Eurostat/European Commission: Romania's income tax, among the lowest in the EU

The tax Romanians pay is listed among the lowest in the EU, according to an annual Eurostat/ European Commission research – „Taxation trends in the European Union”, published on Monday. The state drew 29.4% of the GDP from taxation in 2007, slightly higher than in 2007 – 28.6%, but below the European medium value – 39.8%, according to an EC report.

The lowest straight tax in Europe is recoded in Slovakia (20.8% of the total tax), Bulgaria (20.9%). Romania ranks third, with 23.0%. The reasons indicated by the study underline the moderate taxation for the private medium income and for personal income. Furthermore, a unique tax rate resulted in a strong direct tax incomes reduction against indirect gains.

The money coming from taxes reduced by 24% after Romania voted in favour of the unique income tax rate. The lowest drops recorded in Bulgaria (-40%) and in the Czech Republic (-28%).

The 16% income tax places Romania among the European states with the lowest income tax. After 2000, Romania and Bulgaria saw the biggest increase in income tax: from 40% to 16% (Romania) and 10% (Bulgaria). Slovakia also benefited from a reduced tax: from 42% to 19%. On the other hand, the Danish pay the highest income tax: 59%, followed by Swedish: 56.4% and Belgium: 53.7%.

The medium European income tax was 29.8% of the GDP in 2007, slightly higher than in 2006 – 39.7%, but lower than in 2000 – 40.6%. There is a huge discrepancy between the EU states, Romania, Slovakia and Lithuania, where the tax is below 30%, and Sweden and Denmark, where the tax is little over 50%. On a global level, the EU’s income taxes are about 12% higher in comparison with the figures from the US and Japan