The contribution of corporate income tax (CIT) to government revenues and economic output differs significantly across Europe, highlighting the impact of economic structure and national tax policies, according to new data from the OECD.
Corporate income tax, levied on companies’ net income, profits and capital gains, accounts for roughly 4% of GDP across OECD members. But within Europe, the share of CIT in total tax revenues in 2023 ranged from as low as 4.2% in Latvia to as high as 28.3% in Norway.
Norway and Ireland Lead the Rankings
Norway tops the list, with corporate taxes accounting for more than a quarter of its overall tax revenues, thanks largely to its highly profitable oil and gas sector. Ireland follows with 21.7%, while Czechia ranks third at 13.9%. Turkey (12.8%) and the Netherlands (12.7%) round out the top five.
By contrast, many European economies fall closer to the average of 9.8%. Among the Nordic countries, Iceland (9.4%), Denmark (8.7%), Sweden (8.6%) and Finland (6.8%) are much nearer to the regional norm.
“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,” said Cristina Enache, economist at Tax Foundation Europe.
Divergence Among Major Economies
Europe’s largest economies show a striking divergence. The UK records the highest share of CIT among the top five, at 10.1%. France sits at the other extreme with just 5.3%, placing it near the bottom of the European rankings. Germany (6.1%), Italy (6.5%), and Spain (7.9%) all fall below the average, reflecting what analysts describe as diversified economies that rely more heavily on income and consumption taxes.
Why the Gap Exists
Experts attribute these differences to variations in economic structure, corporate profitability, and national tax regimes. Some governments, such as Ireland and Lithuania, use lower corporate tax rates to attract investment. Others, like Germany and the UK, apply generous allowances and deductions that reduce effective CIT collections.
In Estonia and Latvia, only distributed earnings are taxed, allowing firms to defer payments if profits are reinvested. “This policy encourages investment and entrepreneurship but results in lower immediate CIT revenues,” Enache explained.
CIT as a Share of GDP
Measured against GDP, Norway again leads with CIT equivalent to 11.7% of output—more than triple the European average of 3.5%. Luxembourg (5.0%), the Netherlands (4.9%), Czechia (4.7%) and Ireland (4.7%) also rank highly. At the bottom, Latvia (1.3%) and Estonia (1.9%) collect the least relative to GDP.
Tax rates themselves are less variable, clustering between 20% and 25% across most of Europe. Hungary applies the lowest rate at 9%, while Malta has the highest at 35%. Norway, despite being the top revenue generator, applies a relatively modest 22% rate.
Analysts say the contrast between countries like Norway and Estonia illustrates broader policy choices: some governments leverage corporate taxes to capture resource rents, while others prioritise investment-friendly frameworks.
