Institute for Research in Economic and Fiscal issues

IREF Europe - Institute for Research in Economic and Fiscal issues

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Taxation in Europe - Yearbook 2013
The yearly report on the evolution of European tax systems

A short presentation of IREF ’Yearbook on Taxation in Europe’ Series

Among the many ways to understand the climate of opinion and the culture of a country, looking at its fiscal system is one of the most rewarding. Sure, fiscal systems almost always rhyme with complexity; each system bearing the weight of its history. But the attempts to change the system, to give it a new direction, are highly instructive.

To observe changes, debates and new directions in tax systems is precisely what IREF yearbook is all about. In that sense, the yearbook is not in direct competition with other yearly reports on taxation that typically focus on numbers rather than on the philosophy behind them.

Another unique trait of this yearbook is to provide the latest information on the topic. What is presented here are the last known figures (this year, data for 2012) and the on-going debates. This approach allows the reader to judge whether public decision makers have been keeping their promises or have been victims of inter-temporal inconsistency; drawing plans that they are later unable or unwilling to maintain.

The yearbook is conceived for all those who look for a dynamic understanding of tax and budgetary policies. This includes scholars and students, of course, but also journalists, businessmen and public decision makers. While avoiding technical jargon, authors do not hesitate to enter the details of a mechanism whenever it is necessary. For we all know that there is sometimes a world between notional and real taxation.

Taxation in Europe

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Those reports can be used all along the year for quick reference whenever mention is made of one of the twenty countries presented here. As a useful complement to this yearbook, country profile cards summarizing the main budgetary, fiscal and macroeconomic data for each country can be found on the website of the institute at irefeurope.org .

Table of contents :

Struggling with or against the welfare state?

What comes out from the reading of the contributions to this new edition of the Yearbook on taxation in Europe is, as usual, that European countries vary greatly in their fiscal and budgetary policies. Some states are nearing bankruptcy while others can display rather healthy financial (...)

Serbia

From the perspective of fiscal adjustment, year 2012 was lost. In an attempt to collect more revenues, government increased general VAT rate, excises on tobacco, personal income from capital gains…. Government has also prepared the draft of the Law on Corporate income tax proposing an increase (...)

Bosnia and Herzegovina

Fiscal adjustment continued during 2012 despite the fact that real GDP fell by 0.7%. The rates of major taxes remained unchanged. Fiscal cooperation between different levels of governments substantially improved during 2012, resulting in an early December 2012 adoption of the state (...)

Bulgaria

General assessment
2012 was rather good fiscal year for Bulgaria – while the economy is still underperforming, tax revenues almost fully recovered to their pre-crisis (2008) record high levels and the budget position was close to balanced, with deficit being far less than 1% for 2012. There (...)

Czech Republic

From the accounting viewpoint, the Czech government is relatively efficient in taming deficits. The chosen strategy for the whole period 2010–2014 is to raise approximately one extra Czech koruna in taxes for every two korunas saved from previously planned expenditures. On the other hand, the (...)

Denmark

General assessment
Winning the September 2011-election on a promise of higher taxes, the centreleft government made good on election promises in the 2012-budget by increasing taxes by half a percent of total tax revenue. In the spring of 2012 further tax increases followed on cars and energy (...)

Estonia

While Estonia has rebounded well from the crisis and is still an attractive destination for Nordic companies there needs to be a political thrive towards keeping Estonia’s competitive advantage. In the time were our close neighbours are discussing possibilities for making their economic (...)

Finland

In the spring of 2013, the Finnish government held its half-way assessment, in which it reviewed and revised the government policy program for the remaining two years of its mandate, until the next general election in 2015. The main focus was again on the taxation of dividends. However, the (...)

France

France fiscal and budget policy: The only thing really new in 2012 was the President
2012 has been an election year: President Sarkozy left office last May and President Hollande took over. As explained in our previous report, from a fiscal and budgetary standpoint, the programs of the two (...)

Germany

The big picture
German fiscal policy is at present conducted under very favorable conditions. Capital flight into Germany during the Euro crisis has led to historically low interest rates on newly issued German public debt. Despite a not very low debt-to- GDP ratio of more than 80%, the (...)

Greece

The Greek governments had followed expansionary fiscal policies for many years. The government spending remained at high levels, chronic budget deficits continued, tax collection weakened, and public debt exceeded the size of the economy. The global economic crisis that started to take hold in (...)

