TO PERSPECTIVE TAX IN EUROPE

In this study, I examine tax system in Europe.  What tax strategy is, how rate of taxes is in various countries, which country has got lowest rate of taxes or highest rate of taxes.

TAX

Simply, tax is a gain which is taken from citizen by the government. In every country the government takes taxes, also countries which are member in EU too. EU members can choose rule of tax systems according to their preferences. As a result, there might be problems with countries which trade between each other. EU Commission discuss this topic of "Removing cross-border tax obstacles for EU citizens", and outlines the most serious tax problems that EU citizens face in cross-border situations, such as discrimination, double taxation, difficulties in claiming tax refunds and difficulties in obtaining information on foreign tax rules, and announces plans for solutions.

Sometimes, countries require of deal for trade, but they face taxes because there are a lot of various taxes, such as company tax, VAT, excise duties and car tax areas. As a result, the commission tries to find a solution, such as Europe 2020 strategy, which is sustainable and inclusive in the EU. They try the elimination of tax obstacles to all forms of cross-border economic activity. The Commission designed area of taxation in common principles. They suggest measures to eliminate the tax barriers that financial institutions face in their securities investment activities while at the same time protecting tax revenues against errors or fraud.

Let’s see lowest rate of tax in Europe

Andorra

Andorra is a small country in between France and Spain. The prices of the goods in this country are cheap. Because it has no wealth tax, no gift tax, no inheritance tax and the only capital gains tax is assessed on most sales of Andorra real estate. So, Andorra is perfect for those with capital gains or generational wealth. If someone wants to establish a company, he/she has to introduce a CV and a business plan. Also he/she has to pay $50.000 for deposit to government.  Andorra has got a big advantage for companies.

Bulgaria

Bulgaria has got the lowest tax of income rates in EU. The rate is just 10%. And also it has got low-tax for entrepreneurs.

Czech Republic

Czech Republic is the most affordable country. There is low tax of residency, because as low tax and also lump sum can reduce rate of tax.

Georgia

Georgia is a country which is between Europe and Asia. Georgia is going to be the only European country with a large territorial tax system, it means properly structured. Foreign source income is not taxed in most circumstances. Foreign citizens (except US citizens) who live in Georgia legally are not taxed on profits.

In my opinion

Tax is necessary for every country. Governments are making various investments through taxation. Also various taxation is exerted to citizens, local and multinational firms. As in many countries, EU countries have different tax systems among themselves. Commercial taxes which are applied by governments affect the international companies.

When international business companies trade with other countries, sometimes some problems occur. For example, the custom taxes might be a problem. Thus, especially, Europe Unions is working in this topic. How tariff rate can be lower? Is it possible? EU is working on new strategic plans for 2020. They should prepare plans according to development of countries.

         Second part which I examined, that is, the rate of taxes according to countries. The most available for trade or living is Georgia because its location is easy for transport, so you can arrive easily in Europe and Asia. In other words, it must be less cost of transport. Moreover, it has got less rate of tax and if you are a foreign company, you don’t have to share profits with the government in Georgia. This is a big advantage for international business companies.

Selin Çalışkan

[artigo de opinião produzido no âmbito da unidade curricular “Economia Portuguesa e Europeia” do 3º ano do curso de Economia (1º ciclo) da EEG/UMinho]