Tax revenues are a crucial means for governments to fund public services such as healthcare and education, but tax rates differ widely across Europe.
One way to compare fiscal approaches is to look at the levels of tax revenue as a share of national output (GDP).
According to Eurostat, the overall tax-to-GDP ratio in the EU was 40.0% in 2023, but which countries emerge as outliers across Europe?
When looking at the EU, the UK, Turkey, and EFTA countries, the ratio ranges from 22.7% in Ireland to 45.6% in France.
At the top of the ranking, Belgium (44.8%), Denmark (44.7%), and Austria (43.5%) closely follow France. With the exception of Iceland, the other Nordic countries also record high tax-to-GDP ratios, with Finland, Sweden and Norway recording scores of 42.7%, 42.6%, and 41.8%, respectively.
Luxembourg (41.9%), Italy (41.7%), Greece (40.7%), and Germany (40.3%) are also positioned above the EU average.
Tax revenue, including social contributions, is below 30% of GDP in Turkey (23.5%), Switzerland (26.9%), Malta (27.1%), Romania (27.3%), and Bulgaria (29.9%).
Lithuania, Latvia, Estonia, Czechia, Hungary, and Slovakia rank above the lowest group, though their ratios are still comparatively modest, around 32% to 35%.
Among Europe’s five largest economies, the UK has the lowest tax-to-GDP ratio at 35.3%, followed by Spain at 37.0%. The other three — Germany, France, and Italy — are all above the EU average.
The data for the UK and Turkey come from the OECD, which is not directly comparable with Eurostat figures as methodological differences can lead to slight discrepancies.
Why are ratios lower in Ireland, Turkey, and Switzerland?
Tax Foundation Europe policy analyst Alexander Mengden noted that Ireland, Turkey, and Switzerland all tell three different stories as to why tax-to-GDP ratios diverge across OECD countries.
“Ireland often stands out as an outlier in GDP-based comparisons because of its exceptionally high levels of foreign direct investment, attracted in part by its low 12.5% corporate tax rate," he told Euronews Business. This disproportionately affects GDP relative to other economic indicators.
He explained that for a worker earning the average wage, Ireland's employment tax burden is only slightly above the OECD average.
Recalling that Ireland’s GDP growth exceeded 20% in 2015, driven by tech giant Apple transferring its intellectual property assets to Ireland, Dr. Tom McDonnell, co-director of the Nevin Economic Research Institute, explained: “Irish economists adjust for these ‘globalisation’ distortions by using a bespoke measure of output called GNI, which better reflects actual economic activity in Ireland.”
GDP measures the value of goods and services produced within a country, whereas Global National Income looks at the income of the country's residents, including income received from abroad.
According to the OECD’s 2025 Ireland report, the tax-to-GNI ratio is 38%, placing the country close to the EU average.
Turkey: Limited state capacity to collect taxes
Mengden explained that Turkey has the lowest GDP per capita among all European OECD members and this generally goes hand-in-hand with lower tax-to-GDP ratios.
“This typically reflects more limited state capacity to collect taxes, for example due to a relatively large shadow economy, as well as policy choices that limit revenues,” he said.
He pointed out that in Turkey’s case, its VAT applies to only about 40% of final consumption, the narrowest base among European OECD countries.
The shadow economy covers legal goods and services that are deliberately concealed from public authorities to avoid payment of taxes and social security contributions.
Switzerland: Low ratio but wealthy
In contrast, Switzerland is unique as it achieves a low tax-to-GDP ratio as one of the wealthiest countries in Europe, according to Alexander Mengden.
He explained that this reflects both deliberate federal policy choices to keep overall tax burdens modest and intense local tax competition between municipalities and cantons, which allow residents to choose among different combinations of tax rates and public services.
Total tax revenues
In absolute terms, revenue from taxes and social contributions in the EU was around €6.9 trillion in 2023.
In 2023, three European countries recorded tax revenues exceeding one trillion euro. Germany collected the highest amount, at around €1.7tn. In France, tax revenues reached €1.3tn, while in the United Kingdom they stood at around €1.1tn (£950 billion).
Italy collected €887bn, placing it fourth, and Spain followed in fifth with €555bn.
With €5.6bn, Malta recorded the lowest tax revenue in Europe.
Role of taxes
According to the European Commission, nearly 90% of the revenue available to national governments in the EU comes from taxes.
These revenues are an essential means of financing public services and when they are insufficient, countries may be forced to borrow, creating future debt obligations.
How countries juggle economic growth, taxation levels, and public spending remains a delicate balancing act, set to become increasingly tricky as demands on state budgets rise.