Italy

There seems to be no respite to Italy economic and political torments. The year 2012 witnessed a deepening of the downturn of the economy. The Italian GDP declined by a huge 2.4%, brought mainly by a deep fall in the domestic demand. Increased taxes dented heavily household’s incomes, while (...)

Ireland

2012 saw the stabilisaon of the economic situaon in the Republic of Ireland. Irish GDP retuned to growth with real GDP rising by 0.9 percent and real GNP rising by an unexpected 3.9 percent. The Budget for 2013 comes in the aftermath of three years participation in a bailout and stability (...)

Luxembourg

Unjustified outside pressures A line must be drawn between, on one hand, what has happened and continues to happen in the country itself due to its own will and the decisions of its government and parliament and, on the other hand, what will shortly happen in the country because of decisions made (...)

Norway

The main objectives for the Norwegian Government’s tax and fiscal policies are, according to the Ministry of Finance, “… to secure public revenue, to help bring about a fair distribution of wealth, promote employment throughout the country and to improve the efficiency of the economy”.
The Government (...)

Poland

In November 2011, for the first time in the post-socialist era in Poland, the incumbent government was re-elected for the second turn in the office. The coalition of the Civic Platform (Platforma Obywatelska) and Polish People’s Party (Polskie Stronnictwo Ludowe) maintained sufficient electoral (...)

Portugal

In any undergraduate course the value of legal certainty is taught. Fiscal policy, of all policies, should be following the principle more strictly, as it is one of the basic elements for any investment decision – and investment is the basis for economic growth and job creation. But that has not (...)

Romania

Political instability and its corresponding fiscal uncertainty characterized the 2012 election year (local in June, legislative in December). A cabinet resigned, another was dismissed by the Parliament after few months, a new cabinet took over and was replaced after the legislative elections, but (...)

United Kingdom

The government is embarking upon a programme of fiscal consolidation, though delivering the reduction in the government’s deficit has not been as successful as it hoped. The fiscal consolidation was largely achieved through tax increases in the early years. Government spending remains very high (...)

Switzerland

Internally, corporate taxes have been lowered further in several cantons. Much uncertainty surrounds the planned corporate tax reform to increase acceptance of the Swiss tax system towards the European Union, which has been criticizing some cantonal corporate tax rules for years and is (...)

Sweden

Sweden has a center right government since 2006. This government has reduced the total taxes as percentage of GDP from 48,8 in 2006 to 44,0 in 2012. Only Denmark has higher total taxes. In 2013 the corporate income tax was reduced to 22 percent. Including taxes on income paid by employers, (...)

Slovakia

Fiscal consolidation should have been the priority of the government in 2012, but due to early elections in spring, most of the measures were deferred to year 2013. As a result, public deficit of 4.6% of GDP did not change compared to previous year. New leftist government applied some moderate (...)

Slovenia

For many years since the break-up of Yugoslavia in early 90’s, Slovenia represented a success story which was not frequent among transitional countries. The world’s financial crisis came to Slovenia in 2008 and caught the country totally unprepared. The value of most shares decreased sharply thus (...)

Spain

The economic crisis in Spain highlighted the lack of response from the Government as well as the wasteful public spending, both mirrored in the huge public deficits and the resultant sovereign debt crisis. The Socialist Party called early general elections for November 2011 due to lack of popular (...)

Netherlands

The big picture
Dutch fiscal policy has recently been designed predominantly to speed up fiscal consolidation and to reduce public deficits. This takes place amidst a recession in 2012, where Dutch GDP shrank by 1.3%, after slightly positive yet very low growth in 2011. The fiscal deficit is (...)

Hungary

Systemic chaos
Looking at the main tax types, there was no change in the corporate profit tax in 2012, the rate of the personal income tax remained 16% but the tax temporarily became progressive due to changes in the calculation of the tax base while the standard VAT rate increased from 25% to (...)

Lithuania

Lithuania is often viewed as a success story of austerity measures. Although the country did reduce public spending, it also suffered from high budget deficits which translated into a sharp public debt growth.

Belgium

An almost continuous wave of laws implementing an important number of “miscellaneous measures”, or “containing tax and financial matters” has struck Belgium in 2012.The present climate of crisis has led Belgian authorities to seek new sources of financing or to enforce, sometimes at any cost, thus (...)

Austria

Austria today faces a double challenge: to consolidate the country’s fiscal position through effective fiscal and structural policies aimed at reducing the budget deficit and lowering the public debt to GDP ratio. In 2012, Austria managed to narrow its public deficit below 3 percent according to (...)


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