.
• Exemptions and allowances: In some countries, there are deductions that benefit companies in specific sectors or support small and medium-sized businesses.

Wealth Tax

This tax applies to the ownership of property or net assets. It is present in about 35% of European countries, particularly in those with high income levels.

• Wealth Tax rates: These range from 0.2% to 3.5%. They are generally applied to high net worth individuals.
• Exemptions: Exemptions are applied in some countries to first homes or essential assets.

Special Taxes

Excise taxes are applied to goods such as alcohol, tobacco, and fuel. These taxes are found in all European countries, aiming not only to raise revenue but also to regulate consumption.

• Taxed products: Tobacco, alcohol, fossil fuels and certain luxury goods.
• Variation of rates: Each country has its own rates, which usually include a fixed tax per quantity of product and a percentage of the price.

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Ranking of European countries by Personal Income Tax (IRPF)

Let’s dive into one of the most important taxes for residents in Europe: the Personal Income Tax (IRPF). Although most countries follow a progressive system where the tax rate rises with income, the maximum rates differ considerably based on each country’s tax policies. If you’re thinking about moving to a European country, this is a tax you should definitely consider. To help you make an informed decision, we’ve compiled a ranking of the highest IRPF rates for 2025:

Ranking of European countries by Value Added Tax (VAT)

Another important tax in Europe is the Value Added Tax (VAT), which is an indirect tax levied on the purchase of goods and services. Unlike income tax, VAT applies uniformly to all consumers, regardless of their income level. While EU countries generally have a standard VAT rate, many offer reduced rates for essential goods. These differences in VAT rates reflect each country’s economic focus, and they significantly affect the cost of living for people buying goods and services in Europe. Here’s a list of European countries ranked by their standard VAT rates in 2025:

Ranking of European countries by Mandatory Social Security Payment

Social security contributions are another important tax in Europe, paid by both workers and employers. These contributions help fund public services such as pensions, unemployment benefits, and healthcare. The way the tax is split varies significantly from one country to another, with some countries placing a heavier burden on employers, while in others, the costs are shared more equally between the worker and employer.

In some European countries, social security rates can be quite high and significantly affect both workers’ net salaries and employers’ labor costs. In countries like France and Italy, total contributions exceed 30%, while in others, such as Denmark or Ireland, the rate is much lower. These differences reflect the type of welfare system each country offers its citizens and how they structure their tax collection to fund these services. In the following table, you’ll see a ranking of European countries based on the total social security contribution percentage in 2025, from highest to lowest.

Frequently asked questions about taxes in European countries

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