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Taxation and Customs Union

Taxation trends in the European Union

In 2020, the year of the start of the COVID-19 pandemic, tax revenue as percentage of GDP increased slightly in the EU up to 40.1 % of the GDP. While tax revenues decreased in nominal terms in 2020, GDP decreased more, which raised the tax-to-GDP-ratio.

The last forecast (Spring 2022) estimates that the tax-to-GDP ratio would also have increased in 2021, but it will decrease in the following years, down to 39.5% by 2023.

Labour taxes were more resilient than other tax bases in 2020, which changed the tax structure in the EU. Labour on taxes were 21.5% in 2020, the highest point in the time series and 0.8 pp more than in 2019. The share of labour taxes in total taxation was 53.5% in 2020, also higher than in the last decade. Consumption taxes were at 10.8% of GDP in 2020, 0.3 pp less than in 2019. Revenue from taxes on capital also decreased slightly, 0.2 pp, down to 7.9% of GDP.

Revenue from environmental taxes represented 2.2 % of GDP in 2020, down from 2.4 % in 2019. The main cause for this drop was the decrease in revenue from energy taxes, particularly from the consumption of fuel used for transport. The various restrictions to mobility imposed in 2020 due to the pandemic could have been behind this change as energy consumption decreased in the EU in 2020.

This and many other trends and indicators are presented and analysed in the Taxation Trends 2022 (accompanying document to the Annual Report on Taxation 2022)

Previous editions can also be downloaded free of charge.