Understanding corporate tax rates is essential for businesses operating in Europe. These rates significantly influence where companies choose to establish their operations, invest, and expand.
Staying updated on the latest corporate tax rates across Europe can help businesses make informed strategic decisions.
This article provides a comprehensive overview of corporate tax rates in European countries for 2024, highlighting key changes and trends.
Corporate Tax Rates in Europe in 2024
Country | Combined Statutory Corporate Income Tax Rate |
---|---|
Austria (AT) | 23.0% |
Belgium (BE) | 25.0% |
Bulgaria (BG) | 10.0% |
Croatia (HR) | 18.0% |
Cyprus (CY) | 12.5% |
Czech Republic (CZ) | 19.0% |
Denmark (DK) | 22.0% |
Estonia (EE) | 20.0% |
Finland (FI) | 20.0% |
France (FR) | 25.8% |
Germany (DE) | 29.9% |
Greece (GR) | 22.0% |
Hungary (HU) | 9.0% |
Iceland (IS) | 20.0% |
Ireland (IE) | 12.5% |
Italy (IT) | 27.8% |
Latvia (LV) | 20.0% |
Lithuania (LT) | 15.0% |
Luxembourg (LU) | 24.9% |
Malta (MT) | 35.0% |
Netherlands (NL) | 25.8% |
Norway (NO) | 22.0% |
Poland (PL) | 19.0% |
Portugal (PT) | 31.5% |
Romania (RO) | 16.0% |
Slovak Republic (SK) | 21.0% |
Slovenia (SI) | 19.0% |
Spain (ES) | 25.0% |
Sweden (SE) | 20.6% |
Switzerland (CH) | 19.7% |
Turkey (TR) | 25.0% |
United Kingdom (GB) | 25.0% |
Information courtesy of Tax Foundation:
” Note: Combined statutory corporate income tax rates include both central and subcentral corporate income tax rates.
Source: OECD, “Tax Database: Table II.1. Statutory corporate income tax rate”; and Bloomberg Tax, “Country Guide.” “
- Highest Corporate Tax Rates: Malta (35%), Portugal (31.5%), Germany (30%)
- Lowest Corporate Tax Rates: Hungary (9%), Montenegro (9%), Ireland (12.5%), Cyprus (12.5%)
The average corporate tax rate in Europe in 2024 is approximately 21.3%, slightly below the global average of 23.45% measured across 181 jurisdictions in 2023.
The global average corporate tax rate stands at 23.45%. Europe’s average is lower, reflecting a trend towards more competitive tax environments to attract business investments.
The UK, with a corporate tax rate of 25%, is higher than the European average but competitive compared to other major economies like Germany and France. This rate places the UK in a moderately competitive position within Europe, balancing the need for revenue with the desire to attract businesses.
Which Countries Have the Lowest Corporate Tax Rates in Europe?
- Hungary (9%)
- Montenegro (9%)
- Ireland (12.5%)
- Cyprus (12.5%)
- Bulgaria (10%)
Low corporate tax rates can make these countries attractive destinations for businesses looking to minimise tax liabilities and maximise profitability. These low rates often reflect a strategic choice by these nations to attract foreign direct investment (FDI) and stimulate economic growth.
Countries like Hungary and Ireland have long been known for their favourable tax environments, which have helped them attract substantial foreign investment. Bulgaria and Montenegro also use low tax rates as a tool to boost their economies and compete with larger, more developed markets.
Which Countries Have the Highest Corporate Tax Rates in Europe?
- Malta (35%)
- Portugal (31.5%)
- Germany (30%)
- France (25.8%)
- Netherlands (25.8%)
High corporate tax rates can deter investment and make these countries less attractive to businesses looking to minimise expenses. However, these countries often have other advantages which can offset the high tax burden, such as:
- Large domestic markets
- Robust infrastructure
- A skilled workforce
Countries with higher tax rates often have comprehensive social systems and public services funded through higher taxation. Germany and France, for example, use higher corporate taxes to support their extensive welfare states and infrastructure investments.
How Do Corporate Tax Rates Vary Across EU Countries?
Corporate tax rates across EU member states vary significantly, from Hungary’s 9% to Malta’s 35%. This variation reflects different national policies and economic strategies. While some countries aim to attract businesses with low rates, others maintain higher rates to fund extensive public services.
- Central and Eastern European countries like Hungary and Bulgaria tend to have the lowest rates.
- Western European countries, particularly those with extensive social services, like Germany and France, tend to have higher rates.
How Have European Corporate Tax Rates Changed in Recent Years?
Over the past few decades, European corporate tax rates have generally declined as countries have sought to remain competitive in the global market. However, the average corporate tax rate has stabilised in recent years.
In 2024, Austria reduced its corporate tax rate, finalising a tax cut scheduled in 2022. Conversely, Turkey and the UK increased their corporate tax rates, reflecting different fiscal strategies and economic conditions.
How Do Corporate Tax Rates Impact Businesses Operating in Europe?
Corporate tax rates impact profitability, investment decisions, and overall business strategy. Higher tax rates can reduce after-tax profits, influencing companies to seek more tax-efficient jurisdictions. Conversely, lower tax rates can enhance profitability and encourage investment.
Strategic Decisions Influenced by Tax Rates
- Location Choices: Businesses may choose to establish operations in countries with lower tax rates to minimise costs.
- Investment: High-tax countries might see less foreign investment compared to low-tax jurisdictions.
- Operational Adjustments: Companies might adjust their structures and operations to benefit from favourable tax conditions.
Make Strategic Corporate Decisions in Europe with J. Dauman & Co’s Help
Navigating the complexities of European corporate tax rates requires expertise and strategic planning. J. Dauman & Co offers comprehensive services in accounting, logistics, and international trade to help businesses optimise their tax strategies and enhance profitability. Our team of professionals can assist you in making informed decisions, ensuring compliance, and maximising growth opportunities in Europe.
Contact us today to learn how we can support your business in navigating the intricate landscape of European corporate taxes and achieving your strategic goals.