Eurostat has just published the latest figures available on the tax/GDP ratio, that is to say the sum of taxes and net social contributions as a percentage of gross domestic product (GDP). And Luxembourg is one of the countries where this ratio increased the most in 2023. Explanations.
The tax burden, recalls the OECD, corresponds to the total amount of tax revenue collected, expressed as a percentage of GDP. However, in the EU, this pressure can vary practically by a factor of two!
The overall tax/GDP ratio stood at 40% in the EU in 2023, down from 2022 (40.7%). Some countries like France, Belgium or Denmark are tax hell.
Indeed, the highest shares of taxes and social contributions as a percentage of GDP are recorded in these three countries. France: 45.6%, Belgium: 44.8% and Denmark: 44.1%. But the Luxembourg is in the leading group of countries where the share of taxes is high. With a ratio of 42.8%, it is even the fifth country with the highest tax burden according to the latest Eurostat data. At the opposite extreme, Ireland can call itself a tax haven, with a ratio of 22.7%, the lowest in the EU.
Strong increase in Luxembourg
Another severe observation, Luxembourg is champion of the increase in tax pressure in 2023. Last year, the tax-to-GDP ratio increased in 11 EU countries. And the largest increases were observed in Cyprus (from 35.9% in 2022 to 38.8% in 2023) and Luxembourg (40.2% in 2022 and 42.8% in 2023).
In 2023, tax revenues in absolute terms increased in all EU countries. Revenue from taxes and social security contributions increased by €308 billion in the EU compared to 2022, to €6.883 billion.
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