In most European countries there is a progressive system of income taxation, according to which the more an individual earns, the higher his tax burden. According to the Tax Foundation, cited by euronews, the top income tax rates differ markedly, clearly dividing the north-west of Europe from the east of the continent.
In addition to Denmark, taxes on individuals above 50% in six other countries: France, Austria, Spain, Belgium, Portugal and Sweden. Rates close to this level also apply to the highest incomes in Slovenia and the Netherlands.
Average level in Europe
The average top income tax rate in 35 European countries is 38.5%. Among European members of the OECD, it rises to 43.4%. In 18 countries, the rate exceeds 40%.
In Ireland, Germany, Ireland, Italy, Iceland, Luxembourg, Finland, Great Britain, Greece and Turkey, the top rate ranges from 40% to 48%.
By comparison, in addition to Bulgaria and Romania, the maximum income tax rate is below 25% in Moldova, Hungary, Ukraine, Georgia, Georgia, Czech Republic and Estonia.
The marginal income tax rates clearly demonstrate regional differences. In general, the highest maximum rates, usually from 45 to 60%, are set in the countries of Northern and Western Europe. There are exceptions, such as Norway, where the rate is slightly below 40%.
In most non-EU Eastern European economies, the top rates remain lower. Although Turkey stands out from them with a rate of about 41%, which brings it closer to the intermediate tax regimes of EU countries.
Central and Eastern Europe, including the Balkans, also tend to have lower rates. In some countries, a flat income tax scale helps to maintain relatively low top rates.
Political factor in tax rates
According to the Tax Foundation, a number of countries have revised their maximum personal income tax rates over the past year.
Denmark introduced a new income tax category for income over DKK 2.8 million (EUR 375,000), increasing the maximum rate from 55.6% to 60.5%.
Estonia raised its flat income tax rate from 22% to 24% and Slovakia introduced two new tax categories, increasing the top rate from 25% to 35%.
In contrast, Finland reduced its top income tax rate from 51.5% to 45%.
