The international auditing and consulting firm Mazars is publishing its ninth “CEE Tax Guide”, which offers businesses and investors a unique comparison of tax systems in 21 countries in Central and Eastern Europe. The publication, in which Germany, Austria, Russia and Ukraine are also represented in addition to the Visegrad countries, the south European and the Baltic states, mainly monitors labour costs, indirect taxes, as well as various aspects of corporate taxation and transfer pricing. According to the guide, the global pandemic triggered several changes to tax systems. The study also looks at long-term trends, because business corporation investment decisions are also based on an analysis of trends and changes in regional tax regimes.
- The regional average of employers' total wage expenses amounts to 160 per cent of the net wage, the lowest compulsory contributions are in Romania, the highest in Slovakia.
- The average wage level in euros increased most in the private sector last year, with the highest average wage in the region being in Germany, while the lowest is in Kosovo and Ukraine.
- Hungary and Croatia have the highest standard VAT rate.
- Germany has the highest corporate income tax rate, with Hungary and Montenegro having the lowest rate.
"As far as the economic impact of the pandemic is concerned, it seems that most of the governments of the Central European region have so far decided not to finance programs to maintain employment and support businesses through tax increases. Some governments have even decided to reduce the tax burden. For example, January’s termination of the super-gross wage in the Czech Republic will have a significant long-term impact on state budget revenues," stated Pavel Klein, Tax Leading Partner of Mazars in the Czech Republic, adding: "In the future, in the context of pressure on public finances, the governments of the individual countries can be expected to focus on introducing new taxes (such as a digital tax) or to carry out tax inspections on companies more intensively.”
In 2021, the employers' taxes and compulsory contributions related to the employment of people were generally reduced, though significant differences prevail between countries in the region. The Czech Republic has returned to progressive taxation, which is applied in Austria, Germany, Slovenia, Croatia and Slovakia, among others. Other countries, such as Bulgaria, Romania, Ukraine and Hungary, still apply a single personal income tax rate.
The full report can be downloaded HERE.