Which countries collect the most?

A government’s levy taxes on the net income, profits, and capital gains of enterprises are called corporate income tax (CIT). On average, corporate income tax makes up about 4% of GDP in OECD countries.

According to the OECD, among 27 European countries (22 EU members plus the UK, Switzerland, Norway, Iceland, and Turkey), the share of corporate income tax in total tax revenues in 2023 ranged from 4.2% in Latvia to 28.3% in Norway, based on the most recent data.

How important is corporate income tax for European countries and what share does it represent in GDP across Europe?

Following Norway, Ireland collects the second highest share of total tax from CIT with 21.7%, while Czechia ranks third at 13.9%. Turkey (12.8%), and the Netherlands (12.7%) complete the top five.

Norway and Ireland stand out as significant outliers, since the figures for most other countries are much lower. Despite Norway dominating the rankings, the other Nordic countries are much closer to the European average: Iceland (9.4%), Denmark (8.7%), Sweden (8.6%), and Finland (6.8%). The simple average across the 27 European countries is 9.8%.

“Norway, which has a more moderate corporate tax rate, compared to other European countries, has notably high CIT revenues due to the presence of profitable sectors such as oil and gas, where companies generate substantial taxable income,” Cristina Enache, economist at Tax Foundation Europe, told Euronews Business.

Ireland also benefits from being a hub for multinational corporations.

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Among Europe’s five largest economies, the UK has the highest share of corporate income tax in total tax revenues at 10.1%, while France has the lowest at 5.3%, placing it second from the bottom overall. The other three are Spain (7.9%), Italy (6.5%), and Germany (6.1%), all below the European average. This indicates that CIT accounts for a moderate portion of total tax revenue.

“This reflects the diversified nature of their economies, which rely on multiple revenue sources—such as income taxes and VAT—so that CIT does not dominate overall tax collections,” Enache said.

Cristina Enache noted that cross-country differences in the share of corporate income tax are primarily driven by the structure of each country’s economy, the level of profitability within its corporate sector, and the specific tax policies in place—particularly those concerning the corporate tax base and statutory rates.

“Some countries offer extensive tax incentives, deductions, or exemptions that reduce effective CIT collections,” she said.  For instance, countries aiming to attract corporate investments may have lower CIT rates (like Ireland and Lithuania), or generous capital allowances like the UK and Germany, thereby lowering CIT revenues as a percentage of GDP and total revenues.

Enache explained that the overall tax mix also plays a role. Countries that depend more on consumption or labour taxes tend to have a lower share of corporate income tax in their total revenue, even if corporate sectors are large.

On the other hand, in Estonia and Latvia (5.3%, ranking third from the bottom), only distributed earnings are taxed, allowing companies to defer corporate tax liabilities by retaining and reinvesting earnings.

“This policy encourages investment and entrepreneurship, but results in lower immediate CIT revenues,” she said.

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In terms of corporate income tax revenues as a share of GDP, Norway is again an outlier at 11.7%, compared with a simple average of just 3.5% across the 27 countries. Luxembourg (5.0%), the Netherlands (4.9%), Czechia (4.7%), and Ireland (4.7%) join Norway to make up the top five.

The lowest shares are in Latvia (1.3%) and Estonia (1.9%), both below 2%. Hungary (2.2%), along with Germany and France (both 2.2%), complete the bottom five.

CIT shares vary widely across Europe, both as a share of total tax revenue and as a share of GDP. But what does a lower or higher share actually suggest? Enache of Tax Foundation Europe explained that a higher CIT share may indicate a significant presence of large, profitable companies and capital-intensive industries like Norway’s oil companies. It also reflects a tax policy choice where the tax system is more reliant on corporate taxes.

“These policy differences reflect different priorities: Norway capitalises on resource rents through CIT, while Estonia prioritises investment-friendly policies with deferred corporate taxation,” she added.

Corporate income tax rates in Europe in 2024 generally cluster between 20% and 25%, according to the OECD and the Tax Foundation. Rates range from a low of 9% in Hungary to a high of 35% in Malta. About half of the 32 countries (the previous 27 plus Bulgaria, Croatia, Cyprus, Malta and Romania) fall within the 20–25% range.

While Norway is an outlier in terms of revenue shares, its corporate tax rate is 22%.