European Countries with the Highest Taxes for Individuals and Entrepreneurs

There are more than 60 countries in Europe, with 27 of these being members of the European Union. Each jurisdiction in Europe has its own economy and tax system which, taken together, define the prestige of the state and its rating on the world market.

If we consider tax obligations, each country in Europe has its internal laws that vary greatly and may be profitable or unprofitable for foreign entrepreneurs and immigrants. In this article, we are going to see who pays the highest income taxes in Europe and which countries set the maximum income tax rates for entrepreneurs, local residents, non-residents, and wealthy people.

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Tax System of the European Union

Income tax rates in Europe and the EU include direct and indirect obligations that are individually imposed by each country. However, there is a common tax policy standard that all the European Union countries have to comply with to fight tax evasion and avoid double taxation. 

There is a European Commission that provides supervision over compliance with indirect tax requirements by enterprises and trade companies. The main goal of this well-structured economic system is free movement of resources and ensuring equal conditions for all entrepreneurs that generate income in the EU. 

The Highest Individual Income Taxes in Europe

Income tax rates in Europe are not standardized, so they vary considerably. Companies and individuals have an opportunity to use the provided benefits to reduce income tax burden or fully exclude a part of the income from taxable profit.

The majority of EU countries apply a progressive income tax system (the income tax rate increases or decreases depending on the amount of income). Thus, the highest income taxes in Europe are applicable to wealthy individuals, large corporations, and investors. 

Income Tax in EU countries in 2023

Individual income tax rates in EU countries differ in all respects. As a rule, citizens in Europe are taxed on the total world income at the rates set by the country of residence. An individual is considered an EU tax resident if he or she spends more than six months a year in the country.

Here are standard and high individual tax rates as of 2022–2023 for each EU state (in decreasing order):

1. Individual income tax rate in Finland – up to 56.95%
2. Individual income tax rate in Denmark – 55.90%
3. Individual income tax rate in Austria – 55.00%
4. Individual income tax rate in Sweden – 52.30%
5. Individual income tax rate in Belgium – 50.00%
6. Individual income tax rate in Slovenia – 45.00%
7. Individual income tax rate in the Netherlands – 49.50%
8. Individual income tax rate in Ireland – 41.00%
9. Individual income tax rate in Portugal – 48.00%
10. Individual income tax rate in Spain – 47.00%
11. Individual income tax rate in Luxembourg – 42.00%
12. Individual income tax rate in France – 45.00%
13. Individual income tax rate in Germany – 45.00%
14. Individual income tax rate in Greece – 44.00%
15. Individual income tax rate in Italy – 43.00%
16. Individual income tax rate in Cyprus – 35.00%
17. Individual income tax rate in Malta – 35.00%
18. Individual income tax rate in Poland – 32.00%
19. Individual income tax rate in Latvia – 31.00%
20. Individual income tax rate in Croatia – 30.00%
21. Individual income tax rate in Slovakia – 25.00%
22. Individual income tax rate in the Czech Republic – 23.00%
23. Individual income tax rate in Estonia – 20.00%
24. Individual income tax rate in Lithuania – 20.00%
25. Individual income tax rate in Hungary – 15.00%
26. Individual income tax rate in Romania – 10.00%
27. Individual income tax rate in Bulgaria – 10.00%

Read our article on 15 European countries with low taxes and favorable residence conditions.

Who Pays the Highest Income Taxes in Europe?

The highest individual (income) taxes in Europe were set by non-EU members. In 2023, the highest individual tax in Europe is imposed in the following countries:

• Individual income tax rate in Iceland – 46.25%
• Individual income tax rate in Switzerland – 40.00%
• Individual income tax rate in Norway – 38.20%
• Individual income tax rate in Lichtenstein – 24.00%
• Individual income tax rate in Serbia – 20%
• Individual income tax rate in Ukraine – 18.00%

And here are the countries in Europe where individual tax is levied at a minimum rate:

• Individual income tax rate in Bosnia and Herzegovina – 10.00%
• Individual income tax rate in Kosovo – 10.00%
• Individual income tax rate in Macedonia – 10.00%
• Individual income tax rate in Montenegro – 9.00%

Which Country in Europe Has the Highest Taxes for Business in 2023

Like many other states, countries in Europe receive a considerable share of profit to the treasury at the expense of the corporate income tax. Company income tax rates are set in the country of their tax residence.

The EU countries and the Organization for Economic Cooperation and Development (OECD) are jointly working to minimize tax benefits for separate companies and average corporate income tax rates. However, countries like Ireland and Luxembourg still offer a profitable corporate tax rate for a number of companies, and large transnational corporations use these jurisdictions to optimize taxes. 

The Highest Corporate Tax Rates in EU Countries

It is common knowledge that the European Union offers the highest corporate income tax rates. However, it should be clear that the specified tax rate is not always final. The income tax rate set by the law may be much higher in Europe than the effective income tax rate applied after you acquire the right to certain benefits by complying with the conditions set. 

