Budget 2012: UK jumps up the EU’s Corporate Tax rate rankings as headline rate cut to 24 percent

Budget 2012: UK jumps up the EU’s Corporate Tax r...

The announcement that the UK’s headline rate of corporation tax will drop to 24 percent in April takes the UK from having the 20th highest rate in ...

Also on KPMG.com

Press Release

Press Release

The announcement that the UK’s headline rate of corporation tax will drop to 24 percent in April takes the UK from having the joint 19th highest rate in the European Union to 15th, according to KPMG in the UK. The headline rate is currently 26 percent. It was slated to drop to 25 percent and today the Chancellor has announced it will reduce to 24 percent in April 2012.

Chris Morgan, Head of Tax Policy at KPMG, said:

“Today’s corporation tax rate cut takes us from joint 19th highest in the EU to 15th, leapfrogging Finland, Portugal, Denmark, Austria and the Netherlands (a key competitor on tax). It also puts us below the global average rate of around 24.5 percent. Corporates will welcome today’s reduction but some businesses involved in capital intensive infrastructure industries will be disappointed to emerge empty-handed from the budget as they had been hoping for some targeted infrastructure investment allowances.”

Current country corporate tax rate rank:

Bulgaria 10 1

Cyprus 10 2

Ireland 12.5 3

Latvia 15 4

Lithuania 15 5

Romania 16 6

Czech Republic 19 7

Hungary 19 8

Poland 19 9

Slovak Republic 19 10

Greece 20 11

Slovenia 20 12

Estonia 21 13

Austria 25 14

Denmark 25 15

Netherlands 25 16

Portugal 25 17

Finland 26 18

United Kingdom 26 19

Sweden 26.3 20

Luxembourg 28.8 21

Germany 29.37 22

Spain 30 23

Italy 31.4 24

France 33.33 25

Belgium 33.99 26

Malta * 35 27  

EU average 22.8  

Global average 24.48  

*The corporate tax rate is 35% but the effective rate is in practice much lower. Malta operates a full imputation system of taxation for both residents and non-residents, which ensures the full relief of economic double taxation upon the distribution of taxed profits by companies resident in Malta. On the distribution of taxed profits, the shareholders may opt to claim a partial/full refund of the tax paid by the distributing company. As a general rule, the tax refund amounts to six-sevenths of the tax paid. The refund will be reduced to two-thirds if the shareholder claims double-taxation relief and five-sevenths in those cases where the distributed profits are derived from passive interest or royalty income being subject to foreign tax at less than 5%. Dividends and capital gains derived from participation holdings will qualify for a full refund. The Malta tax suffered on distributed profits hence ranges between 0% and 10%. The tax paid on profits derived, directly or indirectly, from immovable property situated in Malta is not available for refund.      

- ENDS -  

For further information please contact:  

Margot Cowhig, KPMG Corporate Communications

M: +44 (0) 792 027 4856

E: margot.cowhig@kpmg.co.uk    

KPMG Press office Tel:  +44 (0) 207 694 8773

About KPMG:

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.   

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

Connect with us


Request for proposal



KPMG’s new-look website

KPMG’s new-look website