Tax systems in Europe - France, with the weakest performance. Baltic countries lead
Tax revenues play a vital role in financing public services. According to Eurostat, the overall ratio of taxes to Gross Domestic Product (GDP) in the European Union was 40% in 2023. However, tax policies and rates vary significantly between European countries, due to their economic priorities and different social models.
According to the International Tax Competitiveness Index, which assesses how countries design their tax systems, the two main criteria are competitiveness and neutrality. A competitive system keeps tax rates low to encourage investment and economic growth, while a neutral system aims to collect more revenue with as few distortions to economic activity as possible.
Among the 27 European countries included in the 2025 index, scores range from 45.8 in France to 100 in Estonia, meaning Estonia has the most competitive and neutral tax system, while France ranks at the bottom of the table.
According to the report, Paris is in that position because of the implementation of several additional taxes on large corporations, which temporarily increase the top corporate tax rate to 36.1%. This is the highest value among member countries of the Organization for Economic Cooperation and Development (OECD) and almost 12 percentage points above the institution's average (24.2%).
On the other hand, the Baltic countries, such as Estonia, Latvia and Lithuania, dominate the index. Latvia (92.8) follows Estonia, while Lithuania (81.8) holds fourth place, behind Switzerland (86).
In general, Central and Eastern European countries have the most competitive tax systems, while Western ones rank lower. Next to France, at the bottom of the list we find Italy (50.3), Poland (54.7) and Spain (57.9). These countries are followed by Portugal, the United Kingdom, Ireland and Belgium, making up the eight countries with the lowest scores in Europe.
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