How do digital services taxes vary in Europe? - On average they are 3-5%. Hungary has the highest rate of 7.5%
The digital economy poses growing challenges for tax systems, as online services expose the limitations of current frameworks. Virtual enterprises, such as Meta or Alphabet, have significant customer bases in countries where they do not have a physical presence, generating revenue from advertising or subscription services.
Since tax rules still assume a physical presence, profits from digital activities often bypass taxes where consumers are located. Instead, multinational companies typically pay corporate taxes where production takes place.
"It is important that all sectors of our economies pay their fair share of taxes and contribute to the functioning of our societies," says the European Commission.
Several European countries have expressed interest in implementing a digital services tax (DST), especially as an OECD-wide agreement is making slow progress. France, Spain, Italy, Austria, Denmark, Hungary, Poland and Portugal have introduced a DST within the EU. The United Kingdom, Switzerland and Turkey have also implemented such taxes.
Belgium, the Czech Republic, Latvia, Slovakia, Slovenia and Norway have announced plans or signalled intentions to introduce a DST.
DST rates average around 3% to 5%, and Hungary currently has the highest rate at 7.5%. Turkey, which previously shared first place with Hungary, saw its DST rate drop to 5% in 2026, and this will drop to 2.5% in 2027.
The rate is 2% in the United Kingdom and Denmark, while Poland has a 1.5% tax on broadcasting and audiovisual services. It is 3% in Belgium, France, Italy, Latvia and Spain. Portugal and Switzerland apply a rate of 4%. Austria and the Czech Republic have introduced a 5% DST.
A 2025 report by the Centre for European Policy Studies (CEPS) estimates that a 5% tax on digital services would have raised around €11.9 billion across the EU in 2020. This is equivalent to 5.3% of corporate income tax revenues and 7.1% of the EU budget that year.
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