It means that an EU company owner can be actually subject to much lower income taxes than set in laws, but it would be safer to discuss this with your tax advisor.

Here are the corporate tax rates in EU countries set by laws in 2023:

1. Corporate income tax rate in Malta – 35.00%
2. Corporate income tax rate in Germany – 30.00%
3. Corporate income tax rate in France – 26.50%
4. Corporate income tax rate in Austria – 25.00%
5. Corporate income tax rate in Belgium – 25.00%
6. Corporate income tax rate in Netherlands – 25.80%
7. Corporate income tax rate in Spain – 25.00%
8. Corporate income tax rate in Luxembourg – 24.94%
9. Corporate income tax rate in Italy – 24.00%
10. Corporate income tax rate in Greece – 24.00%
11. Corporate income tax rate in Denmark – 22.00%
12. Corporate income tax rate in Portugal – 21.00%
13. Corporate income tax rate in Slovakia – 21.00%
14. Corporate income tax rate in Sweden – 20.60%
15. Corporate income tax rate in Finland – 20.00%
16. Corporate income tax rate in Estonia – 20.00%
17. Corporate income tax rate in Latvia – 20.00%
18. Corporate income tax rate in the Czech Republic – 19.00%
19. Corporate income tax rate in Poland – 19.00%
20. Corporate income tax rate in Slovenia – 19.00%
21. Corporate income tax rate in Croatia – 18.00%
22. Corporate income tax rate in Romania -16.00%
23. Corporate income tax rate in Lithuania – 15.00%
24. Corporate income tax rate in Ireland – 12.50%
25. Corporate income tax rate in Cyprus – 12.50%
26. Corporate income tax rate in Bulgaria – 10.00%
27. Corporate income tax rate in Hungary – 9.00%

Corporate Tax Rates in Europe (Non-EU Members)

Here are the countries in Europe where corporate income tax rates set by laws are the highest in 2023, but they can be reduced under certain circumstances:

• Corporate income tax rate in Iceland — 20.00%
• Corporate income tax rate in Switzerland — 14.93%
• Corporate income tax rate in Norway — 22.00%
• Corporate income tax rate in Lichtenstein — 12.50%

And here are the countries in Europe where the taxes for businesses are set at the most loyal rates in 2023:

• Corporate income tax rate in Bosnia and Herzegovina — 10.00%
• Corporate income tax rate in Kosovo — 10.00%
• Corporate income tax rate in Macedonia — 10.00%
• Corporate income tax rate in Serbia — 15.00%
• Corporate income tax rate in Montenegro — 9.00%

Who Pays the Wealth Tax in Europe?

The wealth tax is a disputable topic, and the majority of countries in Europe have completely abolished it. There is a tax on fortune in Europe, as well as a tax on certain assets. 

The net wealth tax is used in Norway, Spain, and Switzerland. The countries in Europe that have abolished the tax include Austria, Denmark, Finland, Germany, Iceland, Luxembourg, and Sweden. 

Net Wealth Taxes: Where They Are Used in Europe

The tax on all wealth of residents was imposed and preserved by only three countries in Europe:

• Norway imposes a wealth tax on an individual at a rate of 0.85% if the amount of assets exceeds 152,000 euros.
• Spain has a progressive taxation system at rates ranging from 0.20% to 3.75% if the individual’s wealth exceeds 700,000 euros. Non-residents pay a wealth tax in Spain only on the local assets they own, while the residents pay the same on the world wealth. 
• In Switzerland, the net wealth tax is also paid on a sliding scale and is levied on all income in the country and abroad, except for tax on real estate and any other foreign company governed by the individual.

Wealth Tax on Separate Assets

France, Italy, and Portugal are the European countries that impose a wealth tax on separate assets. Thus, if the amount of capital and total wealth of the local citizen does not exceed the limits set, no tax is paid.

• In 2018, France abolished the net wealth taxation system and set new regulations. Today, the wealth tax covers the international real estate of residents that costs 1.3 million euros or more. Non-residents pay the same wealth tax in France if they own local real estate with an estimated value of at least 1.3 million euros. The rates may reach 1.5% depending on the object.
• In Italy, you will be subject to a wealth tax of 0.2% which covers the assets located abroad. There is also a 0.76% tax on foreign real estate owned by Italian tax residents.
• In Portugal, you will have to pay a national wealth tax on real estate that costs 600,000 euros and more. The tax residency status is not taken into consideration in this case, and the rate is 0.7% for individuals and 0.4% for legal entities. If the cost of real estate exceeds 1 million euros, all owners are taxed at the same rate of 1.0%.

Best European Jurisdiction to Relocate and Start your Business

The tax rates are the primary factor that influence the choice of a country for permanent residence and company immigration. It is hard to choose the country where to relocate in this or that situation. You need to study all the current laws and make a comparative analysis.

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